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THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 

SCHOOL  OF  LAW 


Digitized  by  the  Internet  Archive 

in  2008  with  funding  from 

Microsoft  Corporation 


http://www.archive.org/details/casesonlawoftrusOOkenn 


CASES 


ON 


THE  LAW  OF  TRUSTS 


SELECTED  FROM  DECISIONS  OF 


ENGLISH  AND  AMERICAN  COURTS 


BY 

THADDEUS  DAVIS  KENNESON 

PROFESSOR  OP  LAW  IN  NEW  YORK  UNIVERSITY 


AMERICAN  CASEBOOK  SERIES 
JAMES  BROWN  SCOTT 

GENERAL   EDITOR 


ST.    PAUL 

WEST  PUBLISHING  COMPANY 
1911 


In  the  notes,  use  has  been  made,  by  permission  of  tlie  owners 
of  the  copyright,  of  the  notes  in  Ames'  Cases  on  Trusts. 


COPTBIGHT,    1911 
BY 

WEST  PUBLISHING  COMPANY 
(Ken.Tr.) 


(  , 


THE  AMERICAN  CASEBOOK 
SERIES 


For  years  past  the  science  of  law  has  been  taught  by  lectures,  the 
use  of  text-books  and  more  recently  by  the  detailed  study,  in  the 
class-room,  of  selected  cases. 

Each  method  has  its  advocates,  but  it  is  generally  agreed  that  the 
lecture  system  should  be  discarded  because  in  it  the  lecturer  does 
the  work  and  the  student  is  either  a  willing  receptacle  or  offers  a 
passive  resistance.  It  is  not  too  much  to  say  that  the  lecture  system 
is  doomed. 

Instruction  by  the  means  of  text-books  as  a  supplement  or  sub- 
stitute for  the  formal  lecture  has  made  its  formal  entry  into  the  educa- 
tional world  and  obtains  widely ;  but  the  system  is  faulty  and  must  pass 
away  as  the  exclusive  means  of  studying  and  teaching  law.  It  is  an 
improvement  on  the  formal  lecture  in  that  the  student  works,  but  if  it 
cannot  be  said  that  he  works  to  no  purpose,  it  is  a  fact  that  he  works 
from  the  wrong  end.  The  rule  is  learned  without  the  reason,  or  both 
rule  and  reason  are  stated  in  the  abstract  as  the  resultant  rather  than 
as  the  process.  If  we  forget  the  rule  we  cannot  solve  the  problem;  if 
we  have  learned  to  solve  the  problem  it  is  a  simple  matter  to  formulate 
a  rule  of  our  own.  The  text-book  method  may  strengthen  the  mem- 
ory;  it  may  not  train  the  mind,  nor  does  it  necessarily  strengthen  it. 
A  text,  if  it  be  short,  is  at  best  a  summary,  and  a  summary  presup- 
poses previous  knowledge. 

If,  however,  law  be  considered  as  a  science  rather  than  a  collection 
of  arbitrary  rules  and  regulations,  it  follows  that  it  should  be  studied 
as  a  science.  Thus  to  state  the  problem  is  to  solve  it;  the  laboratory 
method  has  displaced  the  lecture,  and  the  text  yields  to  the  actual 
experiment.  The  law  reports  are  in  more  senses  than  one  books  of 
experiments,  and,  by  studying  the  actual  case,  the  student  co-operates 
with  the  judge  and  works  out  the  conclusion  however  complicated 
the  facts  or  the  principles  involved.  A  study  of  cases  arranged  his- 
torically develops  the  knowledge  of  the  law,  and  each  case  is  seen  to 
be  not  an  isolated  fact  but  a  necessary  link  in  the  chain  of  develop- 
ment. The  study  of  the  case  is  clearly  the  most  practical  method, 
for  the  student  already  does  in  his  undergraduate  days  what  he  must 
do  all  his  life ;  it  is  curiously  the  most  theoretical  and  the  most  prac- 
tical. For  a  discussion  of  the  case  in  all  its  parts  develops  analysis, 
the  comparison  of   many  cases  establishes  a  general  principle,  and 

(iii) 


1?  PREFACE 

the  arrangement  and  classification  of  principles  dealing  with  a  sub- 
ject make  the  law  on  that  subject. 

In  this  way  training  and  knowledge,  the  means  and  the  end  of 
legal  study,  go  hand  and  hand. 

The  obvious  advantages  of  the  study  of  law  by  means  of  selected 
cases  make  its  universal  adoption  a  mere  question  of  time. 

The  only  serious  objections  made  to  the  case  method  are  that  it  takes 
too  much  time  to  give  a  student  the  requisite  knowledge  of  the  sub- 
ject in  this  way  and  that  the  system  loses  sight  of  the  difference  be- 
tween the  preparation  of  the  student  and  the  lifelong  training  of  the 
lawyer.  Many  collections  of  cases  seem  open  to  these  objections, 
for  they  are  so  bulky  that  it  is  impossible  to  cover  a  particular  sub- 
ject with  them  in  the  time  ordinarily  allotted  to  it  in  the  class.  In 
this  way  the  student  discusses  only  a  part  of  a  subject.  His  knowl- 
edge is  thorough  as  far  as  it  goes,  but  it  is  incomplete  and  frag- 
mentary. The  knowledge  of  the  subject  as  a  whole  is  deliberately 
sacrificed  to  training  in  a  part  of  the  subject. 

It  would  seem  axiomatic  that  the  size  of  the  casebook  should  cor- 
respond in  general  to  the  amount  of  time  at  the  disposal  of  instructor 
and  student.  As  the  time  element  is,  in  most  cases,  a  nonexpansive 
quantity,  it  necessarily  follows  that,  if  only  a  half  to  two-thirds  of  the 
cases  in  the  present  collections  can  be  discussed  in  class,  the  pres- 
ent casebooks  are  a  third  to  a  half  too  long.  From  a  purely  practical 
and  economic  standpoint  it  is  a  mistake  to  ask  students  to  pay  for 
1,200  pages  when  they  can  only  use  600,  and  it  must  be  remembered 
that  in  many  schools,  and  with  many  students  in  all  schools,  the  mat- 
ter of  the  cost  of  casebooks  is  important.  Therefore,  for  purely 
practical  reasons,  it  is  believed  that  there  is  a  demand  for  casebooks 
physically  adapted  and  intended  for  use  as  a  whole  in  the  class-room. 

But  aside  from  this,  as  has  been  said,  the  existing  plan  sacrifices 
knowdedge  to  training.  It  is  not  denied  that  training  is  important, 
nor  that  for  a  law  student,  considering  the  small  amount  of  actual 
knowdedge  the  school  can  hope  to  give  him  in  comparison  with  the 
vast  and  daily  growing  body  of  the  law,  it  is  more  important  than 
mere  knowledge.  It  is,  however,  confidently  asserted  that  knowdedge 
is,  after  all,  not  unimportant,  and  that,  in  the  inevitable  compromise 
between  training  and  knowledge,  the  present  casebooks  not  only  de- 
vote too  little  attention  relatively  to  the  inculcation  of  knowledge, 
but  that  they  sacrifice  unnecessarily  knowledge  to  training.  It  is  be- 
lieved that  a  greater  effort  should  be  made  to  cover  the  general  prin- 
ciples of  a  given  subject  in  the  time  allotted,  even  at  the  expense  of 
a  considerable  sacrifice  of  detail.  But  in  this  proposed  readjustment 
of  the  means  to  the  end,  the  fundamental  fact  caimot  be  overlooked 
that  law  is  a  developing  science  and  that  its  present  can  only  be  un- 
derstood through  the  medium  of  its  past.  It  is  recognized  as  im- 
perative that  a  sufficient  number  of  cases  be  given  under  each  topic 


PREFACE  V 

treated  to  afford  a  basis  for  comparison  and  discrimination ;  to  show 
the  development  of  the  law  of  the  particular  topic  under  discussion ; 
and  to  afford  the  mental  training  for  which  the  case  system  neces- 
sarily stands.  To  take  a  familiar  illustration:  If  it  is  proposed  to 
include  in  a  casebook  on  Criminal  Law  one  case  on  abortion,  one  on 
libel,  two  on  perjury,  one  on  larceny  from  an  office,  and  if  in  order  to 
do  this  it  is  necessary  to  limit  the  number  of  cases  on  specific  intent  to 
such  a  degree  as  to  leave  too  few  on  this  topic  to  develop  it  fully 
and  to  furnish  the  student  with  training,  then  the  subjects  of  abor- 
tion, libel,  perjury,  and  larceny  from  an  office  should  be  wholly  omit- 
ted. The  student  must  needs  acquire  an  adequate  knowledge  of  these 
subjects,  but  the  training  already  had  in  the  underlying  principles  of 
criminal  law  will  render  the  acquisition  of  this  knowledge  compara- 
tively easy.  The  exercise  of  a  wise  discretion  would  treat  fundamen- 
tals thoroughly :  principle  should  not  yield  to  detail. 

Impressed  by  the  excellence  of  the  case  system  as  a  means  of  legal 
education,  but  convinced  that  no  satisfactory  adjustment  of  the  con- 
flict between  training  and  knowledge  under  existing  time  restrictions 
has  yet  been  found,  the  General  Editor  takes  pleasure  in  announcing 
a  series  of  scholarly  casebooks,  prepared  with  special  reference  to 
the  needs  and  limitations  of  the  class-room,  on  the  fundamental  sub- 
jects of  legal  education,  which,  through  a  judicious  rearrangement 
of  emphasis,  shall  provide  adequate  training  combined  with  a  thor- 
ough knowledge  of  the  general  principles  of  the  subject.  The  collec- 
tion will  develop  the  law  historically  and  scientifically;  English  cases 
will  give  the  origin  and  development  of  the  law  in  England ;  Ameri- 
can cases  will  trace  its  expansion  and  modification  in  America;  notes 
and  annotations  will  suggest  phases  omitted  in  the  printed  case. 
Cumulative  references  will  be  avoided,  for  the  footnote  may  not  hope 
to  rival  the  digest. 

The  law  will  thus  be  presented  as  an  organic  growth,  and  the  neces- 
sary connection  between  the  past  and  the  present  will  be  obvious. 

The  importance  and  difficulty  of  the  subject  as  well  as  the  time  that 
can  properly  be  devoted  to  it  will  be  carefully  considered  so  that  each 
book  may  be  completed  within  the  time  allotted  to  the  particular  sub- 
ject. 

It  is  equally  obvious  that  somic  subjects  are  treated  at  too  great 
length,  and  that  a  less  important  subject  demands  briefer  treatment. 
A  small  book  for  a  small  subject. 

In  this  way  it  will  be  alike  possible  for  teacher  and  class  to  com- 
plete each  book  instead  of  skimming  it  or  neglecting  whole  sections ; 
and  more  subjects  may  be  elected  by  the  student  if  presented  in  short- 
er form  based  upon  the  relative  importance  of  the  subject  and  the 
time  allotted  to  its  mastery. 

Training  and  knowledge  go  hand  in  hand,  and  Training  and  Knowl- 
edge are  the  keynotes  of  the  series. 


n  PREFACE 

If  it  be  granted  that  all.  or  nearly  all.  the  studies  required  for  ad- 
mission to  the  bar  should  be  studied  in  course  by  every  student — and 
the  soundness  of  this  contention  can  hardly  be  seriously  doubted — it 
follows  necessarily  that  the  preparation  and  publication  of  collections 
of  cases  exactly  adapted  to  the  purpose  would  be  a  genuine  and  by 
no  means  unimportant  service  to  the  cause  of  legal  education.  And 
this  result  can  best  be  obtained  by  the  preparation  of  a  systematic 
series  of  casebooks  constructed  upon  a  uniform  plan  under  the  super- 
vision of  an  editor  in  chief. 

For  the  basis  of  calculation  the  hour  has  been  taken  as  the  unit.  The 
General  Editor's  personal  experience,  supplemented  by  the  experience 
of  others  in  the  class-room,  leads  to  the  belief  that  approximately  a 
book  of  400  pages  may  be  covered  by  the  average  student  in  half  a 
year  of  two  hours  a  week ;  that  a  book  of  600  pages  may  be  discussed 
in  class  in  three  hours  for  half  a  year;  that  a  book  of  800  pages  may 
be  completed  by  the  student  in  two  hours  a  week  throughout  the  year ; 
and  a  class  may  reasonably  hope  to  master  a  volume  of  1,000  pages 
in  a  year  of  three  hours  a  week.  The  general  rule  will  be  subject  to 
some  modifications  in  connection  with  particular  topics  on  due  con- 
sideration of  their  relative  importance  and  difficulty,  and  the  time 
ordinarily  allotted  to  them  in  the  law  school  curriculum. 

The  following  subjects  are  deemed  essential  in  that  a  knowledge  of 
them  (with  the  exception  of  International  Law  and  General  Juris- 
prudence) is  universally  required  for  admission  to  the  bar: 

Administrative  Law.  Insurance. 

Agency.  International  Law. 

Bills  and  Notes.  Jurisprudence. 

Carriers.  •    Mortgages. 

Contracts.  Partnership. 

Corporations.  Personal  Property,  including 

Constitutional  Law.  the  Law  of  Bailment. 

Criminal  Law.  -Din  ^      P*"*  "^^'i''. 

^  .    .     ,  -r.         ,  l^^eal  Propertv.  <  2d 

Crnnmal  Procedure.  '     1 3d      " 

Common-Law  Pleading.  Public  Corporations. 

Conflict  of  Laws.  Quasi  Contracts. 

Code  Pleading.  Sales. 

Damages.  Suretyship. 

Domestic  Relations.  Torts. 

Equity.  Trusts. 

Equity  Pleading.  Wills  and  Administration. 

Evidence. 

International  Law  is  included  in  the  list  of  essentials  from  its  in- 
trinsic importance  in  our  system  of  law.  As  its  principles  are  simple 
in  comparison  with  municipal  law,  as  their  application  is  less  technical. 


PREFACE  Vll 

and  as  the  cases  are  generally  interesting,  it  is  thought  that  the  book 
may  be  larger  than  otherwise  would  be  the  case. 

As  an  introduction  to  the  series  a  book  of  Selections  on  General 
Jurisprudence  of  about  500  pages  is  deemed  essential  to  completeness. 

The  preparation  of  the  casebooks  has  been  intrusted  to  experienced 
and  well-known  teachers  of  the  various  subjects  included,  so  that  the 
experience  of  the  class-room  and  the  needs  of  the  students  will  fur- 
nish a  sound  basis  of  selection. 

While  a  further  list  is  contemplated  of  usual  but  relatively  less  im- 
portant subjects  as  tested  by  the  requirements  for  admission  to  the 
bar,  no  announcement  of  them  is  made  at  present. 

The  following  gentlemen  of  standing  and  repute  in  the  profession 
are  at  present  actively  engaged  in  the  preparation  of  the  various  case- 
books on  the  indicated  subjects: 

George  W.  Kirchwey,  Dean  of  the  Columbia  University,  School  of 
Law.    Subject,  Real  Property. 

Nathan  Abbott,  Professor  of  Law.  Columbia  University.  (Formerly 
Dean  of  the  Stanford  University  Law  School.)  Subject,  Per- 
sonal Property. 

Frank  Irvine,  Dean  of  the  Cornell  University  School  of  Law.  Sub- 
ject, Evidence. 

Harry  S.  Richards,  Dean  of  the  University  of  Wisconsin  School  of 
Law.    Subject,  Corporations. 

James  Parker  Hall,  Dean  of  the  University  of  Chicago  School  of  Law. 
Subject,  Constitutional  Lazv. 

William  R.  Vance,  Dean  of  the  George  Washington  University  Law 
School.     Subject,  Insurance. 

Charles  M.  Hepburn,  Professor  of  Law,  University  of  Indiana.  Sub- 
ject, Torts. 

William  E.  Mikell,  Professor  of  Law,  University  of  Pennsylvania. 
Subjects,  Criininal  Law  and  Criminal  Procedure. 

George  P.  Costigan,  Jr.,  Professor  of  Law,  Northwestern  University 
Law  School.    Subject,  Wills  and  Administration. 

Floyd  R.  IMechem,  Professor  of  Law,  Chicago  University.  Subject, 
Damages.     (Co-author  with  Barry  Gilbert.) 

Barry  Gilbert,  Professor  of  Law,  University  of  Illinois.  Subject, 
Damages.     (Co-author  with  Floyd  R.  Mechem.) 

Thaddeus  D.  Kcnneson,  Professor  of  Law,  University  of  New  York. 
Subject,  Trusts. 

Charles  Thaddeus  Terry,  Professor  of  Law,  Columbia  University. 
Subject,  Contracts. 


Vlll  PREFACE 

Albert  M.  Kales,  Professor  of  Law,  Northwestern  University.  Sub- 
ject, Perso)is. 

Edwin  C.  Goddard,  Professor  of  Law,  University  of  Michigan.  Sub- 
ject, Agency. 

Howard  L.  Smith,  Professor  of  Law,  University  of  Wisconsin.  Sub- 
ject, Bills  and  Motes.    (Co-author  with  Wm.  Underhill  Moore.) 

W'm.  Underhill  Moore,  Professor  of  T^aw.  University  of  Wisconsin. 
Subject,  Bills  and  Notes.    (Co-author  with  Howard  L.  Smith.) 

Edward  S.  Thurston,  Professor  of  Law,  George  Washington  Univer- 
sity.   Subject,  Quasi  Contracts. 

Crawford  D.  Hening.  Professor  of  Law,  University  of  Pennsylvania. 
Subject,  Suretyship. 

Clarke  B.  Whittier,  Professor  of  Law,  University  of  Chicago.  Siib^ 
ject,  Pleading. 

Eugene  A.  Gilmore,  Professor  of  Law,  LTnivcrsity  of  Wisconsin. 
Subject,  Partnership. 

Ernst  Freund,  Professor  of  Law,  University  of  Chicago.  Subject, 
Administrative  Law. 

Frederick  Green,  Professor  of  Law,  University  of  Illinois.  Subject, 
Carriers. 

Ernest  G.  Lorenzen,  Professor  of  Law,  George  Washington  Univer- 
sity.   Subject,  Conflict  of  Lazvs. 

Frederic  C.  Woodward,  Dean  of  the  Stanford  University  Law  School. 
Subject,  Sales. 

James  Brown  Scott,  Professor  of  Law,  George  Washington  Univer- 
sity ;  formerly  Professor  of  Law,  Columbia  University,  New 
York  City.  Subjects,  International  Laiv;  General  Jurisprudence; 
Equity. 

James  Brown  Scott, 
Wasuington,  D.  C,  September,  1911.  General  Editor. 


Following  are  the  books  of  the  Series  now  published,  or  in  press: 

Adininistriitive  Law  Partnership 

Bills  and  Notes  Persona 

Carriers  Pleading 

Conflict  of  Laws  Suretyship 

Criminal  Law  Trusts 

Criminal  Procedure  Wills  and  Administration 

Damages 


PREFACE 


In  some  cases  the  statement  of  facts  has  been  wholly  omitted,  in  oth- 
ers abbreviated  by  omissions,  and  in  still  others  entirely  rewritten. 
With  few  exceptions  the  arguments  of  counsel  have  been  omitted. 
Many  of  the  opinions  have  been  abbreviated  by  omissions,  but  in  no 
instance  has  the  original  language  been  changed.  The  author  wishes 
to  acknowledge  his  great  indebtedness  to  James  Barr  Ames,  late  Dean 
of  the  Harvard  Law  School,  in  whose  death  all  legal  scholars  must 
feel  an  irreparable  loss. 

Thaddeus  D.  Kenneson. 
October  1,  1911. 

(ix)* 


TABLE  OF  CONTENTS 


CHAPTER  I 

The  Nature  and  Requisites  oe,  Tuusts 
Section  ^^^^ 

1.  The  Essentials  of  Every  Trust ^ 

2.  The  Creation  of  Trusts ■■; 

3.  The  Language  Necessary  to  the  Creation  of  a  Trust 1<' 

4.  Consideration    ;;^ 

5.  The  Subjeet-Matter   of  a  Trust j^t 

6.  The  Cestui  que  Trust * ' 

7.  The  Trustee    ^_ 

Notice  to  the  Cestui  que  Trust ;{ 


8. 

9.     The  Statute  of  Frauds 
10. 
11.     Revocahility    of  Ti 


99 


The  Statute  of  Wills    1? 


110 


CHAPTER  II 

The  Nature  of  the  Cestui  que  Trust's  Interest 

His  Claim  is  Purely  Equitable,  so  Long  as  the  Relation  of  Trustee 

and  Cestui  que  Trust  Exists HI 

Cestui  que  Trust  is  a  aaimant  Against  the  Trustee  Personally,  Not 

Against  the  Trust  Res 116 

I.     His   Claim   is  Enforceable   ^^'hereve^   the  Trustee   may    he. 

Without  Respect  to  the  Situs  of  the  Trust  Res 116 

II.     Cestui  que  Trust  has  No  Remedies,  Legal  or  Equitable,  Di- 
rectly Against  a  Stranger H') 

III.  A  Cestui  que  Trust  of  an  Obligation  Cannot  Discharge  the 

Obligor     13^ 

IV.  When  Cestui  que  Trusf  s  Equitable  Interest  may  be  Forfeited 

by  Inaction  or  loaches  of  the  Trustee  Causing  a  Forfeiture 

of  the  Trustee's  Legal  Interest 1^0 

V.     The  Owner  of  the  Legal  Title.  Not  of  the  Equitable  Interest 
—that  is,  the  Trustee,  Not  the  Cestui  que  Trust— can  Vote 

as  Owner  of  Tnist  Res l'*6 

VI.     The  Trustee.  Not  the  Cestui  que  Trust,  has  the  Burdens  of 

Ownership    I"*''' 


CHAPTER  III 

Transfer  of  the  Respective  Interests  of  Trustee  and  Cestui  que  Trust 

1.  By  Act  of  the  Party 1^ 

I.     By  Act  of  the  Trustee    1^^ 

II.     By  Act  of  the  Cestui  que  Trust l^-» 

2.  By    Death '-y] 

I.     Death  of  Trustee    -^'\ 

II.     Death  of  Cestui  que  Trust ^^b 

3.  By  Forfeiture    -|^ 

4.  By  Disseisin    ~  "^ 


Ken.Tr.  (xi) 


Xll  TABLE  OF   CONTENTS 

Section  Page 

5.  By  Marriage    22o 

I.     Maniase  of  the  Tiustoe    22;j 

II.     Marriage  of  the  Cestui  que  Trust — Rights  of  Wife 224 

III.     Marriage  of  Cestui  que  Trust — Itights  of  Hushaiul 227 

6.  By    Bankruptcy 2:;t'. 

I.     Bani<rui>t(y  of  the  Trustee    2:'.(J 

II.     BanUrui>tcy  of  the  Cestui  que  Trust 2:>7 

7.  By  Act  of  Creditors 260 

I.     Creditors  of  Trustee    260 

II.     Creditors  of  the  Cestui  que  Trust 309 


CHAPTER  IV 
Extinguishment  of  a  Trist .329 

CHAPTER  V 

The  Duties  of  a  Trustee 

1.  To  Convey  the  Trust  Res  as  the  Cestui  que  Tinist  may  Direct 335 

2.  Trustee's  Duty  to  Put  Cestui  que  Trust  in  Possession  of  the  Trust 

Estate    359 

3.  The  Trustee's  Duty  to  Give  Inforuiation  as  to  the  Trust  Estate....  369 

4.  The  Trustee's  Duties  of  Management  of  the  Trust  Esbite 376 

I.    The  Trustee's  Duty  to  Talie  the  Steps  Necessary  to  Secure 

the  Trust   Estate 376 

n.     The  Trustee's  Duty  to  Convert  into  INIoney  so  INIuch  of  the 

Trust  Estate  as  is  Not  in  a  Proi)er  State  of  Investment..  .380 

III.     The  Trustee's  Duty  to  Invest  the  Trust  Funds 417 

IT.     Consequences  of  Failure  of  the  Trustee  Properly  to  Invest 

the   Trust  Estate 454 

5.  The  Trustee's  Duty  as  to  the  Custody  of  the  Trust  Estate 463 

6.  Who  may  Execute  a  Trust 472 

CHAPTER  VI 

Constructive   Trusts    and    Equitable    Liens— Tracing    E*boperty 
Wrongfully  Appropriated  into  Its  Substitute 513 


CHAPTER  VII 

CONSTBUCTIVE   TBUSTS   AND  THE    STATUTE   OF   FRAUDS 577 

CHAPTER  VIII 
Trusts  and  the  Statute  of  Limitations 602 


TABLE     OF  CASES 

[CASES  CITED  IN  FOOTNOTES  ARE  INDICATED  BY   ITALICS.      WHERE  SMALL  CAPITALS 
ARE   USED,    THE   CASE    IS  REBEURED    TO   IN    THE  TEXT] 


Page 

Adams   v.  Taunton 472 

Aldrich  v.  Aldrich 16 

AJyer  v.  Scott 74 

Aiueiican   Sugar  Refining   Co.   v. 

Faucber    530 

Anonymous    9,  24,  203,  484 

Arguello,  In  re 426 

Ash  V.  Gallen 38 

Aston  V.  Smallman 207 

Attorney     General     v.     Duke     of 

Leeds   204 

Attorney  General  v.  Launderfield    91 


Baker  v.  Disbrow 461 

Bartlett  v.  Bartlett 206 

Barton  v.  Briscoe 239 

Bath  Sav.  Inst.  v.  Hatborn 97 

Bayley  v.  INlansell 483 

Beach  v.  Beach 114 

Beard  v.  Beard 64 

Belcbier,   Ex   parte 487 

Bennet  v.  Box 309 

Bill  V.  Cureton 110 

Bingham  v.  Goshen  Nat.  Bank...  158 

Blaucclfs  Estate,  In  re 433 

Bohle  V.  Hasselbroeb 522 

Bonesteel  v.  Bonesteel 539 

Bostock  V.  Floyer 489 

Boustead  v.  Cooper 406 

Bovey  v.  Smith 155,  514 

Boyle  V.  Boyle 84 

Bradley  v.   IluirUes 234 

Breton  v.  Wooll ven 66 

Breton's  IDstate,  In  re 66 

Brickenkamp  v.  Rees 485 

Bristow  V.  Pegge 120 

Brogden,  In  re 384 

Brook  V.  Brook 92 

Brown  v.  Gellatly 404 

Brown  v.  II Ujijs 21 

Brown  v.  Pierce 274 

Bullock,    In   re 256 

Burcbard  v.   Hubbard 176 

Burchett  v.  Durdant 39 

Burgess  v.  Wheate 210 

Burt  V.  Bowles 577 

Busk  V.  Aldam 353 

Ken.Tb.  (xiii) 


Page 

Callard  v.  Oillard 32 

Campbell  v'.   Doarliorn 591 

Campbell  v.   Drake 524 

Caney  v.  Bond 383 

Cann  v.  Cann 425 

Carpenter  v.  Carpenter 4117 

Carritt   v.    Real   &    I'ersonal   Ad- 
vance Co 172 

Catltorpe,   Ex   parte 431 

C^arues  v.   Irving 113 

Chaplin  v.  Chaplin 225 

Cbay tor.  In  re 405 

Christy  v.  Courtenay 326 

Chudleigh's   Case 205 

City  of  Baltimore  v.  Stirling 151 

Clack  V.  Holland 306 

Claflin  V.  Clatiin 344 

Claussen  v.  La  I'ranz 229 

Clayton  v.  Rose 142 

Clopton  V.  Gbolson 285 

Clough  V.  Clough .53 

Colburn  v.   Broughton 220 

Colt  V.  Colt 224 

Con  tee  v.  Liions 11!) 

Cook  V.  Gregson 324 

Cooke  V.  Crawford 479 

Cooper  V.  Day 383 

Cooper-Dean  v.  Stevens 82 

Corn  well  v.  Deck 464 

Cotton  V.  Cotton 134 

Cox  V.  Walker   119 

Cox  V.  Williams  36 1 

Cox's  Creditors,  Case  of 323 

Creed  v.  Colville 312 

C reveling  v.   Fritts 155 

Cross  V.    Sprigg 42 

Curran  v.   Green 9:i 


Dailcy  v.  New  Haven 

Davis,  Appeal  of 

Davis  V.  Charles  River  Branch  R. 

Co 

Daw  V.  Newborough 

Da  irkins  v.  Penrhyn 

Dean,  In  re 

Dearie  v.   Hall 

I  )enike  v,  Harris 


90 
443 


122 

39 

336 

82 
185 
42S 


XIT 


TABLE   OF   CASES 


Pag« 

Dihbs  V.  Goren lOS 

Dickerson   v.   Mays 14 

Dillam  v.  Fraiii L'l'.> 

Dilrow   V.    Bono 7 

Dimes  v.  Scott 400 

Dixon  V.  Calilwt'll    i'>i't4 

Dixon   V.   llan-ison     -'iN 

Dixon  V.  Hill    I'tl 

Dodds   V.    Hills KiS 

Doe  ex  deni.  Bristow  v.  I'l'.ti^e.  .  . .    120 

Doily   V.    Sherratt 473 

Dowd  V.  Tucker i;> 

Dowse  V.  Gorton 302 

Drovers'  &  Mechanics'   Xal.  liank 

V.    Roller 571 

Dubost.  Kx  parte 39 

Dnoher   Watch   Case   Mfg.   Co.    v. 

Dan-herty    Idr, 

Dundas  v.  Dutens 327 

Dj'son    V.    Simmons 207 

Earl  of  Worcester  v.   Finch 21*.> 

lldwards  v.  Edwards 413 

Edwards   v.  Jones .")!) 

Eldrid.ixe  v.   'J'urncr 1S2 

Elford.   In  ro 230 

Ellison    V.    Ellison 47 

Evangelical  Synod  of  North  Amer- 
ica V.  Schoeneich n07 

Everett    v.    Drew 2S1 

Fairchild  v.  Uasdall 584 

Fant  V.   Dnnhar 520 

Fearn  v.   ^klayers 288 

Fclch  V.  Hooper 11.^ 

Ferrars  v.  Cherry .■')13 

Festorazzi  v.  St.  .Toseitlfs  Catholic 

(Mnirch   of   Mobile S7 

Field  V.  Field 470 

Fletcher  v.  Fletcher (ii) 

Fletcher  r.  Fletcher 77 

Ford  V.  Batley 340 

Foster  v.  Cockerell 188 

Frampton  v.  Gerrard 3:5 

Frankentield,  Aj^peal  of 420 

Freedman's  Savings   &  Trust  Co. 

V.    Earle 313 

Gailand.    Ex   parte 292 

(Jarnish  V.  Went  worth 21 

<;ell    V.   Vermediin 202 

Gennys,   Ex  parte 236 

Gilmer's     Legatees     r.     (lilii>(r'.-< 

Ex'rs    79 

Good  V.  Lickorish 250 

Goodson    V.   Ellisson 330 

(iorton,  In  re 302 

Goshen  Nat.  Bank  v.  Bingham...  158 

Gosling  V.  Gosling 342 

Gott  V.   Nairne 79 

Graves   v.    Dolphin 248 


Page 

(Jraylmni    v.   Clarkson 395 

(Jutmau  V.  Buckler 470 

Ilaigh  V.  Kaye 581 

Hall,    Matter   of 445 

Ilallelt's  Estate,  In  re 557 

Harden  v.  Parsons 417 

Harding   v.  Glyn 20 

Hardin's  E.v'rs  r.  Ilarrin<i1on .  .  .  .  157 

Harney  v.  First  Xat.  Bank 278 

I  larris   v.  Ga  ines 276 

I larrison  v.  Forth 155 

Harvard  Collcpe  v.  A)iiori/ 445 

Ilatton  v.  May 348 

Hayes  v.  Oatley 352 

Head  v.  Lord  Teynham 341 

Hemming  v.   Neil 197,  255 

Hext   V.    rorcher 380 

Ilix  V.  Attorney  (Jencral 203 

1  lolmes  V.   Dring 419 

llolroiid    r.    ifarshatl 270 

Ilopgood  V.  Parkin 490 

Hornsliy  v.   r.ee 232 

Ilorsley  v.  Fawcett 130 

Iloskin's  Trusts.  In  re 353 

Howe  V.  Earl  of  Dartmouth 389 

Hughes   V.   Empsoii 393 

Hulme  V.   Ilulnie 484 

Humphreys  v.  iUiller 537 

■fade's  Appeal 433 

.lackson  v.  Ilobhouse 237 

.Tackson  v.   Stevens 115 

Jacob  V.  Lucas 376 

.letTerys  v.  Jefferys 47 

Jenkins  Century  Cases,  244.  Case 

XXX,    1580 36 

Jewell  V.  Barnes"  Adm'r 74 

Johnson,   In  re 296 

Jones  V.  .Tones 188 

Jones  V.  Locke    42 

Jones  V.  Morley   22 

Jones  V.  Powles    161 

Josselyn  v.  Josselyn 341 

Kane  v.  Bloodgood 602 

King  V.  Boys    94 

King    V.     Sir     John     Daccombe's 

l.:x-rs    208 

King  V.  Talbot   437 

King's    Attorney     v.     Sir    (Jeiu'ge 

Sands    208 

King  &  Co.   v.   Hill 124 

Kiiunonth  v.   Brigham 390 

Kirtland   v.   Kirtland 543 

Knatchbull  v.  Hallett 557 

Lane   v.    Dighton 9 

Lashmar,   In    re 358 

Law's  Estate.   In   re 421 

Ledbetter  v.  Anderson 321 


TABLE   OP   CASES 


XV 


Page 

r^ee   v.   Wilson 371 

Lichfield   v.    Baker 395 

lAoyd  r.  Lloyd 79 

Ivord  C'ompton's  Case 219 

Lord  Grey  v.  Colvile .".11 

luring  V.  Ilildreth 9(5 

Loud  V.   Winchester 370 

Low  V.   Bouverie 369 

Lowther  v.  Carlton "tl;; 

Lucan,  III  re 74 

McCann   v.    Randall 119 

McKnight  v.   Mt-Iviiiglit 4(56 

Martin  v.  Funk 5 

Mason  v.  Mason 140 

Massey  v.   Fisher 564 

Massie  v.   Watts 116 

Mast  &  Co.  V.  Henry 541 

Matthews  v.  Thompson 332 

Mayer  v.   Mordecai 137 

Megod's    Case Ill 

Mercantile  Trust  Co.  v.  St.  Louis 

&  S.  F.  R.  Co 561 

Meux  V.   Bell 188 

Mews  V.  Mews 65 

Miller  v.  Lerch Ill 

Mitchell's  Case 147 

Moody  V.  Penfold 358 

Moore  v.  Jervis    179 

Moore  v.  Metropolitan  Nat.  Bank  169 

Morgan  v.  Kansas  Pac.  R.  Co 128 

Morgan  v.  JNIorgan    227 

Morice  v.  Bishop  of  Durham 77 

Morley   v.   Morley 463 

Morris  v.  Murphey  &  Co 142 

Morris  v.  Wallace    451 

Mortimer  v.  Ireland 478 

Morton,  In  re 482 

Moyer  v.  Ilinman 270 

Mussett  V.   Bingle 79 

Xash  V.  Preston 223 

Neil.   In  re 197,  2.55 

Nevil  V.  Saunders 36 

Newton  v.  Porter 526 

Nichols  f.   Eaton 260 

Nims  V.  Ford 125 

Noel  V.  Jevon 224 

Norbury  v.  Norbury 431 

North  V.   Champernoon 185 

North  Shore  Staten  Island  Ferry  , 

Co..  In  re 146 

Norton  v.  Phelps 290 

Norwegian  Charcoal  Iron  Co.,  In 

re    147 

O'Brien  v.  Jackson 282 

Offly  V.  Warde 134 

Ogle.  Ex  parte 387 

Oliver.  In  re 410 

O'Malley  v.  Gerth 150 


Page 

Onslow  V.  Wallis 3-55 

Osborne  to  Rowlctt 480 

Ownes  V.   Ownes 91 

Pale   V.    Michell 231 

Parker  v.  Johnson 487 

Parrott,  In  re 93 

Par.sons,  Ex  parte 4S7 

Partington,  In  re 499 

Partington  v.  Alltni 499 

Pawlett  V.  Attorney  General 216 

Pearson  v.  Amicable  Assur.  Office     .57 

Pearson  v.  Lane ''iio 

People  V.  Townsend 151 

Phillips  V.  Phillips 18.  19.". 

Pilling,   In   re 387 

Pinkett  v.  Wright 179 

Porter   v.    Woodruff 43.3 

Postlethwaite,  In  re 373 

Postlethwaite  v.  Rickman 373 

Prat  V.  Colt 310 

President    and    Fellows    of    Yale 

College    90 

Priest  V.   Uppleby 432 

Putnam  v.  Story 188 

Pye,    Ex  parte 39 

Reichenbach   v.   Quin 86 

Rice  V.  Burnett 35 

Rickman,  In  re 373 

Robes   y.    Rent 154 

Robinson  v.   Robinson 454 

Rogers  V.  Eagle  Fire  Ins.  Co.  of 

New    York 24 

Rose  V.   Hatch 1 

Ross  V.  Duncan 88 

Salmon.    In   re 432 

Sambach  v.  Dalston 38 

Saunders  v.  Dehew 158 

Scalcts   V.   Maude 42 

Schultz's    Appeal 107 

Scott   V.   Seholcy 323 

Selby   V.    Alston 329 

Shaler  v.  Trowbridge 514 

Sharington  v.    Strotton 25 

Sharpe  v.  Earl  of  Scarboroufih. . .  324 

Shearman   v.    Robinson 296 

Sir  Charles  Oox's  Creditors,  Case 

of    323 

Slanning   v.    Style 63 

Smith,    Ex  parte 3S7 

Smith  V.  Smith     2t54 

Smith  V.  Snow    •■'«.''7 

Smith  &  Son  v.  Towers 249 

Spaulding  v.  Kendrick 1S:1 

Speakman  v.  Tatem •">'^5 

Speight  V.  Gaunt 49 1 

Stearns  r.  Palmer 1 19 

Stephens  Case     2.". 

Stephens  v.    Baily 20.3 


XVI 


TABLE   OP  CASES 


Page 

Stcn-art,    Matter   of 451 

Stith    V.   Lookabill 2G0,  2G2 

Stokes  V.  Cheek 347 

Stone  V.  Ilackett 50 

Straiibenzee,   In   re 400 

Strickland  v.   Symons 28!) 

Swale  V.   Swale 474 

Symson  v.  Turner 38 

Taylor  v.   Haysarth 213 

Taylor  v.  linker's    Ex'rs 338 

Taylor  v.  Taylor 362 

Taylor  v.  Yale 23 

Tboniassen  v.  Van  AVyngaarden.. .  135 

Thompson  v.  Tbompson 332 

Tidd  V.  Lister 359 

Tierney  v.  Wood 102 

Tlllott,  In  re 371 

Titley  v.  Wolstenholme 481 

Tonrville  v.  Naish 156 

Truesdell  v.  P.ourke 550 

'l"'u(lor  V.  Saniyne 231 

Tullett  V.   Armstrong 241 

Tynan  v.   Warren 105 

Tyrrel's  Case 37 

Uruguay    Cent.   &   n.   R.    Co.   of 
Monte  Video,  In  re 123 

Varner's  Appeal 95 

Voyle  V.  Hughes 49 

Wadd  V.  Hazelton 61 

Wadsworth,  In  re 473 

Walker  v.  Crews 54 


Page 

^Yalkcr  v.  Symonds 41  s 

Want  V.  Cam  plan 43:! 

Ward  V.   Kitchen 44S 

Warner  v.   Bates 1 

Watkins  v.   Ifdlnion 118 

Watson  V.  Thompson 517 

Watts  V.  Ball 225 

AVatts  V.  Turner 335 

Wchb  V.  Jonas 432 

West  V.   Wythes 366 

Western  R.  Co.  v.  Nolan 126 

Weston  V.  Dan  vers 202 

Wheatley  v.  Purr 41 

Wheeler  v.  Kirtland 543 

White   V.   White 484 

White  V.   Wilson 277 

Wigi,'  V.  Wif,'g 156 

Wilkins  v.  Sibley 199 

Willianis  T.  Jn;icrsoll 188 

Wilmot  V.   Pike 190 

Wilson  V.   Oliver 410 

Wiltshire   v.   Rabbits 190 

Woodman  v.  Mo!  rcl 9 

Woodruff  V.   Woodruff 95 

Woods,  In  re 405 

WorraU  v.  Harford 289 

Wright  V.  Bates 11 

Wytham  v.  Waterhouse 231 

Wythes,  In  re 366 

Year  Book  15  Hen.  VII,  fol.  12,  pi. 

23    119 

Year  Book  'il  Hen.   VIII,  foi.  8, 

pi.    22 22 

Zimmerman  v.  Kinkle 132 


CASES  ON  THE  LAW  OF 
TRUSTS. 


CHAPTER  I. 
THE  NATURE  AND  REQUISITES  OF  TRUSTS. 


SECTION  1.— THE  ESSENTIALS  OF  EVERY  TRUST. 


To  constitute  a  valid  trust  three  thing's  are  necessary,  viz. :  A  trus- 
tee,^knother  person,  the  beneficiary/ iand  property,  and  without  each 
of  the  three  a  trust  cannot  exist.— Earl,  J.,  in  ROSE  v.  HATCH 
(1891)  125  N.  Y.  437,  431,  432,  26  N.  E.  467. 


SECTION  2.— THE  CREATION  OF  TRUSTS.* 


WARNER  V.  BATES. 

(Supreme  Judicial  Court  of  Massachusetts.  1867.     98  ^Nlass.  274.) 

Bill  in  equity  filed  September  4,  1865,  by  a  son  of  Sarah  I.  Bates, 
deceased,  seeking  a  decree  to  enforce  performance  by  the  respondent, 
his  stepfather,  of  a  trust  created  by  her  will. 

1  A  trust  is  what  Dean  Langdell  in  1  Harvard  Law  Review,  59,  65-70.  has 
described  as  an  "equitable  personal  obligation."  The  creation  of  every  trust 
is  the  creation  of  an  obligation  and  a  right.  The  obligation  is  imposed  upon 
the  trustee  in  favor  of  the  cestui  que  trust  in  respect  of  the  trust  res.  The 
right  is  vested  in  the  cestui  (pie  trust  and  enables  him  to  enforce  the  obliga- 
tion so  imposed  upon  the  trustee.  Every  ('(piitable  obligation  like  every  legal 
obligation  is  created  by  the  state  and  enforced  b.v  its  judicial  tribunals.  It 
may  be  said  with  sufficient  accuracy  that  every  trust  is  created  by  etpiity  it- 
self and  enforced  by  a  court  of  equity.  In  creating  some  trusts  the  object  of 
equity  seems  to  be  to  effect  the  actual  or  presumed  intention  of  the  parties. 
In  creating  other  trusts  the  object  of  equity  seems  to  be  to  effect  what  it  con 
siders  justice  without  regard  to  the  intention  of  the  parties.  The  cases  un 
der  this  subdivision  are  intended  to  enforce  this  distinction. 
Ken.Tu.— 1 


2  THE   NATURE   AND    REQUISITES   OF   TRUSTS.  (CIl.  1 

The  bill  alleged  that  on  December  12,  1833,  the  deceased,  a  widow, 
having  a  danghter  and  two  sons,  of  whom  complainant  was  one,  and 
owning  property  to  the  amount  of  more  than  one  hundred  thousand 
dollars,  was  married  to  respondent  and  her  property  secured  by  a  set- 
tlement from  any  marital  right  or  claim  which  otherwise  he  might 
have  thereto:  that  thereafter,  until  her  death  on  May  17,  1859,  she 
and  respondent,  with  these  children,  and  with  another  daughter,  the 
issue  of  this  marriage,  lived  together  as  one  family  in  her  house, 
where  she  and  her  children  had  formerly  resided ;  that  the  expenses 
of  maintaining  the  family  in  a  liberal  style  suitable  to  their  circum- 
stances were  defrayed  chieHy  from  the  income  of  her  property,  the 
respondent  having  but  little  property  of  his  own,  but  acting  as  the 
head  of  the  family,  having  the  general  care  thereof,  and  managing 
the  funds  for  its  maintenance ;  and  that  she  left  a  will  of  which  she 
named  the  respondent  sole  executor,  and  an  estate  of  which  there 
was  a  large  residue  after  paying  her  debts. 

The  will  was  set  forth  in  the  bill  and  disposed  of  the  estate  during 
respondent's  life  as  follows: 

"I  give  and  bequeath  unto  my  husband,  George  Bates  aforesaid, 
the  use,  income  and  improvement  of  all  the  estate,  real,  personal  and 
mixed,  of  which  I  shall  die  seized  and  possessed,  for  and  during 
the  term  of  his  natural  life,  in  the  full  confidence  that  upon  my  de- 
cease he  will,  as  he  has  heretofore  done,  continue  to  give  and  afford 
my  children''  [enumerating  them],  "such  protection,  comfort  and 
support  as  they  or  either  of  them  may  stand  in  need  of." 

Upon  the  respondent's  death,  it  gave  one-half  of  the  estate  to  com- 
plainant and  his  brother;  and  the  other  half  to  three  persons  upon 
certain  trusts  for  the  two  daughters. 

The  bill  further  alleged  that,  after  the  death  of  testatrix,  respond- 
ent took  possession  of  the  estate ;  that  complainant  with  his  brother 
and  unmarried  sister  continued  to  reside  in  the  house  as  before,  and 
to  receive  from  the  respondent,  without  payment  or  charge  therefor, 
the  benefits  and  privileges  which  children  of  their  condition  usually 
receive  in  their  own  families,  until,  on  or  about  April  1,  1863,  re- 
spondent, in  complainant's  absence,  removed  complainant's  effects 
from  the  house,  and  ever  since  forbade  and  prevented  him  from  com- 
ing into  it,  and  neglected  and  refused  to  give  him  the  said  benefits 
and  privileges  which  he  had  before  enjoyed,  or  make  him  any  reason- 
able compensation  instead  thereof.  The  bill  then  alleged  his  means 
of  support  and  that  they  were  wholly  inadequate  thereto;  that  he 
stood  in  need  of  such  support  as  he  had  been  accustomed  to  receive 
in  his  -mother's  lifetime;  and  that  the  respondent,  though  well  aware 
thereof  and  often  requested  therefor,  refused  to  give  it.  Respondent 
filed  a  general  demurrer  and  the  case  was  reserved  by  Chapman,  J., 
for  the  consideration  of  the  full  court. 

BiGRLOW,  C.  J.  We  see  no  sufficient  ground  for  calling  in  ques- 
tion the  wisdom  or  policy  of  the  rule  of  construction  uniformly  ap- 


Sec.  2)  THE   CREATION   OF   TRUSTS.  3 

plied  to  wills  in  the  courts  in  En<;laiul  and  in  most  of  the  United 
States,  that  words  of  entreaty,  recommendation  or  wish,  addressed  by 
a  testator  to  a  devisee  or  legatee,  will  make  him  a  trustee  for  the 
person  or  persons  in  whose  favor  such  expressions  are  used,  provid- 
ed testator  has  pointed  out  with  clearness  and  certainty  the  objects 
of  the  trust,  and  the  subject  matter  on  which  it  is  to  attach  or  from 
which  it  is  to  arise  and  be  administered.  The  criticisms  which  have 
been  sometimes  applied  to  this  rule  by  text  writers  and  in  judicial 
opinions  will  be  found  to  rest  mainly  on  its  applications  in  particu- 
lar cases,  and  not  to  involve  a  doubt  of  the  correctness  of  the  rule  it- 
self as  a  sound  principle  of  construction.  Indeed,  we  cannot  under- 
stand the  force  or  validity  of  the  objections  urged  against  it,  if  care 
is  taken  to  keep  it  in  subordination  to  the  primary  and  cardinal  rule 
that  the  intent  of  the  testator  is  to  govern,  and  to  apply  it  only  where 
the  creation  of  a  trust  will  clearly  subserve  that  intent.  It  may  some- 
times be  difficult  to  gather  that  intent,  and  there  is  always  a  tendency 
to  construe  words  as  obligatory  in  furtherance  of  a  result  which  ac- 
cords with  a  plain  moral  duty  on  the  part  of  a  devisee  or  legatee,  and 
with  what  it  may  be  supposed  the  testator  would  do  if  he  could  con- 
trol his  action.  But  difficulties  of  this  nature,  which  are  inherent 
in  the  subject  matter,  can  always  be  readily  overcome  by  bearing  in 
mind  and  rigidly  applying  in  all  such  cases  the  test,  that  to  create  a 
trust  it  must  clearly  appear  that  the  testator  intended  to  govern  and 
control  the  conduct  of  the  party  to  whom  the  language  of  the  will 
is  addressed,  and  did  not  design  it  as  an  expression  or  indication 
of  that  which  the  testator  thought  would  be  a  reasonable  exercise  of 
the  discretion  which  he  intended  to  repose  in  the  legatee  or  devisee. 
If  the  objects  of  the  supposed  trust  are  certain  and  definite ;  if  the 
property  to  which  it  is  to  attach  is  clearly  pointed  out;  if  tlie 
relations  and  situation  of  the  testator  and  the  supposed  cestuis  que 
trust  are  such  as  to  indicate  a  strong  intent  and  motive  on  the  part 
of  the  testator  in  making  them  partakers  of  his  bounty;  and  above 
all,  if  the  recommendatory  or  precatory  clause  is  so  expressed  as  to 
warrant  the  inference  that  it  was  designed  to  be  peremptory  on  the 
donee;  the  just  and  reasonable  interpretation  is,  that  a  trust  is  creat- 
ed, which  is  obligatory  and  can  be  enforced  in  equity  as  against  the 
trustee  by  those  in  whose  behalf  the  beneficial  use  of  the  gift  was  in- 
tended.    [Authorities  cited.] 

Turning  now  to  the  clause  of  the  will  wdiich  is  the  subject  of  the 
present  controversy,  it  seems  to  us  that  it  does  not  leave  the  sup- 
port of  the  children  of  the  testatrix  to  the  discretion  of  the  re- 
spondent, to  be  afforded  or  withheld  at  his  pleasure,  but  that  the 
devise  to  him  was  made  on  the  trust  that  he  should  furnish  such 
support  so  long  as  he  lived  and  received  the  income  of  her  property. 
The  objects  of  the  trust  are  distinctly  named.  The  nature  and  ex- 
tent of  the  trust  is  clearly  stated  and  defined.  It  was  such  a  sum  of 
money  as  might   be  necessary  to   the  comfort  and   support  of   each 


i  THE   NATUUE   AND   REQUISITES   OF   TRUSTS.  (Cll.  1 

one  of  the  children  of  the  testatrix.  Nor  is  the  amount  of  the  hcne- 
ficial  interest  left  indefinite  or  without  a  standard  hy  which  it  can  be 
measured.  It  is  to  be  such  comfort  and  support  "as  they  or  either 
of  them  may  stand  in  need  of."  The  extent  of  such  a  beneficial  inter- 
est can  be  ascertained  and  enforced  by  suitable  proceedings  either 
at  law  or  in  equity.  Thorp  v.  Owen,  2  Hare,  607,  GIO.  Sanderson's 
Trust,  3  Kay  &  Johns.  497-507.  Farwell  v.  Jacobs,  4  Mass.  634.  In 
the  last  case,  it  was  held  by  this  court  that  an  action  at  law  would 
lie  against  an  executor  who  w'as  directed  by  the  testator  to  furnish 
support  to  a  person  in  whose  behalf  the  suit  was  brought.  But  in 
the  present  case,  the  phrase  "comfort  and  support"  is  made  more 
definite  and  certain  by  an  express  reference  in  the  terms  of  the  gift 
to  the  continuance  of  a  previously  existing  state  of  things  in  the  fam- 
ily of  the  testatrix  and  her  husband,  in  which  the  children  of  the 
former  had  resided  and  received  support  during  her  life.  Nor  is 
it  to  be  overlooked  that  the  language  addressed  to  the  respondent  in 
the  clause  of  the  will  under  consideration  is  not  confined  to  words  ex- 
pressive of  a  wish  or  recommendation  only,  but  the  property  is  given 
to  the  respondent  "in  the  full  confidence"  that  he  will  afford  to  the 
children  of  the  testatrix  adequate  support.  Although  these  words 
would  not  necessarily  create  a  trust  in  a  case  where  a  different  in- 
tent is  clearly  indicated,  they  are  nevertheless  strong  and  significant 
to  show  that  such  was  the  purpose  of  the  testatrix,  wdien  taken  in 
connection  with  other  facts  and  circumstances  which  have  a  like  tend- 
ency. Wright  V.  Atkins,  17  Ves.  255,  258,  261.  Meredith  v.  Hen- 
eage,  1  Sim.  542,  556. 

We  think  it  also  worthy  of  remark  in  that  connection  that  it  is  not 
left  to  the  respondent  to  determine  the  amount  or  extent  of  the 
support  which  he  was  to  afford  to  the  children.  The  gift  to  him  is 
not  in  confidence  that  he  will  give  them  such  support  as  he  may  think 
proper,  or  as  in  his  judgment  they  may  need,  but  to  such  an  extent 
as  they  shall  in  fact  "stand  in  need  of."  It  was  to  be  measured,  not 
by  the  exercise  of  his  discretion  in  the  matter,  but  by  the  actual 
wants  of  the  children. 

The  view  which  we  have  taken  of  the  construction  of  the  clause 
of  the  will  by  which  the  property  of  the  testatrix  is  given  to  the  re- 
spondent for  his  life  is  greatly  strengthened  when  w-e  take  into  con- 
sideration the  relations  of  all  the  parties  toward  each  other,  the  na- 
ture and  condition  of  the  property  which  was  the  subject  of  the  gift, 
and  the  ultimate  disposition  which  was  made  of  it  by  the  will  after 
the  death  of  the  resi)ondent.  The  objects  for  whose  comfort  and 
support  the  testatrix  was  aiming  to  provide  were  her  own  children, 
three  of  them  by  a  former  husband,  and  one  by  the  respondent. 
They  had  always  lived  in  the  family  of  the  testatrix  and  her  husband, 
and  received  all  needful  support  as  members  thereof;  they  had  no 
property  of  their  own  ;  and,  if  they  were  deprived  after  her  death 
during  the   life   of   respondent   of   all   benefit   of   the   estate   of   their 


Sec.  2)  THE   CRKATION   OF   TUUSTS.  5 

mother,  from  which  the  support  of  the  family  had  been  chiefly  drawn 
during  her  Ufe,  they  would  not  only  lose  the  support  which  they  had 
previously  enjoyed,  but  would  be  in  danger  of  being  left  without  ade- 
quate means  of  support,  and  without  habits  or  abilities  which  would 
enable  them  to  obtain  a  livelihood.  To  these  children  she  gives  the 
entire  beneficial  interest  in  her  whole  estate  after  the  death  of  her 
husband.  Is  it  reasonable  to  suppose  that  under  such  circumstan- 
ces she  intended  that  these  children,  who  were  so  clearly  the  chief 
objects  of  her  bounty,  should  be  left  during  the  lifetime  of  her  hus- 
band without  any  such  right  or  interest  in  her  estate  as  would  en- 
able them  to  enforce  a  claim  for  support  in  the  event  that,  from  al- 
ienation of  feeling,  imbecility  of  mind,  or  any  other  like  cause,  the 
respondent  should  be  unwilling  or  unable  to  comply  with  her  wish 
or  to  exercise  a  discretion  in  their  behalf? 

It  is  suggested  that  in  other  clauses  of  the  will,  in  which  she  cre- 
ates a  trust  in  favor  of  her  daughters  for  their  respective  shares  of 
her  estate,  of  which  they  are  to  have  the  entire  income  after  the 
death  of  her  husband,  she  does  not  use  words  of  entreaty,  request  and 
recommendation,  but  apt  and  technical  words  by  which  to  establish  a 
trust  in  their  behalf.  But  we  think  this  suggestion  is  not  entitled  to 
much  weight.  She  might  well  express  herself  in  a  different  language 
when  addressing  her  husband  from  that  which  she  would  use  toward 
strangers,  and  at  the  same  time  intend  a  similar  result.  Words  of 
confidence,  entreaty  and  recommendation  w^ere  natural  and  appro- 
priate when  used  to  express  the  will  of  a  testatrix  who  intended  to 
direct  and  control  the  conduct  of  her  husband  in  a  matter  in  which 
the  right  to  give  directions  and  to  control  belonged  to  her.  In  such 
a  case,  the  words  used  by  Lord  Loughborough  are  applicable :  "Where 
a  person  recommends  to  another  who  is  independent  of  him,  there  is 
nothing  imperative;  but  if  he  recommends  that  to  be  done  by  a  per- 
son whom  he  has  a  right  to  order  to  do  it,  the  mode  is  only  civility." 
Malim  V.  Keighley,  2  Ves.  Jr.  333,  529. 

After  a  careful  consideration  of  the  case,  we  are  of  opinion  that 
the  will  creates  a  trust  in  favor  of  the  complainant,  which  it  is  our 
duty,  sitting  as  a  court  of  equity,  to  enforce.     Decree  accordingly. 


MARTIN  V.  FUNK,  Adm'r,  and  Others.       -'^^-1    A  g^^ 
(Court  of  Appeals  of  New  York,  1878.     75  X.  Y.  i;;4.  31  Am.  Rep.  446.)^^^ 

The    defendants    appeal    from    a    General    Term    judgment   of   the     "' 
Supreme  Court  which  affirmed  a  Special  Term  judgment  for  plaintiff. 

Church,  C.  J.^  The  intestate  Mrs.  Boone,  in  1SG6,  deposited  in 
the  Citizens'  Savings  Bank  $500,  declaring  at  the  time  that  she  want- 
ed the  account  to  be  in  trust  for  Lillie  Willard,  who  is  the  plaintiff. 

1  Part  of  the  opinion  is  omitted. 


6  THE  NATURE  AND   REQUISITES  OF   TRUSTS.  (Ch.  1 

The  account  was  so  entered,  and  a  pass-book  delivered  to  the  intes- 
tate, which  contained  these  entries:  "The  Citizens'  Savings  Bank  in 
account  with  Susan  Boone,  in  trust  for  Lillic  W'illard.  18G6,  IMarch 
23.     $500." 

A  deposit  of  the  same  amount,  and  in  the  same  manner,  was  made 
in  trust  for  Kate  W'illard,  now  Mrs.  Brown.  This  money  belonged  to 
the  intestate  at  the  time  of  the  deposits.  The  plaintiff  and  j\Irs. 
Brown  are  sisters,  and  were  at  the  time,  of  the  age  respectively  of 
eighteen  and  twenty,  and  were  distant  relatives  of  the  intestate,  their 
mother  being  a  second  cousin.  The  intestate  retained  possession 
of  the  pass-books  until  her  death  in  1875,  and  the  plaintiff  and  her 
sister  were  ignorant  of  the  deposits  until  after  that  event.  The 
money  remained  in  the  bank  with  its  accumulated  interest  until  the 
death  of  the  intestate  except  that  she  drew  out  one  year's  interest. 
Mrs.  Brown  assigned  to  the  plaintiff  her  interest  in  the  deposit  pur- 
porting to  have  been  made  for  her  benefit,  and  the  action  is  brought 
against  the  administrator  of  the  intestate  and  the  bank  for  the  deliv- 
ery of  the  pass-books  and  the  recovery  of  the  money.  *  *  *  It  is 
clear  that  a  person  sui  juris,  acting  freely  and  with  full  knowledge 
has  the  power  to  make  a  voluntary  gift  of  the  whole  or  any  part  of 
his  property,  while  it  is  well  settled  that  a  mere  intention,  whether  ex- 
pressed or  not  is  not  sutlicient.  and  a  voluntary  promise  to  make  a  gift 
is  nuduin  pactum,  and  of  no  binding  force.  (Kekewich  v.  Manning, 
50  Eng.  Ch.  175,  and  cases  cited.)  The  act  constituting  the  transfer 
must  be  consummated,  and  not  remain  incomplete,  or  rest  in  mere  in- 
tention, and  this  is  the  rule  whether  the  gift  is  by  delivery  only,  or 
by  the  creation  of  a  trust  in  a  third  person,  or  in  creating  the  donor 
himself  a  trustee.  Enough  must  be  done  to  pass  the  title,  although 
when  a  trust  is  declared,  whether  in  a  third  person  or  the  donor,  it 
is  not  essential  that  the  property  should  be  actually  possessed  by  the 
cestui  que  trust,  nor  is  it  even  essential  that  the  latter  should  be  in- 
formed of  the  trust.     *     *     * 

The  contention  of  the  defendant  is  that  the  transaction  did  not 
transfer  the  property  and  that  there  was  no  sufficient  declaration  of 
trust  and  that  by  retaining  the  pass-books  the  intestate  never  part- 
ed with  the  control  of  the  property.  If  what  she  did  was  sufficient 
to  constitute  herself  a  trustee,  it  must  follow  that  whatever  control 
she  retained  would  be  exercised  as  trustee,  and  the  right  to  exercise 
it  would  not  be  necessarily  inconsistent  with  the  completeness  of  the 
trust.     *     *     * 

No  particular  form  of  words  is  necessary  to  constitute  a  trust, 
while  the  act  or  words  relied  upon  nmst  be  unequivocal,  implying  that 
the  person  holds  the  property  as  trustee  for  another. 

Let  us  now  consider  the  case  in  hand.  In  form  at  least  the  title 
to  the  money  was  changed  from  the  intestate  individually,  to  her  as 
trustee.  She  stated  to  the  bank  that  she  desired  the  money  to  be  thus 
deposited.     It  was  so  done  by  her  direction,  and  she  took  a  voucher 


Sec.  2)  THE   CREATION   OF   TRUSTS.  7 

to  herself  in  trust  for  the  plaintiff.  Upon  these  facts  what  other  in- 
tent can  be  imputed  to  the  intestate  than  such  as  her  acts  and  decla- 
rations imported,  and  did  they  not  import  a  trust?  There  was  no 
contingeng-cy  or  uncertainty  in  the  circumstances,  and  I  am  unable  to 
see  wherein  it  was  incomplete.  The  money  was  deposited  unqualified- 
ly and  absolutely  in  trust,  and  the  intestate  was  the  trustee.  It  would 
scarcely  have  been  stronger,  if  she  had  written  in  the  pass-book,  "I 
hereby  declare  that  I  have  deposited  this  money  for  the  benefit  of  the 
plaintiff  and  I  hold  the  same  as  trustee  for  her." 

This  would  have  been  a  plain  declaration  of  trust,  and  accompanied 
as  it  was  with  a  formal  transfer  to  herself  in  the  capacity  of  trustee 
would  have  been  deemed  sufficient  under  the  most  rigid  rules  to  be 
found  in  any  of  the  authorities.  It  seems  to  me  that  this  was  the  nec- 
essary legal  intendment  of  the  transaction,  and  that  it  was  sufficient 
to  pass  the  title.  The  retention  of  the  pass-book  was  not  necessarily 
inconsistent  with  this  construction.  She  must  be  deemed  to  have  re- 
tained it  as  trustee.  The  book  was  not  the  property,  but  only  the 
voucher  for  the  property  which  after  the  deposit  consisted  of  the  debt 
against  the  bank.     *     *     * 

As  notice  to  the  cestui  que  trust  was  not  necessary,  and  as  the  re- 
tention of  the  pass-books  was  not  inconsistent  with  the  completeness 
of  the  act,  the  case  is  peculiarly  one  to  be  determined  by  this  test; 
did  the  intestate  constitute  herself  a  trustee?  After  a  careful  con- 
sideration of  the  case  in  connection  with  the  established  rules  appli- 
cable to  the  subject,  and  the  authorities,  I  think  this  question  must 
be  answered  in  the  affirmative.  It  was  not  done  in  express  formal 
terms,  but  such  is  the  fair  legal  import  of  the  transaction.     *     *     * 

Judgment  affirmed. 


DILROW  v.  BONE.   i^.,^j(^. 

(In  Chancery,  before  Vice  Chancellor  Sir  John  Stuart,  1862.     3  Giffard,  .538.) 

By  an  indenture  dated  June  30,  1835,  between  Edmund  Bone  and 
Mary,  his  wife,  of  the  one  part,  and  John  Fulleck  and  Richard  Hear- 
sey,  of   the  other  part,   after   reciting   that  by  a   previous   indenture 
and  fine  levied  in  pursuance  thereof  certain  lands  had  been  conveyed 
to  William  Hogflesh  and  his  heirs  upon  such  trusts  as  Edmund  Bone 
and  Mary,  his  wife,  should  by  deed  appoint  and  that  they  w^ere  de- 
sirous of  exercising  said  power,  the  said  Edmund   Bone  and  Mary, 
his  wife,  did  appoint  that,  immediately  after  the  decease  of  the  sur- 
vivor of  them,  all  said  lands  should  go,  remain  and  be  "unto  and  to 
f     '        the  use  of  the  said  John  Fulleck  and  said  Richard  Hearsey,  their  ex- 
^--N^j   ecutors,  administrators  and  assigns"  upon  trust  to  sell  and  divide  the 
t^MXiS    proceeds  into  seven  equal  parts  and  to  pay  one  part  to  each  of  the 
seven  children  of  Edmund  and  Mary  Bone  respectively. 

Mary  Bone  died  in  183G  and  Edmund  Bone  in  18G0.     Shortly  aft- 


8  THE   NATURE   AND   REQUISITES   OF  TRUSTS.  (Cll.  1 

er  his  death  the  present  trustees  proceeded  to  a  sale  when,  upon  in- 
vestigation of  the  title,  it  was  found  that  (as  the  bill  alleged),  "by 
mistake  or  inadvertence"  the  estate  was  limited  after  the  death  of  the 
survivor  of  the  two  settlors  to  the  trustees,  their  "executors,  adminis- 
trators, and  assigns"  only,  and  not  their  "heirs,"  so  that  the  legal 
estate  was  now  vested  in  the  infant  defendant  William  Bone,  as  heir 
of  William  Bone  deceased,  the  eldest  son  of  Edmund  Bone,  the  set- 
tlor. This  bill  was  filed  by  the  six  surviving  children  of  Edmund  and 
Mary  Bone  against  the  infant  heir  and  trustees  to  have  the  infant 
heir  declared  a  trustee  of  the  hereditament  comprised  in  the  indenture 
of  June  ;>(),  1835,  and  the  legal  estate  vested  in  him  vested  in  said 
trustees  upon  the  trusts  of  said  indenture,  or  the  said  indenture,  if 

"  necessary,  rectified. 

The  Vice  Chancellor.  The  instrument,  which  contains  a  clear 
declaration  of  trust,  professes  to  operate  by  an  apjiointmcnt  of  trus- 
tees in  exercise  of  a  power,  and  it  also  contains  clear  and  distinct 
words  of  conveyance  in  a  further  witnessing  part.  It  is  impossible  to 
say  that  by  the  operation  of  those  words  of  conveyance  some  legal 
estate  did  not  pass   from   the  settlor.     Upon   the  intention   apparent 

(  from  the  whole  scope  of  the  deed  and  its  language  it  is  certain  that 

Uhe  intention  was  to  give  an  absolute  legal  estate  to  the  two  persons 
who  are  named  as  trustees,   and   upon   whose   legal   estate   the   trust 

\is  grafted.  Lord  Eldon,  in  the  case  of  Ellison  v.  Ellison  [G  Ves.  656— 
662],  says:  "I  take  the  distinction  to  be,  that  if  you  want  the  assist- 
ance of  the  Court  to  constitute  you  cestui  que  trust,  and  the  instru- 
ment is  voluntary,  you  shall  not  have  that  assistance  for  the  purpose 
of  constituting  you  cestui  que  trust,  as  upon  a  covenant  to  transfer 
stock,  etc. ;  if  it  rests  on  covenant,  and  is  purely  voluntary,  this  Court 
will  not  execute  that  voluntary  covenant ;  but  if  the  party  has  com- 
pletely transferred  stock,  etc.,  though  it  is  voluntary,  yet,  the  legal 
conveyance  being  efifectually  made, — the  equitable  interest  will  be 
enforced  by  this  Court."  It  is  true  that  Lord  Eldon  says,  "has  com- 
pletely transferred  or  completely  conveyed ;"  but  I  cannot  under- 
stand upon  what  principle  it  can  be  said  that,  if  there  was  a  transmu- 
tation of  possession — there  being  a  determinate  estate  created  in  in- 
telligible terms,  but  with  this  effect,  that  wdiat  upon  the  whole  scope 
p  or  the  instrument  was  intended  to  vest  the  fee  simple  in  the  trust 
conveyed  only  the  freehold  for  life — this  Court  should  decline  to  en- 
force the  performance  of  the  trust.  I  consider  it,  therefore,  my  duty 
in  this  case  to  give  the  relief  in  substance,  as  prayed  by  the  bill.  I  do 
not  think  it  necessary  to  go  at  length  into  the  authorities  that  have 
been  cited,  because  there  were  two  cases  before  me  not  long  ago: 
Airey  v.  Hall  [3  Sm.  &  Gifif.  315],  and  Voyle  v.  Hughes  [2  Sm.  & 
Gifif.  18],  in  which  I  endeavored  to  distinguish  some  of  the  various 
decisions  which  had  been  made  on  the  subject  of  voluntary  gifts. 
The  declaration  will  be  that  the  heir  of  W'illiam  Bone  is  a  trustee, 
and  there  will  be  an   order   that   the  legal   estate   may  be   vested   in 


Sec.  2)  THE   CUKATION   OF   TRUSTS.  9 

trustees  to  be  appointed  by  the  court.    In  my  opinion  a  trust  is  so  at- 
tached to  the  property  in  this  case  that  the   infant  heir  of  the  set 
tier  holds  the  estate  with  this  trust  attached  to  it  in  his  hands. 


ANONYMOUS. 

(In  Chnnrpry,  boforf  Lords  CoiiniiissioiuTs  Trovor,  Rawlinson  and  Ilutchins. 
1G92.     Freeman's  Chancery  Cases,  12;3.) 

If  a  man  makes  a  conveyance  to  A.  in  consideration  of  money  paid 
by  B.,  A.  is  but  a  trustee  for  B.  by  virtue  of  this  resuhing  trust  not- 
withstanding the  statute  of  frauds  and  perjuries,  aUhough  no  trust  be 
declared  in  writinsf. 


WOODMAN  V.  MORREL  and  Wife. 

(In  Chanrery.  before  Justice  Atkins,  1G7S.     Freeman's  Chancery  Reports.  .".2.) 

And  in  this  case,  these  dififerences  were  taken:  1.  Where  a  man 
purchaseth  land  in  the  name  of  a  stranger,  and  of  a  child;  for  in  the 
lirst  case  it  is  presumed  a  trust  for  the  purchaser;  but  in  the  latter, 
the  presumption  is,  that  it  is  a  provision  for  the  child,  if  there  be  no 
declaration  of  the  father  to  the  contrary. 


LANE  and  Others  v.  DIGHTON  and  Others. 

(In  Chancery,  before  the  Master  of  the  Rolls,  Sir  Thomas  Clarke.  17(12.     Am- 
bler, 409.) 

By  indenture  of  16th  July,  1748,  made  after  the  marriage  of  John 
Dighton  with  the  said  Elizabeth,  her  fortune,  which  was  personalty, 
and  amounted  to  more  than  iSOOO,  was  assigned  to  four  persons  up- 
on trust,  to  pay  the  interest  to  him  for  life,  and  then  to  his  wife  for 
life,  and  then  the  principal  to  their  children,  as  they  or  the  survivor 
should  appoint :  and  in  default  of  appointment,  to  all  of  them.  On 
24th  January,  17.54,  Dighton  bought  at  an  auction  an  estate  in  Ox- 
fordshire, called  Sherborne- Woods,  for  i6600,  and  made  a  deposit  of 
iG60.  Mr.  Dighton,  not  having  sufficient  of  his  own,  prevailed  on 
the  trustees  to  let  him  have  £4010.  10s.  of  the  trust  money  to  make  up 
the  £5940.,  the  balance  of  the  purchase  price.  He  was  let  into  pos- 
session of  the  estate  and  afterwards  received  a  conveyance  of  it.  He 
also  bought  another  estate,  at  Ascot,  in  Oxfordshire.  He  died  intes- 
tate on  1st  January,  ITGl. 

The  bill  was  brought  for  ]xiymcnt  of  debts,  and  to  have  the  set- 
tlrment  made  good  out  of  the  personal  estate  and  distribution  of  the 


10  THE   NATUUK   AND    REQUISITES   OF   TRUSTS.  (Ch.  1 

residue.  The  widow  and  youn<>-er  children,  by  their  answer,  said  that 
part  of  the  trust  money  had  been  laid  out  in  the  purchase  of  Sher- 
borne-Woods and  Ascot  Estate,  and  ought  to  be  considered  as  the 
trust  money. 

The  cause  came  on  to  be  heard  on  May  8th,  1761,  by  consent  be- 
fore Sir  Thomas  Clarke,  Master  of  the  Rolls,  when  the  question, 
whether  the  estate  can  be  charged  with  any  part  of  the  trust  money? 
W'as   debated. 

On  the  part  of  the  plaintiff,  James  Lucy  Dighton,  it  was  argued  by 
Mr.  Capper,  That  if  trustee  lays  out  trust  money  in  land,  the  court 
will  charge  the  land  with  it,  upon  admission  of  the  trustees,  but  will 
not  receive  evidence  to  prove  it;  for  that  would  be  contrary  to  the 
statute  of  frauds,  which  requires  trusts  of  lands  to  be  in  writing,  un- 
less by  operation  of  law:  as  if  land  is  bought  in  the  name  of  A.,  evi- 
dence may  be  given  that  the  purchase  money  was  paid  by  B.;  that  is 
a  trust  raised  by  operation  of  law ;  and  the  cases  of  Kirk  v,  Webb, 
Prec.  in  Chancery,  84,  and  of  Halcot  v.  Marchent,  Prec.  Ch.  168, 
were  cited  as  authorities  on  the  general  principle.  It  was  further 
said,  that  if  evidence  could  be  received,  it  ought  to  prove  precise- 
ly in  what  land  the  money  was  laid  out.  That  in  this  case  it  is  only 
loosely  said,  that  the  trust  money  was  from  time  to  time  laid  out  in 
land. 

On  the  other  side  it  was  argued  by  me,  on  the  behalf  of  the  de- 
fendants, that  the  evidence  ought  to  be  read,  and  that  it  is  sufficient  to 
ground  an  inquiry,  if  not  to  make  an  immediate  decree. 

His  Honour,  after  taking  time  for  consideration,  on  8th  June  fol- 
lowing gave  his  opinion: 

The  general  question  is,  whether  the  court  can  follow  the  trust 
money  into  land,  consistently  with  the  statute  of  frauds  and  perju- 
ries, and  the  cases  determined  upon  it?  It  divides  itself  into  two 
questions:  1st,  Whether  the  evidence  can  be  received?  2d,  Wheth- 
er it  is  sufficient,  if  received? 

For  the  plaintiffs  were  cited  the  cases  of  Kirk  v.  Webb,  and  Hal- 
cot  V.  Marchent,  and  the  reason  upon  which  those  cases  were  deter- 
mined ;  that  is,  that  there  must  be  an  express  trust  in  writing  to  af- 
fect lands,  and  that  evidence  cannot  be  received.  The  only  cases  ex- 
cepted in  the  statute  are,  operation  of  law,  and  extinguishment :  as 
if  A.  buys  land  in  the  name  of  B.,  A.  may  prove  that  he  paid  the  con- 
sideration, and  there  wall  be  a  resulting  trust  for  him:  so  where 
there  is  a  declaration  as  to  part  of  the  land,  the  rest  results. 

On  the  other  side  was  cited  Ryal  v.  Ryal,  in  Ch.  4th  February,  1739. 
In  that  case  compassion  took  place,  and  inquiry  was  directed,  whether 
any  of  the  money  was  laid  out  in  land.  In  Jones  v.  Jones,  10th  July, 
1752,  the  same  inquiry  was  directed.  In  Ilardacre  v.  Massenger,  10th 
IVIarch,  1753,  Sir  John  Strange  declared  the  land  liable,  without  di- 
recting an  inquiry.  If  it  was  res  integra,  I  should  think  the  evidence 
not  admissible  within  the  statute.     But  I  must  not  be  wiser  than  mv 


Sec.  2)  THE   CREATION   OF   TRUSTS.  11 

predecessors;  therefore  refer  it  to  the  Master  to  inquire  whether  any, 
and  what  part  of  the  trust  money,  was  laid  out  in  the  purchase  of  the 
Sherhorne-Woods  and  Ascot  estate,  or  either,  and  which  of  them. 

The  cause  coming  on  for  further  directions  on  27th  January,  17G2, 
his  Honour  decreed  as  follows :  It  appearing  by  the  Master's  report, 
that  the  sum  of  i4010.  10s.  Id.  part  of  the  trust  money,  or  funds, 
being  part  of  the  portion  of  the  defendant  Elizabeth  Dighton,  agreed 
to  be  secured  by  her  marriage  articles  of  16th  July,  17-18,  was  invest- 
ed by  John  Dighton,  her  husband,  together  with  other  money  of  his 
own,  in  the  purchase  of  Sherborne-Woods  estate,  declare,  that  the 
same  ought  to  be  considered  in  the  same  plight  and  condition  as  if 
the  same  had  not  been  invested,  and  to  be  subject  to  the  trusts  and 
limitations  in  the  said  articles. 


WRIGHT  V.  BATES  and  NILES. 

(Sninvmo  Court  of  Verinniit.  ISll.     13  Vt.  341.) 

This  was  an  appeal  from  a  decree  of  the  Court  of  Chancery,  allow- 
ing the  plaintiff  to  redeem  certain  lands. 

Wright  borrowed   of   the  defendant.   Bates,  $300  and  on   IVTay  2. 
1821,  made  a  deed  of  certain  land  to  him  absolute  in  form.     Wright 
continued  in  possession  of  the  land.     On  June  26,  1834,  Bates  con- 
veyed the  land  to  the  defendant,  Niles.     Niles  brought  an  action  of  . 
ejectment  against  Wright  and  secured  judgment  at  the  June  Term  - 
of  the  Bennington  County  Court  in  1836. 

Wright  then  brought  this  bill  in  equity  alleging  that  the  deed  to 
Bates  was  given  as  a  mortgage  to  secure  the  payment  of  $325  and 
that  Bates  agreed  to  reconvey  the  land  to  him  on  being  paid  $32o ; 
that  Niles  bought  the  land  of  Bates  with  notice  of  plaintiff's  rights; 
that  the  plaintiff  on  August  16,  1836,  tendered  the  amount  due.  The 
bill  prayed  that  Niles  be  decreed  to  reconvey  to  the  plaintiff  the  mort- 
gaged premises  on  payment  of  the  amount  due  and  that  the  action 
of  ejectment  be  enjoined  and  for  further  relief. 

Bennett,  J.^  This  case  comes  before  this  court  by  an  appeal  from 
the  court  of  chancery.  The  object  of  the  orator  is  to  be  let  in  to  re- 
deem, and  the  first  question  presented  for  our  consideration  is,  wheth- 
er the  deed  from  Wright  to  Bates  is  to  be  treated  as  a  mortgage,  be-  ■ 
tween  the  immediate  parties.  It  is  well  settled  law,  in  this  state,  that 
a_court  of  chancery  will  treat  an  absolute  deed  of  real  estate,  given 
to  secure  the  payment  of  a  debt,  as  a  mortgage,  as  between  the  im- 
mediate parties,  especially  if  the  grantor  continues  to  remain  in  pos- 
session, though  the  defeasance  rests  wholly  in  parol.  Campbell  v. 
Worthington,  6  Vt.  R.  418.  Baxter  v.  Willey,  9  Vt.  R.  280,  31  Am. 
Dec.  623.  When  there  is  an  attempt  to  set  up  such  an  instrument 
as  an   absolute  conveyance,  there  is  a   fraudulent  application  or  use 

1  Part  of  the  opinion  is  oinittiHl. 


12  THE  NATURE  AND  REQUISITES  OF  TRUSTS.         (Ch.  1 

made  of  it;  and  this  is  a  proper  ground  upon  which  chancery  may 
proceed.  Though  Bates,  in  his  answer,  denies  that  the  deed  was  giv- 
en or  accepted  as  a  mortgage,  or  that  any  parol  agreement  was  made, 
at  the  time  of  its  execution,  that  it  should  be  considered  otherwise 
than  as  an  absolute  conveyance,  yet.  from  the  testimony  of  Danforth, 
we  learn  that  he,  in  the  spring  of  IS'^l,  went  with  the  orator  to  I'ates, 
to  assist  him  in  getting  a  loan  of  three  hundred  dollars,  and  that 
Bates  agreed  to  accomodate  him  with  the  loan,  provided  the  orator 
would  secure  him  with  a  deed  of  the  lands  described  in  the  bill, 
and  pay  him  an  interest  of  twenty-five  dollars  a  year  for  the  use  of 
the  money,  which  proposition  was  then  agreed  to,  though  the  writ- 
ings were  not  then  made.  A  short  time  after  this,  the  witness  says, 
he  was  informed  by  both  parties,  that  the  agreement  had  been  car- 
ried into  efifect.  Samuel  Wright  also  testifies  that  in  the  spring  of 
1823  he  was  employed  to  draw  the  lease  set  forth  in  the  answer  of 
Bates ;  and  that  at  that  time  he  learned  from  him  that,  at  some  previ- 
ous time,  he  had  let  the  orator  have  $1)35,  and  that  he  took  a  deed 
of  the  premises  in  question,  and  promised  to  give  him  a  time  to  re- 
deem them  in,  but  that  no  time  was  fixed,  and  he  wanted  it  done  in 
the  lease.  When,  in  addition  to  this,  we  see  that  the  value  of  the 
property,  as  shown  by  a  great  number  of  witnesses,  was,  in  1821, 
about  $1000,  and  that  the  orator  had  been,  for  a  great  length  of  time, 
I)crmitted  to  remain  in  possession,  we  can  have  no  reasonable  doubt 
that  this  land  was  conveyed  as  a  security  for  the  money  advanced,  and 

that,  in  equity,  the  conveyance  should  be  treated  as  a  mortgage, 
*     *     * 

Niles,  in  his  answer,  admits  that  he  was  informed  by  the  orator,  a 
short  time  before  Bates  conveyed  to  him,  that  he  (Bates)  was  bound 
to  reconvey  the  premises  to  him  vipon  the  payment  of  a  given  sum 
of  money,  and  that  he  was  still  indebted  to  Bates,  on  account  of  the 
lands  conveyed  in  about  the  sum  of  nine  hundred  dollars,  and  it  ap- 
pears that  Wright  had  remained  in  the  quiet  possession  from  1821 
down  to  1836,  when  Niles  commenced  his  action  of  ejectment  against 
him.  Upon  this  state  of  facts  it  is  evident  that  Niles  can  stand  in  no 
better  situation  than  Bates.  The  fact  that-  Wright  remained  in  the 
open,  peaceable,  and  exclusive  possession  and  improvement  of  the 
land  conveyed  to  Bates,  for  so  great  a  length  of  time,  is  sufficient 
of  itself,  to  afifect  Niles  with  notice  of  the  orator's  right  of  redemp- 
tion. Rublee  v.  Mead,  2  Vt.  R.  541.  Griswold  v.  Smith,  10  Vt.  R. 
452.  Niles,  then,  having  purchased  with  notice  of  Wright's  equity, 
must  come  in  subject  to  it.  So  far  as  Wright  is  concerned,  it  is  a 
purchase  mala  fide.     *     *     * 

Niles  is  the  immediate  grantee  of  Bates,  and  his  rights  are  de- 
pendent upon  those  of  his  grantor.  If  he  is  afifected  with  notice,  he 
takes  the  title,  subject  to  all  the  equities  that  existed  against  Bates. 


Sec.  2)  THE   CUEATION   OF   TItUSTS.  13 

DOWD  V.  TUCKKR. 
(Ruprome  Court  of  Errors  of  Couiiocticut,  1874.    41  Conn.  107.) 

Bill  in  equity  to  compel  the  conveyance  of  real  estate.  The  follow- 
ing facts  were  found  by  a  committee : 

The  petitioner  is  a  niece,  and  the  respondent  a  nephew  of  Frances 
M.  Hayden,  who  died  Sept.  3rd,  1870. 

On  the  2Tth  day  of  May,  18G3,  Mrs.  ITayden  made  a  will,  by  which 
she  gave  all  her  property  to  the  respondent,  which  will,  after  her 
death,  was  proved  as  her  last  will  and  testament. 

At  the  time  of  her  death  she  was  the  owner  of  one-half  of  a  dwell- 
ing house  and  lot,  worth  $T.")0,  being  the  property  in  dispute  between 
the  parties. 

About  two  weeks  before  her  death  ]\Irs.  Hayden  desired  and  in- 
tended to  give  to  the  petitioner  her  part  of  the  dwelling  house,  and 
to  change  her  will  accordingly,  but  was  unwilling  to  do  so  without 
the  consent  of  the  respondent.  The  petitioner  thereupon  caused  a 
codicil  to  be  prepared  giving  to  the  petitioner  the  dwelling  house. 
This  codicil  was  presented  to  her,  upon  which  she,  without  signing 
it,  expressed  a  desire  to  see  the  respondent.  The  respondent  was 
then  called  into  the  room,  and  she  informed  him  that  she  wanted  to 
give  her  half  of  the  dwelling  house  to  the  petitioner,  if  he  was  will- 
ing, and  asked  him  if  he  was  willing,  saying  again  that  she  wanted 
to  do  so.  The  respondent  replied  that  she  was  weak,  and  that  she 
need  not  trouble  herself  to  sign  the  paper,  but  that  he  would  deed 
the  property  to  the  petitioner  and  would  do  just  as  she  wanted  to 
have  him.  The  testatrix  expressed  herself  satisfied  that  the  respond- 
ent would  do  as  he  agreed,  and  did  not  sign  the  codicil.  This  inter- 
view was  on  Sunday,  about  2  o'clock  in  the  afternoon.  Mrs.  Hayden 
at  that  time  was  capable  of  making  a  will. 

After  the  death  of  Mrs.  Hayden  the  petitioner  demanded  of  the 
respondent  that  he  should  execute  to  her  a  deed  of  the  premises  in 
question ;  but  he  refused,  and  has  ever  since  refused  to  do  so.  Tlic 
respondent  is  now  in  possession  of  the  property,  claiming  it  as  his 
own  and  denying  that  the  petitioner  has  any  rights  or  interest  there- 
in. 

Upon  these  facts  the  case  w^as  reserved  for  the  advice  of  this 
court. 

Park,  C.  J.^    This  case  is  clearly  one  of  fraud.     *     *     * 

But  it  is  unnecessary  to  pursue  this  question  of  fraud,  for  the  case 
otherwise  is  palpably  one  where  the  respondent  holds  the  property  in 
trust  for  the  petitioner,  whether  he  made  the  promise  in  good  or  bad 
faith.  HA,  knowing  that  B  is  about  to  convey  certain  real  estate  to 
C,  which  the  latter  has  purchased  of  him,  shoukl  say  to  B,  "Convey 

1  I'art  of  the  opivuo'i  '.s  ouiittod. 


14  THK   NATUIU:    AXI>    UP^QUISITKS   OF   TIU'STS.  (Ch.  1 

the  proi)crty  to  mc  and  T  will  convey  it  to  C."  and  B  should  accede 
to  the  request,  and  convey  the  property  to  A,  no  one  would  question 
but  that  A  would  hold  the  property  in  trust  for  C.  Is  this  case  any 
different  in  principle?  Mrs.  Hayden  was  on  the  point  of  giving  this 
property  to  the  petitioner  by  the  execution  of  a  codicil  to  her  will, 
which  had  been  prepared.  The  respondent  knowing  the  fact,  said  to 
her  in  effect,  "Let  me  have  the  property  by  the  will  you  have  already 
executed  and  I  will  convey  it  to  the  petitioner."  The  respondent  by 
this  promise  obtained  the  property.  It  would  seem  that  no  argument 
need  be  made  to  show  that  he  holds  it  in  trust. 

But  it  is  said  that  she  did  not  intend  to  execute  the  codicil  unless 
the  respondent  was  willing  that  she  should  do  so.  We  do  not  so 
understand  the  report  of  the  committee.  But  grant  that  it  was  so ; 
did  he  not  in  the  plainest  and  most  unmistakable  language  give  her 
to  understand  that  he  was  willing?  What  did  she  desire  to  have  done:* 
She  wanted  the  petitioner  to  have  the  property.  What  request  did 
she  make  of  the  respondent?  She  asked  him  if  he  was  willing  that" 
the  petitioner  should  have  it.  Whether  the  conveyance  was  to  be 
made  in  one  form  or  another  was  of  no  consequence,  and  formed  no 
part  of  the  substance  of  the  inquiry,  although  he  took  it  for  granted 
that  she  intended  to  do  it  by  executing  the  codicil  that  lay  before 
her,  which  was  in  fact  her  intention.  What  reply  did  he  make?  He 
said  that  she  was  weak,  that  she  need  not  trouble  herself  to  sign  the 
paper  (meaning  the  codicil),  that  he  would  deed  the  property  to  the 
petitioner,  and  would  do  just  as  she  wanted  to  have  him;  that  is,  I 
will  do  just  what  you  ask  my  consent  to  have  done;  therefore  do 
not  trouble  yourself  in  your  weak  condition  to  execute  the  codicil. 
If  this  language  does  not  convey  a  consent  that  the  petitioner  should 
have  the  property,  then  language  in  any  form  of  words  would  fail  to 
express  the  idea. 

It  follows  therefore  that  the  respondent  obtained  the  property  in 
question  by  his  promise  to  convey  the  same  to  the  petitioner,  and  con- 
sequently we  think  he  is  bound  in  equity  and  good  conscience  to 
make  the  conveyance. 

We  advise  the  Superior  Court  to  grant  the  prayer  of  the  petition. 


DICKERSON  and  Others  v.  ]\TAYS. 
(Siiprciiic  Court  of  Mississippi,  1882.    GO  Miss.  P.88.) 

Appeal  from  the  Chancery  Court  of  Benton  County. 

The  bill  filed  in  this  suit  on  the  14th  of  November,  1870,  by  Mrs. 
Mary  F.  Mays  against  G.  N.  Dickerson,  G.  D.  Dickerson  and  H.  L. 
Machem,  alleges  substantially  the  following  facts:  In  1871,  John 
H.  Machem  purchased  of  L.  J.  McDonald  a  house  and  lot  in  the  town 
of  Ashland,  Benton  County,  which  he  intended  for  the  use  and  benefit 


Sec.  2)  THE   CREATION   OF   TRUSTS.  15 

of  the  complainant,  Mary  F.  Mays,  and  her  brother  H.  L.  Machem, 
who  were  his  children.  J.  11.  Machem  paid  for  the  property  and  put 
Mary  F.  Mays  and  her  brother  in  possession  of  it ;  but  by  accident 
or  neglect  no  conveyance  was  taken  from  McDonald ;  in  November, 
1873,  the  complainant  and  her  brother  made  a  parol  contract  with 
G.  N.  Dickerson  to  exchange  this  house  and  lot  in  Ashland  for  a 
house  and  lot  in  the  town  of  Salem,  Benton  County,  and  a  tract  of 
land  in  the  same  county.  Pursuant  to  the  contract  McDonald  by 
instructions  of  complainant  and  her  brother  conveyed  the  house  and 
lot  in  Ashland  by  direction  of  G.  N.  Dickerson  to  his  son  G.  D.  Dick- 
erson. G.  N.  Dickerson  took  possession  of  the  Ashland  property,  but 
refused  to  convey  to  complainant  and  her  brother  the  property  he 
agreed  to  convey.  H.  L.  Machem  sold  his  interest  in  the  property 
to  complainant.    J.  H.  Machem  the  father  died  in  1872. 

The  prayer  of  the  bill  is  for  "a  decree  divesting  all  right,  title 
and  interest  of  the  said  defendants  in  and  to  the  said  house  and 
lot  in  the  town  of  Ashland,  or  the  property  which  the  said  Dickerson 
was  to  convey  for  said  house  and  lot,  out  of  them  and  each  of  them 
and  vesting  the  same  in  a  commissioner  of  the  court,  with  full  power 
to  convey  the  same  to  your  oratrix,"  etc.  and  for  general  relief. 

H.  L.  Machem  made  no  defense.  The  Dickersons  demurred  on  the 
ground  that  the  contract  of  exchange  could  not  be  enforced  because 
not  in  writing.  The  demurrer  was  overruled  and  the  defendants 
answered.  Proof  was  taken  and  on  final  hearing  a  decree  was  ren- 
dered vesting  the  title  to  the  Ashland  property  in  a  commissioner, 
with  direction  to  convey  the  same  to  complainant,  unless  G.  N.  Dick- 
erson should  within  thirty  days  convey  to  her  the  property  which  he 
had  agreed  to  exchange  for  the  Ashland  property.  From  that  de- 
cree the  Dickersons  appealed. 

Kimbrough  &  McDonald,  for  the  appellee. 

In  this  case  the  fraudulent  grantee  should  be  made  to  hold  title  as 
trustee  for  benefit  of  injured  party. 

Campbell,  C.  J.,  delivered  the  opinion  of  the  court. 

The  Statute  of  Frauds  presents  no  obstacle  to  the  bill,  which  does 
not  seek  the  enforcement  of  a  parol  agreement  for  the  sale  of  land, 
but  the  cancellation  of  a  conveyance  which  it  is  inequitable  for  the  de- 
fendant to  hold.  There  was  no  just  objection  to  the  bill,  and  the  de- 
murrer was  rightfully  overruled.  The  evidence  supports  the  decree, 
and  it  is  affirmed. 


16  TlJi:   NATLUE   AND   UKQUISITHS   OF   TUUSTS.  (Cll.  1 


SECTION  3.— THE  LAXGUAGE  NECESSARY  TO  THE  CREA- 
TION  OF  A  TRUST. 


ALDRICII  V.  ALDRICH,  Executor,  and  Others. 
(Suiir.>in(>  Judicial  Court  of  Massachusetts,  1898.     172  Mass.  101,  r.l  X.  E.  440.) 

Bill  in  equity,  filed  May  G,  18i)S,  in  the  Superior  Court,  hy  a  son  of 
P.  Eniorv  Aldrich,  to  establish  a  trust  under  the  will  of  his  father. 

The  bill  allejjed  that  the  testator  died  on  March  11,  1895,  leaving 
a  will  by  which  he  gave  "all  the  rest  and  residue  of  my  estate,  after 
the  payment  of  debts,"  to  his  wife.  After  appointing  her  executrix. 
*  *  *  he  proceeded:  "I  give  all  my  estate  to  my  said  wife  to  the 
end  that  she  may  be  able  to  maintain  a  home  for  herself,  and  one 
where  she  can  receive  all  our  dear  children,  as  we  have  been  accustom- 
ed to  do  during  our  joint  lives.  I  am  confident  she  will  manage  with 
good  discretion  and  fidelity  what  is  committed  to  her,  and  that  when 
.she  shall  no  longer  need  the  property  it  will  be  equally  divided  among 
all  our  children,  or  their  representatives."  The  widow  died  on  De- 
cember 25,  1897,  leaving  a  will  by  which  she  provided:  "After  the 
payment  of  all  debts  and  charges  it  is  my  wish  so  to  provide  that  the 
remainder  of  my  property  may  .suffice  if  possible  to  maintain  the 
house  wdiere  we  have  so  long  lived  happily,  for  those  of  my  chil- 
dren who  may  need  it,  without  attempting  to  control  their  disposition 
of  it  as  may  to  them  seem  best."  After  a  few  small  legacies,  includ- 
ing one  thousand  dollars  to  Charles  F.  Aldrich,  a  son,  who  was  nam- 
ed executor,  and  one  thousand  dollars  to  said  Charles  in  trust  for  the 
plaintifif.  the  testatrix  further  provided :  "All  the  rest,  residue,  and 
remainder  of  my  property  of  every  nature,  I  give,  devise  and  be- 
queath to  my  three  daughters  *  *  *  in  equal  shares,  to  have 
and  to  hold  to  them  their  heirs  and  assigns  forever." 

The  widow  died  possessed  of  the  personal  property  left  her  by 
her  husband's  will,  except  the  income  thereof,  which  she  spent  dur- 
ing her  life.  The  plaintifif  received  during  the  life  of  the  testatrix 
no  part  of  the  testator's  property  either  real  or  personal,  and  the  one 
thousand  dollars  left  to  him  in  trust  was  less  than  one-fifth  of  the 
property  owned  by  her  wdien  she  made  her  will,  and  at  her  death 
exclusive  of  what  came  to  her  by  the  will  of  her  husband,  and  less 
than  one-fifth  of  the  personal  property  so  left  by  him,  and  less  than 
one-fifth  of  the  real  estate  left  by  him.  The  prayer  was  that  an  ac- 
count might  be  taken,  and  that  the  executor  might  be  directed  to  hold 
the  property  as  trustee,  and  to  pay  over  to  the  plaintifif  one-fifth  of 
the  same.  , 


Sec.  3)  LANGUAGE    NECESSARY    TO    CREATE    TRUST.  17 

Hearing  before  Dewey,  J.,  who  reserved  the  case  for  the  consid- 
eration of  this  court.  ^ 

Morton,  J.  If  the  testator  had  intended  to  create  a  trust  in  favor 
of  his  children  at  his  widow's  death,  there  can  be  no  doubt  that  he 
knew  how  to  do  it  in  clear  and  unmistakable  terms,  and  it  is  almost 
inconceivable  that,  if  such  was  his  purpose,  he  should  have  express- 
ed himself  in  the  manner  in  which  he  has  done. 

There  is  no  doubt  that  words  of  recommendation,  or  of  confidence, 
entreaty,  hope,  or  desire,  have  been  held  sufficient  under  some  circum- 
stances' to  create  a  trust.  But,  speaking  generally,  this  was  because 
in  such  cases  such  a  construction  was  supposed  to  carry  out  the  in- 
tention of  the  testator.  If  an  arbitrary  rule  seems  to  have  been  laid 
down  at  one  time  in  regard  to  what  would  constitute  a  precatory 
trust,  there  can  be  no  doubt,  w^e  think,  that  the  tendency  of  later  de- 
cisions has  been,  if  not  to  relax  the  rule  thus  laid  down,  at  least  not 
to  extend  it.  Hess  v.  Singler,  114  Mass.  56.  Lambe  v.  Eames,  L. 
R.  10  Eq.  26T;   S.  C.  6  Ch.' App.  597. 

In  the  present  case  there  is  what  clearly  would  constitute  in  law,  if 
it  stood  alone,  an  absolute  gift  of  the  estate  to  the  wife.  Then  fol- 
lows, after  one  or  two  intervening  clauses,  the  one  on  which  the 
plaintiff  relies.  This  was  intended  by  the  testator,  it  seems  to  us,  to 
express  his  reason  for  the  gift  to  his  wife  and  his  confidence  in  her, 
and  not  to  cut  down  or  affect  the  absolute  character  of  the  gift  which 
he  had  previously  made  to  her.  It  is  true  that  he  says  in  substance 
that  he  expects  that  the  property,  when  she  shall  no  longer  need  it, 
will  be  divided  equally  between  the  children  and  their  representatives. 
But  there  is  nothing  which  renders  it  obligatory  on  her  to  do  this,  and 
therefore  one  of  the  features  of  a  precatory  trust  is  wanting.  [Cases 
cited.] 

The  cases  wdiich  we  have  cited  do  not  resemble  in  all  respects  the 
one  at  bar,  and  there  are  English  and  American  cases  which  seem  to 
support  the  view  for  which  the  plaintiff  contends.  But  the  question 
is,  whether,  taking  the  will  as  a  whole,  it  was  the  intention  of  the  tes- 
tator to  create  a  trust,  and  we  are  of  opinion  that  it  was  not,  and  that 
the  construction  which  we  have  adopted  is  in  harmony  with  the  more 
recent  English  and  American  cases. 

Bill  dismissed. 

1  Part  of  the  statement  ot  tne  case  is  omitted. 
Ken.Tb.— 2 


18  THE   NATURE   AND    REQUISITES   OF   TRUSTS.  (Ch.  1 


rillLLIPS,  as  Executrix,  v.  PHTUjrS  and  Others,  as  Executors. 

(Court  of  Appeals  of  New  York,  1S80.  ^V2  N.  Y.  197.  19  N.  E.  411,  8  Am.  St. 

Kcp.  ToT.) 

Defendants  appeal  from  a  General  Term  judc^ment  of  the  Supreme 
Court  which  affirmed  a  Special  Term  judgment  in  favor  of  plaintiff. 

Finch,  J.^  The  will  to  be  construed  was  written  by  the  testator 
himself,  and  while  extremely  brief  and  simple,  presents  a  problem  not 
altogether  easy  of  solution. 

Its  terms  give  to  the  testator's  wife  the  whole  of  his  property,  real 
and  personal,  name  her  as  executrix,  and  then  proceed  as  follows: 
"If  she  find  it  always  convenient  to  pay  my  sister  Caroline  Buck  the 
sum  of  three  hundred  dollars  a  year,  and  also  to  give  my  brother, 
Edwin  W.,  during  his  life  the  interest  on  ten  thousand  dollars  (or 
seven  hundred  dollars  per  year),  I  wish  it  to  be  done."  The  widow 
has  paid  the  annuity  to  the  sister  regularly,  but  that  to  the  brother 
for  a  single  year  only.  During  the  years  succeeding,  no  payment  was 
made,  and  this  action  is  brought  by  the  executrix  for  a  construc- 
tion of  the  will  and  to  determine  whether  she  is  bound  to  make  the 
payments  withheld.  It  is  admitted  by  formal  stipulation  that  the 
contingency  described  in  the  will  has  in  fact  happened  during  the 
three  years  after  1883,  and  that  the  financial  situation  of  the  widow 
during  the  years  of  her  refusal  was  such  that  it  was  entirely  conveni- 
ient  for  her  to  have  paid  the  disputed  allowance,  and  that  she  refused 
payment  not  on  that  account,  but  from  motives  of  her  own  with 
which  she  claimed  the  courts  have  no  concern,  and  about  which 
they  are  not  at  liberty  to  inquire.  The  General  Term  has  sustain- 
ed her  contention  upon  an  opinion  of  the  trial  judge,  very  patiently 
and  carefully  prepared,  and  from  which  we  depart  only  upon  convic- 
tions that  we  are  unable  to  resist. 

The  real  intention  of  the  testator  was  one  of  two  things.  He 
meant  to  make  the  annuities  to  his  brother  and  sister  dependent  upon 
the  existence  of  a  specific  fact,  or  upon  the  choice  and  will  of  his  de- 
visee. If  they  rest  upon  the  former  they  become  a  gift  from  him;  if 
upon  the  latter,  they  have  no  existence  outside  of  the  choice  of  the 
widow.     *     *     * 

One  suggestion  made  on  behalf  of  the  a])pcllants  is,  that  the  fram- 
ing of  the  condition  or  contingency  shows  that  the  provision  for  the 
brother  and  sister  was  not  meant  to  be  dependent  upon  the  absolute 
and  uncontrolled  choice  of  the  wife.  If  that  had  been  testator's  pur- 
pose, the  condition  interposed  was  both  needless  and  misleading. 
Without  it  she  would  be  left  to  give  the  allowance  or  not  as  she 
pleased,  and  could  suffer  no  inconvenience  at  the  hands  of  the  testator. 
But  with  it  the  inference  is  that  the  contingency  provided  for  was 
the  only  one  intended  to  excuse  payment.     That  contingency  was  an 

1  Part  of  tho  opinion  is  omitted. 


Sec.  3)        LANGUAGE  NECESSARY  TO  CREATE  TRUST.  19 

actual  fact  to  liappen  or  not  to  happen  aloni^  the  line  of  the  future, 
and  in(lej)endent  of  the  mere  volition  or  choice  of  the  general  devisee. 
"If  she  find  it  always  convenient"  are  the  w^ords.  "If  she  find  it;" 
that  is,  if  experience  shows  it;  if  the  facts  at  the  tiriie  of  payment 
prove  to  be  such;  if  her  financial  condition  as  it  shall  then  exist  en- 
ables her  to  pay  easily.  The  expression  contemplates,  not  her  choice 
or  preference,  but  her  pecuniary  situation  after  the  experience  or 
managment  of  one  or  more  years,  and  it  indicates  his  purpose  to  have 
been  to  charge  the  annuities  upon  the  sweeping  gift  to  his  wife,  pro- 
vided, and  provided  only,  that  in  her  experience  of  the  future  it 
should  turn  out  that  the  payment  of  those  charges  would  occasion  her 
no  inconvenience. 

"If  she  find  it  always  convenient;"  that  is  on  each  occasion,  at  the 
date  of  every  payment.  *  *  *  Jn  these  words  of  the  testator 
his  purpose  and  intention,  I  think,  is  sufficiently  disclosed.  He  did 
not  mean  to  make  the  payment  of  the  annuities  dependent  upon  the 
mere  choice  or  will  of  his  wife,  but  upon  her  ability  to  pay  them 
without  inconvenience  to  herself.  Given  that  ability,  he  says :  "I 
wish  it  to  be  done."  The  words  are  not,  I  wish  her  to  do  it,  or  I 
hope  she  will  feel  it  to  be  her  duty,  or  I  trust  she  will  see  the  pro- 
priety of  such  payment  to  be  made,  but  I,  the  testator,  dealing  with 
my  own  bounty  to  her.  "I  wish  it  to  be  done ;"  it  is  my  wish,  not 
hers,  that  I  put  behind  the  annuities.  It  is  observable,  also,  that  in  ■ 
the  gift  to  his  wife  he  does  not  add  words  that  could  seem  inconsi'-'t- 
ent  with  a  subsequent  charge  upon  it,  as,  for  her  own  use  and  benefit, 
or  to  her  and  her  heirs  forever,  but  leaves  the  path  to  a  trust  or  a 
charge  unol^tructed  so  far  as  possible. 

It  is  perfectly  well  settled  that  what  are  denominated  precatory 
words,  expressive  of  a  wish  or  desire,  may,  in  given  instances,  cre- 
ate a  trust  or  impose  a  charge.  *  *  *  'j^j^g  primary  question  in 
every  case  is  the  intention  of  the  testator,  and  whether  in  the  use 
of  precatory  words  he  meant  merely  to  advise  or  influence  the  dis- 
cretion of  the  devisee,  or  himself  to  control  or  direct  the  disposition 
intended.  In  such  a  case  we  must  look  at  the  wdiole  will,  so  far  as  it 
bears  upon  the  inquiry,  and  the  use  of  the  words  "I  wish"  or  "I  de- 
sire" is  by  no  means  conclusive.  They  serve  to  raise  the  question,  but 
not  necessarily  to  decide  it.  We  are  convinced  that  in  the  present 
case  the  testator  meant  to  charge  upon  the  gift  to  the  wife  the  an- 
nuities to  his  sister  and  l^rother,  provided,  only,  that  their  payment 
should  not  occasion  her  inconvenience.  The  legacy  to  the  brother  j 
should  be  computed  at  $700  per  year. 

The  jv.dgment  should  be  reversed,  and  judgment  rendered  for  the 
defendant,  construing  the  will  in  accordance  with  this  opinion. 


20  THE   NATUKE   AM)    REQUISITES   OF   TRUSTS.  (Ch.  1 


HARDIXG  V.  GLYN. 

(In  Chanrovy.  boforo  tho  Muster  of  the  Rolls,  Hon.  John  Vomey,  1739.     1 

Atkyns.  4G0.) 

Nicholas  Harding  in  1701  made  his  will,  and  thereby  gave  "to 
Elizabeth,  his  wife,  all  his  estate,  leases,  and  interest  in  his  house  in 
Hatton  Garden,  and  all  the  goods,  furniture,  and  chattels  therein  at 
the  time  of  his  death,  and  also  all  his  plate,  linen,  jewels,  and  other 
wearing-apparel,  but  did  desire  her  at  or  before  her  death  to  give  such 
leases,  house,  furniture,  goods  and  chattels,  plate  and  jewels,  unto 
and  amongst  such  of  his  own  relations  as  she  should  think  most  de- 
serving and  approve  of,"  and  made  his  wife  executrix,  and  died  the 
23d  of  January,  1736,  without  issue. 

Elizabeth,  his  widow,  made  her  will  on  the  12th  of  June,  1737, 
"and  thereby  gave  all  her  estate,  right,  title  and  interest  to  Henry 
Swindell  in  the  house  in  Hatton  Garden,  which  her  husband  had  be- 
queathed to  her  in  the  manner  aforesaid;  and  after  giving  several 
legacies,  bequeathed  the  residue  of  her  personal  estate  to  the  defend- 
ant Glyn  and  two  other  persons,  and  made  them  executors,"  and 
soon  after  died,  without  having  given  at  or  before  her  death  the 
goods  in  the  said  house,  or  without  having  disposed  of  any  of  her 
husband's  jewels,  to  his  relations. 

The  plaintifjfs  insisting  that  Elizabeth  Harding  had  no  property  in 
the  said  furniture  and  jewels  but  for  life,  with  a  limited  power  of 
disposing  of  the  same  to  her  husband's  relations,  which  she  has  not 
done,  brought  their  bill  in  order  that  they  might  be  distributed 
amongst  his  relations,  according  to  the  rule  of  distribution  of  intes- 
tates' effects. 

Master  of  the  Roeus.  The  first  question  is,  if  this  is  vested  ab- 
solutely in  the  wife?  And  the  second,  if  it  is  to  be  considered  as  un- 
disposed of,  after  her  death,  who  are  entitled  to  it? 

As  to  the  first,  it  is  clear  the  wife  was  intended  to  take  only  bene- 
ficially during  her  life;  there  are  no  technical  words  in  a  will,  but 
the  manifest  intent  of  the  testator  is  to  take  place,  and  the  words 
"willing"  or  "desiring"  have  been  frequently  construed  to  amount  to 
a  trust,  Eacles  et  ux.  v.  England  et  ux.,  2  Vern.  466 ;  and  the  only 
doubt  arises  upon  the  persons  who  are  to  take  after  her. 

Where  the  uncertainty  is  such  that  it  is  impossible  for  the  court 
to  determine  what  persons  are  meant,  it  is  very  strong  for  the  court 
to  construe  it  only  as  a  recommendation  to  the  first  devisee,  and  make 
it  absolute  as  to  him;  but  here  the  word  "relations"  is  a  legal  de- 
scription, and  this  is  a  devise  to  such  relations,  and  operates  as  a 
trust  in  the  wife,  by  way  of  power  of  naming  and  apportioning,  and 
her  non-performance  of  the  power  shall  not  make  the  devise  void, 
but  the  power  shall  devolve  on  the  court ;  and  though  this  is  not  to 
pass  by  virtue  of  the  statute  of  distributions,  yet  that  is  a  good  rule 


Sec.  4)  CONSIDERATION.  21 

for  the  court  to  go  by.  And  therefore  I  think  it  ought  to  be  divided 
among  such  of  the  relations  of  the  testator  Nicholas  Harding,  who 
were  his  next  of  kin  at  her  death ;  and  do  order  that  so  much  of  the 
said  household  goods  in  Hatton  Garden,  and  other  personal  estate 
of  the  said  testator  Nicholas  Harding,  devised  by  his  will  to  the  said 
Elizabeth  Harding,  his  wife,  which  she  did  not  dispose  of  according  to 
the  power  given  her  thereby,  in  case  the  same  remains  in  specie,  or  the 
value  thereof,  be  delivered  to  the  next  of  kin  of  the  said  testator  Nich- 
olas Harding,  to  be  divided  equally  amongst  them,  to  take  place  from 
the  time  of  the  death  of  the  said  Elizabeth  Harding.^ 


SECTION  4.— CONSIDERATION. 


Note,  uses  are  raised  either  by  transmutation  of  the  estate,  as  by 
fine,  feoffment,  common  recovery,  etc.  or  out  of  the  state  of  the  own- 
er of  the  land,  by  bargain  and  sale,  by  deed  indented  and  enrolled,  or 
by  covenant  upon  lawful  consideration. — Co.  Lit.  271b. 


It  is  clear,  uses  may  be  raised  two  ways :  1.  By  transmutation  of 
the  estate.     2.  Without  transmutation  of  the  estate. 

Those  that  arise  by  transmutation :  as  by  line,  feoffment,  recovery. 
Those  that  arise  without  transmutation,  and  that  but  tv^^o  ways:  1. 
By  bargain  and  sale.     2.  By  covenant  to  stand  seized  to  uses. 

This  is  to  be  observed  in  raising  of  uses,  that  they  that  arise  by 
way  of  covenant,  or  bargain  and  sale,  there  must  be  a  consideration 
to  raise  them;  but  they  that  arise  by  way  of  transmutation  of  pos- 
session may  arise  without  any  consideration  at  all. — Earle,  Serjeant, 
arg.  in  Garnish  v.  Wentv/orth,  Carter's  Common  Pleas  Reports,  137, 
143  (1666). 


See  Lib.  2,  Doctor  &  Student,  fol.  100.  A  man  can  [not]  commence 
an  use  without  bargain,  livery  of  seisin,  or  recompense ;  for  it  can- 
not be  by  bare  grant  or  covenant  without  recompense,  where  the 
grantor  himself  is  seized  of  the  land  in  possession ;  but  if  a  man 
makes  a  feofifment  in  fee  to  the  use  of  the  feofifee  and  his  heirs  with- 
out recompense,  yet  the  feoffee  is  seized  to  his  own  use;  but  if  a 
man  makes  a  feoffment  to  his  use,  so  that  a  use  be  in  esse,  he  may 
grant  to  the  feofifee  to  be  seized  to  his  own  use  without  recompense 

1  See  conunent  of  Lord  Eldon  ou  this  case  in  Browu  v,  Higgs,  8  Ves.  Jr. 
!5G1,  571  (18C3). 


22  THE   NATURE   AND    REQUISITES   OF   TRUSTS.  (Ch.  i 

and  well;  for  there  was  a  use  in  esse  before.  Contra  where  a  man 
seized  in  fee  to  his  own  use,  grants  to  another  that  he  will  be  seized 
to  his  use  without  bargain  or  recom])ense.  Xote  a  diversity;  and 
the  same  it  seems  of  a  consideration. — Brooke's  Abridgment,  Feoff- 
ments al  Uses,  pi.  4G. 


For  as  I  have  said,  a  use  is  nothing  but  a  trust,  which  trust  one 
can  sell  or  give  at  his  pleasure.  For  I  say  that  there  is  no  doubt 
but  if  T  sell  to  you  my  use,  now  upon  the  sale  the  use  is  changed  to 
you  from  my  person;  so  I  understand  if  I  say  to  you  "I  give  you  my 
use  of  such  lands  to  you,"  by  those  words  you  have  the  use ;  for  the 
use  does  not  pass  as  the  land  passes,  for  land  cannot  pass  without 
livery,  but  a  use  by  bare  words.  *  *  *  And  so  by  the  same  rea- 
son that  a  use  can  pass  by  words,  by  the  same  reason  it  can  pass 
by  dcM^e.— i'er  York,  Y.  B.  27  Hen.  VUI,  fol.  8,  pi.  22. 


There  are  several  ways  in  the  law  for  declaring  of  uses,  whether 
upon  transmutation  of  possession,  or  without  it.  If  an  use  be  de- 
clared to  be  on  transmutation  of  possession,  as  in  a  fine  or  feoffment, 
there  needs  no  agreement  whatever;  it  is  sufficient  for  the  party  on 
the  transmutation  to  declare,  that  the  use  shall  be  to  such  party,  and  of 
such  an  estate;  but  if  an  use  arise  without  transmutation  of  posses- 
sion, the  use  then  does  not  arise  by  virtue  of  any  declaration  or  ap- 
pointment, but  there  must  be  some  precedent  obligation  to  oblige  the 
party  declaring  the  use,  which  must  be  founded  on  some  considera- 
tion ;  for  a  use,  having  its  foundation  generally  on  grounds  of  equity, 
could  not  be  relieved  in  chancery,  without  transmutation  of  posses- 
sion, or  an  agreement  founded  on  a  consideration;  and  therefore  if 
bargain  and  sale  were  made  of  a  man's  land  on  the  payment  of  money, 
the  use  would  have  raised,  without  deed,  by  parol.  But  if  the  use  was 
in  consideration  of  blood,  then  it  could  not  arise  by  parol  agreement, 
without  a  deed;  because  that  agreement  was  not  an  obliging  agree- 
ment, it  wanted  a  consideration ;  and  therefore  to  make  it  an  oblig- 
ing agreement  there  was  a  necessity  of  a  deed :  but  where  there  was  a 
transmutation  of  possession,  there  needed  no  deed,  but  only  the 
bare  appointment  of  the  party. — Per  Holt,  Chief  Justice,  Jones  v. 
Morley,  13  Modern,  159  (King's  Bench,  1G97). 


2  ROLLK'S  ABRIDGMENT,  781  (F),  USES,  pi.  1,  2,  3. 

If  a  feoffment  be  made  at  this  day  without  any  consideration  ex- 
pressed, it  shall  be  to  the  use  of  the  feoffor. 

So  if  a  man  suffer  a  common  recovery  without  limiting  to  whose 


Sec.  4)  CONSIDERATION.  23 

use  it  shall  be,  or  expressing  a  consideration,  it  shall  be  to  the  use  of 
the  rccovcror. 

The  law  is  the  same  of  a  fine. 


NOTE. 

(Benloe,  27,  pi.  112.  l.-).35.) 

Note  by  all  the  justices  and  sergeants  in  the  Common  Pleas,  that 
if  a  man  enfeoffs  another  in  fee  of  land  by  deed  without  any  consid- 
eration to  be  held  to  the  use  of  the  feoffee  himself  as  recited  in  the 
deed  and  yet  the  feoffee  permit  the  feoffor  to  take  the  profits  of  the 
land  for  several  years  afterwards,  still  the  feoffee  shall  be  adjudged 
to  have  the  right  to  said  lands  in  fee.  and  not  the  feoffor,  because  the 
use  was  limited  to  him  by  the  deed  which  was  a  good  consideration. 


STEPHENS  CASE. 

(In  the  Common  Pleas,  1588.     1  Leonard.  l.'^S.  pi.  ISS.) 

In  an  ejectione  firmae  the  case  was,  that  the  father  covenanted  with 
one  A  that  in  consideration  of  a  marriage  to  be  had  betwixt  the  son 
of  the  covenantor  and  the  daughter  of  A  that  he  before  such  a  day 
would  levy  a  fine,  which  fine  should  be  to  the  uses  of  the  son  and 
daughter  in  tail  for  the  jointure  of  the  daughter.  The  fine  is  levied 
according  to  the  uses  aforesaid;  the  father  dieth,  but  in  the  fine  no 
mention  is  made  of  any  marriage  had;  and  upon  that  matter  the 
court  was  clear  of  opinion,  that  notwithstanding  that  the  marriage 
was  not  accomplished,  yet  the  estate  tail  was  well  enough  executed 
in  the  son  and  daughter,  for  the  fine  without  any  consideration  doth 
carry  the  uses,  but  without  a  fine  such  a  consideration  would  not  raise 
such  an  use  without  accomplishment  of  the  marriage,  for  the  con- 
sideration executed  ought  to  produce  the  use.  But  in  this  case  the 
uses  are  perfected  by  the  fine,  and  A  upon  the  matter  might  have 
had  covenant  against  the  father  to  have  the  fine  before  the  marriage. 


TAYLOR  V.  VALE. 

(In  the  Queen's  Bench,  1589.    1  Croke.  Eliz.  1G6.) 

Replevin.  The  case  was  upon  demurrer.  Vale,  having  a  rent  charge 
in  fee  by  indenture,  which  was  enrolled  within  six  months,  giveth  and 
granteth  it  to  Hall,  in  fee  and  there  was  no  attornment. 

Nota.  In  truth,  the  case  was,  that  he  for  a  certain  sum  of  money 
giveth,  granteth,  and  selleth  the  rent,  &c.  But  it  was  pleaded  only, 
that  he  by  indenture  dedit  et  concessit. 


24  THH   NATURE   AND    ItEQlISITHS   OF   TIU'STS.  (Ch.  1 

And  it  was  ruled  witliout  any  argument,  that  the  rent  without  at- 
tornment passeth  not,  being  only  by  way  of  grant,  and  not  of  bargain 
or  sale;  although  the  deed  was  enrolled. — But  \\'ray  said,  that  if  by 
indenture,  \r\  consideration  of  a  certain  sum  of  money,  dedit  et  con- 
cessit and  the  deed  is  enrolled,  this  shall  pass  the  rent  without  at- 
tornment, though  there  be  no  words  of  bargain  and  sale. — And  the 
plaintiff  had  judgment. 


2  ROLLK'S  ABRIDGMENT,  783  (H),  USES,  pi.  5.  G.  7. 

Consideration  of  ancient  acquaintance,  or  of  being  chamber- fellows 
or  entire  friends,  will  not  raise  an  use. 

So  consideration  of  great  familiarity  or  long  acquaintance  with 
him,  or  that  they  were  scholars  together  in  their  youth,  will  not  raise 
an  use. 

So  if  A  in  consideration  that  B  was  bound  in  a  recognizance  for 
him,  bargains  and  sells  land  to  the  other,  this  is  not  good. 


ANONYMOUS. 

(In  the  Common  Pleas,  KJTS.     2  Ventris.  ?',.) 

In  an  ejectment  upon  a  special  verdict  the  sole  point  was,  whether 
a  lease  for  a  year,  upon  no  other  consideration  than  reserving  a 
pepper-corn,  if  it  be  demanded,  shall  work  as  a  bargain  and  sale,  and 
so  to  make  the  lessee  capable  of  a  release. 

And  it  was  resolved  that  it  should,  and  that  the  reservation  made  a 
sufficient  consideration  to  raise  an  use,  as  by  bargain  and  sale.  Vide 
10  Co,  in  Sutton's  Hospital's  case. 


.  _Xll£jefficacy  of  a  bargain  and  sale  appears  never  to  have  depended 
upon  the  amount  of  the  consideration;  and  if  any  pecuniary  consid- 
eration  whatever  is  expressed  in  the  deed,  it  is  not  necessary  to 
prove  actual  payment,  neither  w\\\  the  bargainor  or  his  heirs  or  dev- 
isees be  permitted  to  show  that  nothing  was  in  fact  paid.  In  the 
ordinary  case  of  a  bargain  and  sale  by  a  lease  for  years,  on  which  to 
found  the  common  law  conveyance  of  a  release  by  the  owner  of  the 
reversion,  it  has  been  held  that  the  reservation  of  a  pepper-corn  rent, 
to  be  paid,  if  demanded,  was  sufficient  to  raise  the  use. — Walworth, 
Ch.,  in  Rogers  v.  Eagle  Fire  Ins.  Company  of  New  York,  9  Wend. 
611,  631  (1832)  citing  Barker  v.  Keete,  Frccm.  Com.  L.  R.,  250,  2 
Mod.  249 ;  s.  c,  2  Vent.  35. 


Sec.  4)  CONSIDERATION.  .  25 

2   ROLLE'S   ABRIDGMENT,   784    (I),   USES,   pi.   5,   6. 

In  consideration  of  certain  money  given  by  B.  a  man  may  cove- 
nant to  stand  seized  to  the  use  of  A.  for  life,  remainder  to  C  in  fee  ; 
for  here  it  is  clear  that  the  money  was  given  for  both  estates;  and 
though  A.  and  C.  are  strangers  to  the  gift  of  money,  still  they  are 
sufficiently  privy  as  if  it  was  given  for  them. 

So  in  consideration  of  certain  money  given  by  B.  a  man  may 
covenant  to  stand  seized  to  the  use  of  B.  for  life,  remainder  to  C.  in 
fee,  or  with  divers  remainders  for  the  money  was  given  for  all  the 
estates.^ 


U 


SHARINGTON  and  PLEDALL  v.  STROTTON  and  Others. 
(In  the  Queen's  Bench,  15Gij.     1  Plowden,  208.) 

Trespass  quare  clausum  fregit,  March  20,  1564.  The  defendant 
pleaded  that  the  place  in  which  the  trespass  was  supposed  to  be  done 
was  part  of  the  Manor  of  Bremell,  in  the  county  of  Wilts,  of  which 
one  Andrew  Baynton  was  seised  in  his  demesne  as  of  fee;  that  be- 
ing so  seised,  before  the  alleged  trespass,  an  indenture  was  made  be- 
tween the  said  Andrew  Baynton  and  Edward  Baynton.  his  brother, 
by  which,  after  expressing  his  intention  that  the  land  might  con- 
tinue and  remain  to  those  of  the  blood  and  name  of  Baynton  therein 
named,  he  for  said  cause  and  for  the  good  will,  fraternal  love  and 
favor  which  he  bore  Edward  his  brother  and  his  other  brothers  there- 
in named,  covenanted  and  granted  that  he  and  his  heirs  should  thence- 
forth stand  and  be  seised  thereof  to  the  use  of  himself  for  life  and 
after  his  death  to  the  use  of  Edward  Baynton  and  Agnes  his  wife 
for  their  lives  with  divers  remainders  over.  Andrew  died  February 
21,  1564.  Edward  and  his  wife  entered  and  claimed  as  legal  tenants 
for  life  under  said  indenture  and  the  Statute  of  Uses.  Defendants 
justified  the  alleged  trespass  as  servants  of  Edward  and  Agnes. 
Plaintiffs  demurred  to  this  plea  and  defendants  joined  in  the  de- 
rnurrer. 

And  the  matter  was  argued  in  Michaelmas  Term,  in  the  7th  and 
8th  years  of  Queen  Eliz.,  by  Fleetwood  and  Wray  on  the  part  of  the 
plaintiffs,  and  by  Thomas  Bromley  and  an  apprentice  of  the  Middle 
Temple  on  the  part  of  the  defendants. 

And  those  who  argued  on  behalf  of  the  plaintiff's  said  that  the 
matter  of  the  bar  was  insufficient,  and  that  there  was  no  use  here 
made  by  this  indenture,  nor  was  any  possession  conveyed  to  the  said 
Edward  Baynton  and  Agnes  by  the  Statute  of  Uses  upon  this  cove- 
nant and  agreement  by  the  indenture.  For  they  said,  first  it  is  to  be 
considered  that  Andrew   Baynton,  at  the  time  of  making  the  inden- 

1  See,  also.  Same's  Case,  2  Kolle's  Abr.  791,  Uses,  pi.  2  (Exchequer,  lUO!)) 


26  ,  THE   NATURE   AND   REQUISITES   OF   TRUSTS,  (Ch.  1 

ture,  was  seised  of  the  said  manor    in  fee  simple,  clear  of  all  estates 
and  interests  of  any  stranj^er  therein,  and  if  he  intended  to  make  a 
stranger  have  a  use  in  it,  he  ought  to  have  taken  one  of  these  jwo 
xyaysjo  raise  such  use.    The  one  is,  to  part  with  the  possession,  by  the 
circumstances  required  by  the  common  law,  to  the  use  intended,  as 
to  make  a   feoffment,  to  levy  a  fine,  or  to  suffer  a  recovery  of  the 
land  to  the  use  intended;    and  this  way  the  common  law  is  satisfied, 
as  well  as  the  party  also  who  has  the  use,  for  the  circumstances  of 
the  common  law  are  pursued,  and  the  use  is  no  more  than  a  confi- 
dence annexed  to  the  estate  which  the  person  parts  wdth,  and  when 
he  parts  with  the  estate  by  his  own  consent,  he  may  make  it  upon  con- 
fidence, and  this  way  the  use  is  properly  made.     The  other  way  i^^to 
keep  the  land  in  his  hands  without  parting  with  it,  and  yet  to  do  such 
a  thing  as  shall  make  the  possession  to  be  to  the  use  of  another,  and 
that  cannot  be  unless  the  thing  done  imports  in  itself  a  good  and  suffi- 
dent  consideration  to  make  the  possession  be  to  the  use  of  another, 
whicTTshall  be  upon  a  contract,  or  upon  a  covenant  or  grant  on  con- 
sideration.    As  if  a  man  is  seised  of  land  in  fee,  and  bargains  and 
sells  the  land  to  another  in  consideration  of  a  certain  sum  paid  to 
him,  or  agreed  to  be  paid  at  a  certain  day,  here  is  a  contract  and 
the   bargainor   shall    be    seised   to   the   use   of   the   bargainee    by   the 
course  of  the  common  law,  because  he  has  done  an  act  upon  consider- 
ation, that  is,  he  has  bargained  the  land  for  money;    and  inasmuch 
as  he  hath  the  money,  or  security  for  it,  it  is  reasonable  that  the  bar- 
gainee  should   have  something  for  it,   and  the   land   he  cannot  have 
as  his  own,  because  he  had  not  livery  of  seisin,  and  therefore  reason 
has  necessarily  vested  the  use  in  him,  which  is  but  a  right  in  con- 
science to  have  the  profits,  and  to  have  the  land  ordered  according 
to  his  will ;    and  if  the  bargainor  will  not  permit  him  so  to  have  it, 
reason  vests  in  the  bargainee  a  title  to  compel  him  by  the  Judge  of 
conscience  to  do  it.     So  is  it  in  the  case  of  a  covenant  upon  consid- 
eration, as  if  I  promise  and  agree  with  another  that,  if  he  will  marry 
my  daughter,  he  shall  have  my  land  from  thenceforth,  and  he  does 
so,  there  he  shall  have  a  use  in  my  land,  and  I  shall  be  seised  to  his 
use,  because  a  thing  is  done  whereby  I  have  benefit ;    viz.  the  other 
has  married  my  daughter,  whose  advancement  in  the  world  is  a  sat- 
isfaction and  comfort  to  me,  and  therefore  this  is  a  good  considera- 
tion to  make  him  have  a  use  in  my  land.     So  that  a  good  considera- 
tion is  always  requisite  to  create  a  use  de  novo  in  the  land  of  another, 
where  there  is  no  transmutation  of  the  possession  of  the  land.     Then 
in  our  case  here,  inasmuch  as  Andrew  Baynton  was  seised  of  the  land 
in  fee  simple,  and  intended  to  raise  uses  in  it  without  any  transmuta- 
tion of  the  possession,  which  he  cannot  do  by  the  course  of  the  com- 
mon  law,   unless   the  circumstances   pursued   in   the   raising   of   such 
uses  import  a  good  and  sufficient  consideration  to  support  the  same, 
for  this  reason  we  ought  to  weigh  the  considerations  here,  and  see 
what  substance  they  have  in  the  law.     And  the  causes  contained  in 


Sec.  4)  CON.SIDIOUATION.  27 

the  indenture  are  three ;    first,  a  desire  which  lie  had  that  the  lands 
mi.e^ht   come,    remain,    and   descend    to   the   heirs   males   of   his    hotly 
limited  in  the  indenture;    secondly,  his  intent  that  the  lands  should 
continue  and  remain  to  such  of  the  blood  and  name  of  Baynton  as  are 
named  in  the  indenture;   thirdly,  the  g-ood  will  and  brotherly  love  and 
favor  which  he  bore  to  his  brother  Edward  Baynton,  and  to  his  other 
brothers.     And  these  are  all  the  considerations  for  the  matter  in  the 
rehearsal,  viz.  that  the  said  Andrew  had  no  issue  male,  and  that  he 
w-as  determined  and  resolved  how  his  manors  and  lands  should  re- 
main and  be  as  well  in  his  lifetime  as  after  his  death,  is  no  considera- 
tion at  all,  but  the  want  of  issue  male  is  the  cause  that  moved  him  to 
resolve,  and  the  resolution  is  but  a  demonstration  of  his  mind,  and 
none  of  them  is  any  consideration,  for  the  considerations  are  the  three 
before  mentioned.     And  as  to  the  first,  viz.  his  desire  that  the  lands 
might  come  to  the  heirs  males  of  his  body,  this  does  not  seem  to  be 
any  consideration  to  the  father,  for  the  father  has  no  gain  or  advan- 
tage by  it,  but  the  heirs  males  of  his  body.     And  the  consideration 
ought  to  be  to  him  that  is  seised  of  the  land,  for  if  he  has  no  recom- 
pense there  is  no  cause  why  the  use  of  his  land  should  pass.     And 
none  of  the  considerations  contain  a  recompense  here,   for  the  con- 
tinuance of  the  land  in  his  blood  and  name  of  Baynton  is  no  recom- 
pense to  him,  nor  cause  worthy  to  raise  a  use  ;   no  more  is  the  brotherly 
love  and  favor  which  he  bore  to  Edward  Baynton,  or  to  his  other 
brothers,  for  although  these  causes  induce  affection,  yet  every  affec- 
tion is  not  a  sufficient  cause  to  alter  the  use.     For  if  a  man  grants 
to  J.  S.  that  in  consideration  of  their  long  acquaintance,  or  of  their 
great  familiarity,  or  of  their  being  scholars  together  in  their  youth, 
or  upon  such  like  considerations,  he  will  stand  seised  of  his  land  to 
his  use,  this  will  not  change  the  use,  for  such  considerations  are  not 
looked  upon  in  the  law  as  worthy  to  raise  a  use,  because  they  don't 
import  any  value  or  recompense.     For  if  upon  consideration  that  you 
are  my  familiar  friend  or  acquaintance,  or  my  brother,  I  promise  to 
pay  you  £20.  at  such  a  day,  you  shall  not  have  an  action  upon  the 
case,  or  an  action  of  debt  for  it,  for  it  is  but  a  nude  and  barren  con- 
tract, et  ex  nudo  pacto  non  oritur  actio,   and   there  is  no  sufficient 
cause  for  the  payment,   nor  is   anything   done   or  given  on  the  one 
part,   for  you  were  my  brother  or  my   acquaintance  before,   and   so 
will  you  be  afterwards;    so  that  nothing  is  newly  done  on  the  one 
part,   as   is   requisite  in   contracts,   and   also   in   covenants  upon   con- 
sideration.    As  if  I  sell  my  horse  to  you  for  money  or  other  recom- 
pense, here  is  a  thing  given  on  both  sides,  for  the  one  gives  the  horse, 
and  the  other  the  money,  or  other  recompense,  and  therefore  it  is  a 
good  contract.     So  is  it  in  the  case  of  a  covenant  upon  consideration, 
as  if  I  covenant  with  you,  that  if  you  will  marry  my  daughter  you 
shall  have  my  land,  or  I  shall  be  seised  to  your  use;    here  is  an  act 
on  both  parts,   for  you   are  to  marry  my  daughter,  and   for  that  I 
grant  to  you  the  use ;   so  that  there  is  an  act  done,  and  a  cause  arising 


28  THE    NATUUK    AND    i:i;QriSITKS    OF    TUISTS.  (Cll.  1 

newly  on  each  part.     lUit  in  the  principal  case  there  is  no  such  thinc^, 
for  the  issue  male  of  Andrew   lUiynton   should  have  been   his  issue 
male,  and  his  name  and  blood  should  have  been  his  name  and  blood, 
and  his  brothers  should  have  been  his  brothers,  and  fraternal  love 
should  have  been  between  them,  if  this  covenant  or  grant  had  not 
been  made,  so  that  all  this  was  before  the  indenture  or  covenant,  and 
should  have  been  after  the. time  of  the  indenture  or  covenant,  if  the 
same  had  not  been  made.     Wherefore  no  new  tiling-  is  here  done  or 
caused  by  the  one  side,  and  there  is  no  cause  here  but  what  would  have 
been  if  no  such  covenant  or  indenture  had  been  made.     But  the  com- 
mon  law   requires  that   there   should   be   a   new   cause,   whereof   the 
country  may   have   intelligence  or   knowledge   for  the   trial   of   it,  if 
need  be,  so  that  it  is  necessary  for  the  public  weal.     For  livery  of 
seisin  was  first  invented  as  an  act  of  notoriety,  whereby  people  might 
have  knowledge  of  estates,   and  be  more  able   to  try   them,   if  they 
should  be  empanelled  on  a  jury;    and  by  the  like  reason  when  a  use 
shall  pass,  there  ought  to  be,  by  the  common  law,  a  contract,  or  a 
public  and  notorious  consideration  to  a  covenant,  which  may  cause 
the  country  to  have  knowledge  of  the  use  for  the  better  trial  thereof, 
if  it  should  be  necessary.     And  such  was  the  intention  of  the  Parlia- 
ment in  27  Henry  VIII.  when  they  made  the  Act  that  the  possession 
should  be  where  the  use  was,  one  of  the   great  causes  of  making 
which   Act   was   to   remove   ignorance,   and   that   the    country   might 
know  in  whom  the  estate  of  the  land  was.     And  the  like  considera- 
tion they  had  in  making  the  Act  of  Enrolments,  which  restrains  es- 
tates of  freehold  from  passing  by  bargain  and  sale,  except  it  be  by 
writing  indented  enrolled  within  six  months.     And  if  uses  might  be 
so  easily  raised  by  covenants  upon  such  considerations  as  these  here 
are,  where  no  act  or  thing  apparent  is  done  whereof  the  country  may 
have  notice,  it  would  destroy  the  effect  of  the  said  Statute  of  Uses, 
and  would  be  pernicious  to  the  public  weal,  and  make  it  very  difficult 
for  the  people  to  know  who  were  the  owners  of  lands  and  tenements. 
And  it  is  to  be  presumed  that  the  makers  of  the  said  Act  of  Enrol- 
ments did  not  take  the  common  law  to  be  so,   for  if  they  had  they 
would  have  remedied  it  in  this  case,  as  well  as  they  did  in  the  case 
of  a  bargain  and  sale,  which  is  much  more  notorious  than  a  covenant 
upon   such   secret   consideration,  where  no  apparent   act  or   thing   is 
done   to    inform   the   country  of   the   alteration   of   the   estate    in   the 
land;    and  forasmuch  as  they  did  not  add  any  remedy  to  it,  it  is  an 
argument  that  they  did  not  take  the  law  to  be  that  uses  might  pass 
upon   such   covenants   without   notorious   considerations.  ^.But   if   the 
use  had  been  in  esse,  it  might  w^ell  enough  have  passed  to  a  stranger 
by  the  grant  of. cestui  que  use  without   any  consideration;    for  the 
cestui  que  use  may  as  well  give  or  grant  his  use  without  considera- 
tion, as  he  may  his  horse  or  other  chattel,  and  he  may  also  devise 
it,  but  to  create  it  de  novo  out  of  lands  cannot  be  done  without  good 
consideration.      And    to    this    purpose    they    alleged    the    opinions    oi 


Sec.  4)  CONSIDKUATIOX.  29 

Read  and  Tremail,  two  of  the  Justices  of  the  King-'s  Bench,  in  tlie 
case  of  an  office  traversed  in  21  Henry  VII.  and  the  case  there  put 
by  Read,  fol.  19,  was  also  cited,  viz.  it  was  covenanted  by  indenture 
between  Sir  John  Mordant  and  his  wife,  and  one  T.  that  the  said  T. 
should  have  the  land  to  him  and  to  his  heirs  of  his  body,  and  that  for 
default  of  such  issue,  the  lands  should  remain  to  Sir  John  Mordant 
and  his  wife  in  fee,  and  it  was  adjudged  that  he  should  not  have  any 
use  by  force  of  the  indenture,  as  it  is  there  rehearsed  by  Read,  but 
they  were  put  to  their  action  of  covenant.  So  here  no  use  shall  be 
raised  upon  these  considerations,  for  they  are  utterly  ineffectual  to 
such  purpose,  and  then  if  no  use  could  be  raised  by  the  common  law, 
from  thence  it  follows  that  the  statute  does  not  execute  any  posses- 
sion here,  for  it  executes  no  possession  but  where  there  was  a  use 
before;  for  which  reason  the  bar  is  not  good,  but  the  plaintiffs  shall 
recover.  And  many  other  things  were  said,  and  many  cases  put  to 
enforce  this  argument,  which  I  have  omitted,  my  design  being  only 
to  show  briefly  the  principal  reasons  thereof. 

On  the  contrary  Thomas  Bromley  and  the  said  Apprentice  argued 
for  the  defendants.^  The  Apprentice  divided  the  matter  into  two 
distinct  points.  First,  whether  the  grant  and  agreement  upon  these 
considerations  (admitting  it  had  been  without  deed  or  writing)  had 
been  sufficient  to  raise  the  uses  according  to  the  agreement  or  not. 
Secondly,  admitting  the  considerations  to  be  insufficient  if  they  had 
been  without  deed,  or  admitting  that  there  were  no  considerations 
at  all,  if  nevertheless  the  uses  shall  be  raised  here,  inasmuch  as  the 
agreement  thereunto  is  by  deed. 

And  as  to  the  first  point,  which  contains  the  considerations,  he 
said  that  the  considerations  are  in  number  four,  and  each  of  them  is 
several",  and  he  made  several  points  of  them,  and  argued  to  them 
severally.  The  first  is,  the  affection  of  the  said  Andrew  Baynton 
for  his  heirs  males  which  he  should  beget  on  the  body  of  Frances 
Lee.  and  his  provision  in  the  estate  made  for  their  security  accord- 
ingly. *  *  *  The  second  consideration  is  the  continuance  of  the 
land  in  the  name  of  Baynton,  and  this  seems  to  be  a  good  considera- 
tion to  raise  a  use.  *  *  *  The  third  consideration  here  is,  the 
brotherly  love,  and  continuance  of  the  land  in  such  of  the  blood  of 
the  said  Andrew  as  are  mentioned  in  the  indenture,  viz.  his  brothers. 
*  *  *  The  fourth  consideration  is  the  marriage  had  between  Ed- 
ward Baynton  and  Agnes  his  wife ;  for  the  use  is  limited  after  the 
death  of  Andrew  to  Edward  Baynton  and  Agnes  his  wife,  for  term 
of  their  lives.     *     *     * 

Then  as  to  the  second  point,  admitting  the  considerations  to  be  in- 
sufficient, or  admitting  that  no  considerations  had  been  expressed,  yet 
the  covenant  of  itself,  without  consideration,  is  sufficient  to  raise  the 
uses.     And   in  order  to  understand   this  the  better,  let  us  see  what 

1  Part  of  the  argument  for  defeiulaiits  herein  is  omitted. 


;jU  TUi:   XATLKE   AND    UEQl.-I.SITES   OF   TliLSTS.  (Ch.  1 

advantage  the  party  here  shall  have  by  the  deed,  if  the  deed  be  not 
sufficient  to  raise  the  uses.  And  it  seems  clearly  that  he  shall  have 
none.  For  he  cannot  have  an  action  of  covenant  upon  the  deed,  be- 
cause there  is  nothing:  executory  here;  for  Andrew  has  covenanted 
with  Edward  that  he  and  all  persons  seised  of  the  land  shall  from 
thenceforth  stand  and  be  seised  to  the  uses  limited.  And  if  they  did 
not  stand  seised,  there  is  no  default  in  Andrew,  but  in  the  law,  for  he 
p^ranted  that  from  thenceforth,  viz.  immediately,  he  would  be  seised, 
and  no  default  can  be  charged  in  him  if  he  did  not  stand  seised.  Nor 
can  Edward  have  an  action  of  covenant  against  him,  for  an  action  of 
covenant  shall  never  be  brought,  but  where  it  is  covenanted  that  a 
thing  shall  be  done  in  time  to  come,  or  that  it  was  done  in  time  past. 
And.  Sir,  by  the  law  of  this  land  there  are  two  ways  of  making 
contracts  or  agreements  for  lands  or  chattels.  The  one  is,  by  words, 
which  is  the  inferior  method;  the  other  is,  by  writing,  which  is  the 
superior.  And  because  words  are  oftentimes  spoken  by  men  unad- 
visedly and  without  deliberation,  the  law  has  provided  that  a  contract 
by  words  shall  not  l)ind  without  consideration.  As  if  I  promise  to 
give  you  £20.  to  make  your  sale  de  novo,  here  you  shall  not  have  an 
action  against  me  for  the  £20.,  as  it  is  affirmed  in  the  said  case  in 
17  Edward  IV..  for  it  is  a  nude  pact,  et  ex  nudo  pacto  non  oritur  actio. 
And  the  reason  is,  because  it  is  by  words  which  pass  from  men  light- 
ly and  inconsiderately,  but  where  the  agreement  is  by  deed,  there  is 
more  time  for  deliberation.  For  when  a  man  passes  a  thing  by 
deed,  first  there  is  the  determination  of  the  mind  to  do  it,  and  upon 
that  he  causes  it  to  be  written,  which  is  one  part  of  deliberation,  and 
afterwards  he  puts  his  seal  to  it.  which  is  another  part  of  deliberation, 
and  lastly  he  delivers  the  writing  as  his  deed,  which  is  the  consum- 
mation of  his  resolution  ;  and  by  the  delivery  of  the  deed  from  him 
that  makes  it  to  him  to  whom  it  is  made,  he  gives  his  assent  to  part 
with  the  thing  contained  in  the  deed  to  him  to  whom  he  delivers  the 
deed,  and  this  delivery  is  as  a  ceremony  in  law,  signifying  fully 
his  good  will  that  the  thing  in  the  deed  should  pass  from  him  to  the 
other.  So  that  there  is  great  deliberation  used  in  the  making  of 
deeds,  for  which  reason  they  are  received  as  a  lien  final  to  the  party, 
and  are  adjudged  to  bind  the  party  without  examining  upon  what 
cause  or  consideration  they  were  made.  And  therefore  in  the  case 
IHit  in  IT  Edward  IV.  put  it  thus,  that  I  by  deed  promise  to  give  you 
£20.  to  make  your  sale  de  novo,  here  you  shall  have  an  action  of  debt 
upon  tliis  deed,  and  the  consideration  is  not  examinable,  for  in  the 
deed  there  is  a  sufficient  consideration,  viz.  the  will  of  the  party  that 
made  the  deed.  And  so  where  a  carpenter,  by  parol  without  writing, 
undertook  to  build  a  new  house,  and  for  the  not  doing  of  it  the 
party  in  11  Henry  IV.  brought  an  action  of  covenant  against  the 
carpenter,  there  it  does  not  appear  that  he  should  have  anything  f*tr 
building  the  house,  and  it  was  adjudged  that  the  plaintiff  should  take 
nothing  by  his  writ:    but  if  it  had  been  by  specialty,  it  would  have 


Sec.  4)  CONSIDERATION.  31 

been  otherwise;  and  so  it  is  there  held  by  Thirninq-,  causa  qua  supra. 
So  in  45  Edward  III.  in  debt,  the  plaintiff  counted  that  a  covenant 
was  made  between  him  and  the  defendant,  that  the  plaintiff  should 
marry  the  defendant's  daughter,  and  that  the  defendant  should  be 
bound  to  him  in  ilOO.,  and  he  said  that  he  had  married  his  daughter; 
and  the  count  was  challenged,  because  this  debt  is  demanded  upon  a 
contract  touching  matrimony,  which  ought  to  be  in  Court  Christian ; 
but  notwithstanding  this,  forasmuch  as  he  demanded  a  debt  upon  a 
deed,  whereby  it  was  become  a  lay  contract,  he  was  put  to  answer: 
but  otherwise  it  would  have  been  if  it  had  been  without  deed,  as  it  is 
there  put;  and  14  Edward  IV.  and  also  17  Edward  IV.  are,  that  if 
it  be  without  deed  the  action  does  not  lie,  because  the  marriage,  which 
is  the  consideration,  is  a  thing  spiritual ;  which  books  are  contrary  to 
the  opinion  of  Thorp  in  the  said  case  in  22  Ass.  Plow.,  fol.  305.  So 
that  where  it  is  by  deed,  the  cause  or  consideration  is  not  inquirable, 
nor  is  it  to  be  weighed,  but  the  party  ought  only  to  answer  to  the  deed, 
and  if  he  confesses  it  to  be  his  deed,  he  shall  be  bound,  for  ^ejvery. 
deed  imports  in  itself  a  consideration,  viz.  the  will  of  him  that  made 
iV  and  therefore  where  the  agreement  is  by  deed  it  shall  never  be 
called  a  nudum  pactum.  And  in  an  action  of  debt  upon  an  obliga- 
tion, the  consideration  upon  which  the  party  made  the  deed  is  not  to 
be  inquired,  for  it  is  sufficient  to  say  that  it  was  his  will  to  make  the 
deed.  And  so  inasmuch  as  in  the  principal  case  it  is  agreed  that  the 
uses  might  be  raised  by  the  deed  if  there  had  been  a  consideration 
in  it,  and  here  there  is  a  consideration  contained  in  the  deed,  viz. 
the  will  of  Andrew  Baynton,  which  is  sufficient  of  itself,  for  this 
reason  the  uses  shall  be  raised  thereby;  and  if  this  should  not  be 
sufficient  to  raise  them,  yet  they  should  have  been  raised  by  other 
considerations,  if  they  had  been  without  deed,  whereas  here  they  are 
by  deed,  and  so  they  shall  be  raised  a  fortiori.  For  which  reasons 
they  prayed  judgment  that  the  plaintiffs  might  be  barred.  And  many 
other  things  were  said,  and  cases  put  to  enforce  these  arguments. 

And  after  these  arguments  the  Court  took  time  to  deliberate  un- 
til Hilary  Term,  and  from  thence  until  Easter  Term,  and  from 
thence  until  this  present  Trinity  Term,  in  the  eighth  year  of  the 
reign  of  the  present  Queen,  and  the  defendants  now  prayed  judgment. 
And  Corbet,  Justice,  said  that  he  and  all  his  companions  had  resolv- 
ed that  judgment  should  be  given  against  the  plaintiffs.  For  it  seemed 
to  them  that  the  considerations  of  the  continuance  of  the  land  in  the 
name  and  blood,  and  of  brotherly  love,  were  sufficient  to  raise  the 
uses  limited.  But,  he  said,  as  my  Lord  Chief  Justice  is  not  now 
present,  you  must  move  it  again  when  he  is  present,  and  you  shall 
have  judgment.  And  afterwards,  at  another  day,  Catline.  Chief 
Justice,  being  present,  the  Apprentice  prayed  judgment.  And  Cat- 
line  and  the  Court  were  agreed  that  judgment  should  be  entered 
against  the  plaintiffs,  and  he  ordered  Haywood,  the  Prothonotary, 
to  enter  it      And  the  Appre-ntice  said,  may  it  please  your  Lordship 


32  THK  NATiin:  and  keqiisitks  of  trusts.  (Ch.  1 

to  show  us,  for  our  learning,  the  causes  of  your  judgment.  And  Cat- 
line  said,  it  seems  to  us  that  the  affection  of  the  said  Andrew  for  the 
provision  of  the  heirs  males  which  he  should  heget,  and  his  desire 
that  the  land  should  continue  in  the  blood  and  name  of  Baynton,  and 
the  brotherly  love  which  he  bore  to  his  brothers,  are  sufficient .xon^^ 
siderations  to  raise  the  uses  in  the  land.  And  where  you  said  in  your 
argument  naturae  vis  maxima,  I  say  natura  bis  maxima,  and  it  is  the 
greatest  consideration  that  can  be  to  raise  a  use.  But  as  to  the  other 
consideration  moved  in  the  argument,  viz.  of  the  marriage  had  be- 
tween Edward  Baynton  and  Agnes,  the  record  does  not  prove  this. 
nor  is  it  so  averred,  and  it  shall  not  be  so  intended,  and  therefore  I 
don't  regard  it,  but  the  other  causes  and  considerations  are  effectual, 
and  those  which  moved  us  to  our  judgment.  WlKTcfore  judgment 
was  given  for  the  defendants. 


CALLARD  V.  CALLARD. 

(In  tlio  Qnoon's  P.onch  and  Kxdieciuor  ("h:uiil  t>r.   l.io:?.     Moore,  687,  pi.  950.) 

In  ejectione  flrmse  upon  a  demise  by  Eustace  Callard.  And  upon 
not  guilty  pleaded  it  was  found  by  special  verdict  that  Thomas  Cal- 
lard was  seized  in  fee,  and  in  consideration  of  the  marriage  of  Eu- 
stace, his  son  and  heir  apparent,  being  upon  the  land  spoke  these 
words  to  the  said  Eustace,  viz.:  "Eustace  stand  forth,  I  do  here, 
reserving  an  estate  for  mine  own  and  my  wife's  life,  give  unto  thee 
and  thine  heirs  forever,  those  my  lands  and  Barton  of  Southcot." 
[  And  afterwards  Thomas  enfeoffed  Richard  |he_def_endant,  his  young- 
/  er  son,  in  fee,  with  warranty  and  died.  Eustace  entered  and  made  a 
demise  to  the  plaintiff  who  entered,  and  the  defendant  ejected  him. 
Upon  which  special  verdict,  after  long  debate  in  the  Queen's  Bench 
judgment  was  given  for  the  plaintiff',  upon  which  the  defendant 
brought  a  writ  of  error  in  the  Exchequer  Chamber,  and  here  the 
judgment  was  reversed  at  Hilary  Term  in  the  year  39  Eliz.  Note 
that  in  the  Queen's  Bench,  Popham,  C.  J.,  held  strongly  that  the 
consideration  of  blood  raised  a  use  to  Eustace  without  writing,  and 
so  he  had  the  possession  by  27  Hen.  VHI.  But  Gawdy,  Fenner  and 
Clench  contra  to  this  opinion,  yet  in  the  final  judgment  they  agreed, 
because  they  took  the  words  to  amount  to  a  feoffment  with  livery 
being  upon  the  land,  and  the  use  to  be  to  the  feoffor  and  his  wife 
for  life,  and  then  to  Eustace  and  his  heirs.  But  note  that  in  the 
Exchequer  Chamber,  Ewen  took  the  law  in  the  same  manner  as  the 
puisne  justices  in  the  Queen's  Bench,  and  that  the  judgment  ought 
to  be  affirmed  for  this  reason.  But  he  was  against  Popham  that  the 
use  would  not  arise  without  writing.  Beamont  took  it  as  a  feoff- 
ment to  Eustace  in  fee  and  the  reservation  to  the  father  and  his 
wife  void   for  repugnancy;    and  therefore  wished  to  have  the  judg- 


Sec.  4)  CONSIDERATION.  33 

ment  affirmed;    and  he  also  was  against  Popham.     But  all  the  other 

iustices,   viz.,  Anderson,   Pyrryam,  Clerk,  Walmesley  and   Owen  all 

agreed,  that  there  was  no  feoffment  executed,  because  the  intent  was  .  ^  ^  %  ^ , 

repugnant  to  the  law.  that  is,  to  pass  an  estate  to  Eustace  reserving 

a^particular  estate  to  himself  and  his  wife.     And  a  use  it  could  not  be  _  ._^ 

because  thelDurpose  was  not  to  raise  a  use  without  an  estate  executed.       ^        '      ' 

but  by  an  estate  executed  which  could  not  take  effect.     And  they  all    ^ 

agreed  that  if  it  was  a  use  yet  it  could  not  arise  upon  natural  affec-    -^ 

tion  without  a  deed.     Note  that  the  witnesses  that  proved  the  words 

to 'the  jury  were  attainted  of  perjury  in  the  Star  Chamber,  at  Easter 

Term,  40  Eliz.  

FRAMPTON  V.  GERRARD. 

(In  the  Queen's  Bench.  1601.    2  Rolle's  Abridgment,  785  (K).  Uses.  pi.  4;  701, 

pi.  1.) 

Per  Curiam.  If  a  man  covenant  in  consideration  of  blood  and  of 
the  marriage  of  his  bastard  daughter  to  stand  seized  to  the  use  of  the 
bastard  daughter:  this  is  not  a  good  consideration  to  raise  a  use,  for 
in  law  she  is  not  his  daughter,  but  filia  populi. 

If  a  man  levies  a  fine  of  certain  land  and  covenants  by  indenture 
in  consideration  of  the  marriage  of  his  bastard  daughter  that  the 
conusee  shall  stand  seized  to  the  use  of  the  daughter,  though  that.is 
aot  a  good  consideration  to  raise  an  use  by  way  of  covenant,  yet  it, 
is  sufficient  upon  a  fine,  for  the  will  of  the  party  is  sufficient  for  this 
without  consideration.  

2  ROLLE'S  ABRIDGAIENT,  (I),  USES,  pi.  5. 

If  a  man  in  consideration  that  B.  will  marry  his  daughter  covenants 
to  stand  seized  to  the  use  of  B.  and  his  daughter,  remainder  to  C, 
this  is  a  void  remainder  to  C.  because  he  is  a  stranger  to  the  consid- 
eration.^ 

1  See,  also.  Fox  v.  Wilcocks,  2  Rolle's  Abr.  783  (H),  Uses,  pi.  4. 

The  cestui  que  trust  is  not  a  stranger  to  the  consideration,  if  (1)  nearly 
related  bv  blood  to  the  covenantor,  e.  g.  a  son  or  grandson.  Bonde  v.  Edmunds. 
2  Rolle's' Abr.  782,  783  (H),  Uses,  pi.  3 ;  2  Rolle's  Abr.  784  (I),  Uses,  pi.  3.  4; 
2  Rolle's  Abr.  785  (K),  Uses,  pi.  6,  8;  Cross  v.  Fausteuditch,  Cro.  Jac.  180; 
a  daughter.  2  Rolle's  Abr.  784  (I),  Uses,  pi.  2,  5 ;  brother  of  covenantor.  Shar- 
ington  V.  Strotton.  Plowd.  208 ;  nephew,  Englefield's  Case,  7  Co.  R.  110 ;  or  if 
(2)  connected  by  marriage  with  the  covenantor,  e.  g.  v^'ife  of  covenantor.  Be- 
dell's Case,  7  Co.  R.  40a ;  Burgoine  v.  Burgoine.  22  Yin.  Abr.  (N).  I^ses,  pi.  10 ; 
Co.  Lit.  112a;  wife  of  covenantor's  son.  Anon.  13  Co.  R.  48;  Corbyn  v.  Corbyn. 
2  Rolle's  Abr.  784  (I),  Uses.  pi.  4;  Bould  v.  Winston.  2  Rolle's  Abr.  784  (I). 
I^ses.  pi.  3  ;  husband  of  covenantor's  daughter,  2  Rolle's  Abr.  784  (I),  Uses,  pi. 
2 ;  wife  of  covenantor's  brother,  2  Rolle's  Abr.  783  (I),  Uses,  pi.  1. 

The  cestui  que  trust  need  not  be  the  covenantee.  Cross  v.  Faustenditch,  Cro. 
Jac.  180;  Bedell's  Case.  7  Co.  R.  41a;  llarpur's  Case,  11  Co.  R.  246;  Buckler 
V.  Symons,  2  Rolle's  Abr.  788,  Uses. 

If  the  cestui  que  trust  be  the  covenantor's  wife,  she  cannot  be  the  cove- 

Ken.Tr.— 3 


34  THE   NATUKE   AND   REQUISITES   OF  TRUSTS.  (Cll.  1 

THE  STATUTE  OF  USES,  27  HEN.  VHI,  c.  10  (1535). 

This  statute  enacts  that  where  any  person  or  persons  stand  or  be 
seized  or  at  any  time  hereafter  shall  happen  to  be  seized,  of  and  in 
any  honours,  castles,  manors,  lands,  tenements,  rents,  services,  re- 
versions, remainders  or  other  hereditaments,  to  the  use,  confidence  or 
trust  of  any  other  person  or  persons  or  of  any  body  politick  by  reason 
of  any  bargain,  sale,  feoffment,  fine,  recovery,  covenant,  contract, 
agreement,  will  or  otherwise,  by  any  manner  means  whatsoever  it  be : 
that  in  every  such  case,  all  and  every  such  person  and  persons,  and 
bodies  politick,  that  have  or  hereafter  shall  have  any  such  use,  con- 
fidence or  trust,  in  fee-simple  fee-tail,  for  term  of  life  or  for  years, 
or  otherwise,  or  any  use,  confidence  or  trust  in  remainder  or  reverter, 
shall  from  henceforth  stand  and  be  seized,  deemed  and  adjudged  in 
lawful  seizin,  estate  and  possession  of  and  in  the  same  honours,  castles, 
manors,  lands,  tenements,  rents,  services,  reversions,  remainders  and 
hereditaments,  with  their  appurtenances,  to  all  intents,  constructions 
and  purposes  in  the  law,  of  and  in  such  like  estates  as  they  had  or_ 
shall  have  in  use,  trust  or  confidence  of  or  in  the  same ;  and  that  the 
estate,  title,  right  and  possession  that  was  in  such  person  or  persons 
that  were,  or  hereafter  shall  be  seized  of  any  lands,  tenements  or 
hereditaments,  to  the  use,  confidence  or  trust  of  any  such  person  or 
persons,  or  of  any  body  politick,  be  from  henceforth  clearly  deemed 
and  adjudged  to  be  in  him  or  them  that  have,  or  hereafter  shall 
have,  such  use,  confidence  or  trust,  after  such  quality,  manner,  form 
and  condition  as  they  had  before,  in  or  to  the  use,  confidence  or  trust, 
that  was  in  them. 

STATUTE  OF  INROLLMENTS,  27  HEN.  VHI,  c.  16. 

Enacts  that  from  July  31,  153G,  no  manors,  lands,  tenements  or 
other  hereditaments  shall  pass,  alter  or  change  from  one  to  another, 
whereby  any  estate  of  inheritance  or  freehold  shall  be  made  or  take 
effect  in  any  person  or  persons,  or  any  use  thereof  to  be  made,  by 
reason  only  of  any  bargain  and  sale  thereof,  except  the  same  bargain 
and  sale  be  made  by  writing,  indented,  sealed,  and  inrolled  in  one  of 
the  King's  courts  of  record  at  Westminster  etc.  *  *  *  ^\^q  same 
inrollment  to  be  had  and  made  within  six  months  next  after  the  date 
of  the  same  writincrs  indented. 


In  St.  27  Hen.  \^ni,  c.  10,  all  the  conveyances  are  mentioned,  not 
one  word  of  a  consideration  in  the  whole  statute,  that  is  left  to  the 
judgment  of  the  law;    therefore  the  law  hath  construed  that  statute 

nantee.    A  husband  and  wifo  at  common  law  were  one,  and  therefore  the  hus- 
band could  not  covenant  with  himself.    Co.  Lit.  112a. 


Sec.  4)  CONSIDERATION.  35 

according  to  the  rules  of  the  common  law  for  considerations ;  for  at 
common  law,  that  passeth  by  transmutation  of  possession,  it  is  so 
since,  and  what  before  the  statute  could  not  pass  without  valuable 
consideration,  so  it  is  since,  and  not  directed  by  any  statute.  Plowd. 
Comment,  fol.  301,  Sharington's  Case.  Good  consideration  is  requi- 
site to  create  a  novel  use,  where  there  is  no  transmutation  of  posses- 
sion. The  reason  why  such  constructions  are  made,  may  be  because 
such  conveyances  by  transmutation  of  possession  are  done  more  sol- 
emnly and  publicly,  as  in  Plowd.  302.  Boynton's  Case.  Therefore 
the  Statute  of  Inrollments  was  made,  that  men  might  know  the  own- 
ers and  the  tenants  to  the  Praecipe.  And  the  law  hath  allovved  consid- 
eration of  natural  afifection  and  marriage  sufficient  to  raise  an  use. 
Dyer  fol.  336b.  Bee  and  Carlton's  Case,  11  Rep.  fol.  76b,  tells 
you  what  a  consideration  is,  it  is  a  meritorious  cause  requiring  a  mu- 
tual recompense  in  fact  or  in  law ;  in  Boynton's  Case  cited  before,  ac- 
quaintance and  great  familiarity  are  not  sufficient  to  raise  an  use. 
In  every  promise  which  gives  any  cause  of  action,  there  must  be  a 
consideration,  that  must  be  either  beneficial  to  him  that  made  the 
promise,  or  prejudicial  to  him  that  brings  the  action.  My  Lord 
Bacon  in  his  reading  upon  the  Statute  of  Uses,  hath  a  good  observa- 
tion, though  Uses  are  accounted  light,  yet  they  are  ponderous,  and 
nothing  but  a  good  consideration  can  raise  them  up.  There  are  no 
considerations  now  at  this  day  to  raise  uses  upon  covenants,  but  natu- 
ral love  and  affection  which  is  for  advancement  of  blood,  or  consid- 
eration of  marriage,  which  is  the  joining  of  blood  and  marriage  to- 
gether; other  considerations,  as  money  for  land,  or  land  for  land, 
though  the  words  be  [stand  seized  to  uses]  yet  they  are  Bargains  and 
Sales,  and  without  enrollment  they  raise  no  use.  As  you  may  see  in 
1  Leonard  201,  at  the  end  of  my  Lord  Paget's  Case,  Coke's  Com- 
ment, upon  the  Statute  of  Enrollments,  p.  672  Plowd.  Comment. 
303,  and  in  many  other  books. — Per  Brome,  Serjeant,  arg.  Carter's 
Common  Pleas  Reports,  137,  138-139. 


The  second  word  material  is  the  word  "seized" ;   this  excludes  chat- 
:tel§,— Lord  Bacon,  Statute  of  Uses,  43  (Rowe's  Ed.). 


Neither  the  Statute  of  Uses,  nor  the  10th  section  of  the  Statute  of 
Frauds,  embrace  personal  property. — Dunkin,  Ch.,  in  Rice  v.  Bur- 
nett, 1  Speer's  Eq.  579,  588,  42  Am.  Dec.  336  (1844).^ 

1  See,  also,  Watson,  Trustee,  v.  Pitts,  2  McMul.  298  (1&42). 


36  THE   NATURE   AND   KEQI'ISITES   OF  TRUSTS.  (Cll.  1 

JEXKIXS  CJ-:XTL'RY  CASl-.S,  214,  CASE  XXX,  1580. 

An  husband  possessed  of  a  lease  for  years,  assi.c^ns  it  to  B  in  trust 
for  himself  and  his  wife;  the  husband  cannot  assign  this  trust,  for  a 
trust  is  nothing-  in  law;  and  uses  being  abolished  and  joined  to  the 
possessions,  this  trust  cannot  be  said  to  be  an  use;  for  if  so,  the  27 
H.  8  of  transferring  uses  into  possession,  would  be  to  no  purpose; 
for  this  statute  requires  a  seisin  to  the  use,  but  there  is  only  a  pos- 
session in  a  lessee  for  years.  Assignments  of  trusts  beget  strife  and 
maintenance,  and  are  void  in  law. 

Uy  the  judges  of  both  Benches.    , 


NEVIL  V.  SAUNDERS. 

(Tn  Cliiinrory.  before  Lord  ('liMUct'llor  .TelTreys,  1G80.     1  Vernon.  Cli.  415.) 

Lands  were  given  by  will  to  trustees  and  their  heirs,  in  trust  for 
Anne  the  defendant's  wife  and  her  heirs,  and  that  the  trustees  should 
from  time  to  time  pay  and  dispose  of  the  rents  and  protits  to  the 
said  Anne,  or  to  such  person  or  persons  as  she  by  any  writing  under 
her  hand,  as  well  during  coverture  as  being  sole,  should  order  or  ap- 
point the  same,  without  the  intermeddling  of  her  husl^and,  whom  he 
willed  should  have  no  benefit  or  disposal  thereof;  and  as  to  the  in- 
heritance of  the  premises  in  trust  for  such  person  or  persons,  and  for 
such  use  and  estates,  as  the  said  Anne  by  any  writing  purporting 
her  will,  or  other  writing  under  her  hand,  should  appoint;  and  for 
want  of  such  appointment,  in  trust  for  her  and  her  heirs. 

The  question  was,  whether  this  was  an  use  executed  by  the  statute, 
or  a  bare  trust  for  the  wife :  and  the  court  held  it  to  be  a  trust  only, 
and  not  an  use  executed  by  the  statute. 


BROOKE'S  ABRIDG:\IENT,   FEOFFMENT  AL    USES,  pi.  -10, 

1532. 

A  man  makes  a  feoffment  in  fee  to  four  to  his  use,  and  the  feoffees 
make  a  gift  in  tail  to  a  stranger  without  consideration  who  has  no 
notice  of  the  first  use  to  hold  to  the  use  of  the  cestui  que  use  and  his 
heirs,  the  tenant  in  tail  shall  not  be  seized  to  the  first  use,  but  to  his 
own  use,  for  the  statute  of  West.  2,  c.  1,  directs  that  voluntas  dona- 
toris  in  omnibus  observetur,  that  a  man  should  refer  his  will  to  the 
law  and  not  the  law  to  his  will,  and  so  here  there  is  tenure  between 
the  donor  and  the  donee,  which  is  a  consideration  that  the  tenant  in 
tail  shall  be  seized  to  his  own  use,  and  the  same  law  of  tenant  for 


Sec.  4)  CONSIDERATION.  37 

term  of  years  and  for  term  of  life,  there  fealty  is  clue  and  where  a 
rent  is  reserved,  there  though  a  use  be  expressed  to  the  use  of  the 
donor  or  lessor,  yet  this  is  a  consideration  that  the  donee  or  lessee 
shall  have  it  to  his  own  use ;  and  the  same  law  where  a  man  sells  his 
land  for  £20.  by  indenture,  and  executes  an  estate  to  his  own  use; 
this  is  a  void  limitation  of  the  use,  for  the  law,  by  the  consideration 
of  money,  makes  the  land  to  remain  in  the  vendee. 


TYRREL'S  CASE. 

(Tn  the  Court  of  Wards,  1557.    2  Dyer,  1.55a.  pi.  20.) 

Jane  Tyrrel,  widow,  for  the  sum  of  four  hundred  pounds  paid  by 
G.  Tyrrel  her  son  and  heir  apparent,  by  indenture  enrolled  in  chan- 
cery in  the  4th  year  of  Edw.  VI,  bargainedj^old,  gave,  granted,  cove- 
nanted, and  concluded  to  the  said  G.  Tyrrel  all  her  manors,  lands, 
tenements,  etc.  to  have  and  to  hold  the  said  etc.,  to  the  said  G.  T.  and 
his  heirs  forever,  to  the  use  of  the  said  Jane  during  her  life,  without 
impeachment  of  waste ;  and  immediately  after  her  decease  to  the  use 
of  the  said  G.  T.  and  the  heirs  of  his  body  lawfully  begotten;  and  in 
default  of  such  issue,  to  the  use  of  the  heirs  of  the  said  Jane  forever. 
Ou^re  well  whether  the  limitation  of  those  uses  upon  the  habendum 
are  not  void  and  impertinent,  because  an  use  cannot  be  springing, 
drawn,  or  reserved  out  of  an  use,  as  appears  prima  facie?  And  here 
it  ought  to  be  first  an  use  transferred  to  the  vendee  before  that  any 
freehold  or  inheritance  in  the  land  can  be  vested  in  him  by  the  en- 
rollment, etc.  And  this  case  has  been  doubted  in  the  Common  Pleas 
before  now:  ideo  quaere  legem.  But  all  the  judges  of  C.  B.  and 
Saunders,  Chief  Justice,  thought  that  the  limitation  of  uses  above 
is  void,  etc.  for  suppose  the  Statute  of  Inrollments  [cap.  16]  had 
never  been  made,  but  only  the  Statute  of  Uses  [cap.  10],  in  27  Hen. 
VIII,  then  the  case  above  could  not  be,  because^ an  use  cannot  be  in- 
gendered  of  an  use,  etc. 

The  reason  why  the  use  to  Jane  Tyrrel  was  void  is  thus  stated  by 
Anderson  in  1  And.  37,  pi.  96 :  "For  the  bargain  for  money  implies 
in  it  a  use,  and  the  limitation  of  the  other  use  is  merely  contrary, 
for  by  this  means  t^e  use  in  fee  which  is  in  the  bargainee  in  fee  alone 
will  be  destroyed  if  the  law  were  not  as  before   [the  statute]." 

In  Dillamv.  Frain,  1  And.  309,  313,  Anderson,  citing  Tyrrel's 
Case,  savs:  "This  limitation  of  the  use  is  utterly  void  because  by 
the  sale  for  money  the  use  appears  and  to  limit  another  (though  the 
other  use  appear  by  deed)  is  merely  repugnant  and  they  cannot  stand 
together."     He  refers  to  Brooke's  Abr.  Feoffments  al  Uses,  40.^ 

1  See,  also.  Anrlerson  in  Crumuol  v.  Aiulrus,  2  And.  GO,  81.  » 


38  THE   NATURE   AND    HEQUISITES   OF   TRUSTS.  (Ch.  1 

SA^IBACH  V.  DALSTON. 

(In  Chancery,  1634.     Tcthill,    ISO.) 

Because  one  use  cannot  be  raised  out  of  another,  yet  ordered,  and 
the  defendant  ordered  to  pass  according  to  the  intent. 


•       ASH  V.  GALLHN. 

(In  ClmnfM-y.  boforo  Lord  K<'eper  Bridcman  aiid  .luslico  Windham.  IHOS.     1 

C'liaiU'ory  Casi^s.  114.1 

It  was  declared,  that  a  use  upon  a  use  will  not  rise  by  bargain  and 
sale.     Dyer,  155,  and  Chudleigh's  Case,  1  Co.  Rep.  283. 

But  for  the  plaintiff  it  was  insisted,  that  though  a  use  could  not 
rise  as  a  use  upon  a  use,  yet  as  a  trust  it  would  in  equity. 

A  case  was  ordered  to  be  made,  but  the  parties  agreed  among 
themselves,  and  it  was  not  argued  at  all. 


DIXON  V.  HARRISON. 
(In  roiiimnii  rioas,  IGC.I).    Vaughan's  Reports,  36,  50.) 

Vaugh.\x,  Ch.  J.  The  intent  of  the  Statute  of  27  Hen.  VIII,  c.  10, 
which  was  to  bring  together  the  possession  and  the  use,  when  the 
use  was  to  one  or  more  persons,  and  the  possession  in  one  or  more 
other  separate  persons,  was  soon  after  the  statute^  wdiolly  declined, 
upon  what  good  construction  or  reference  I  know  not. 

For  now  the  use  (by  the  name  of  trust)  which  were  one  and  the 
same  before  the  statute,  remains  separately  in  some  persons,  and  the 
possession  separately  in  others,  as  it  did  before  the  statute,  and  are 
not  brought  together  but  by  decree  in  chancery,  or  the  voluntary  con- 
veyance of  the  possessor  of  the  land,  to  cestui  que  trust. 


SYMSON  V.  TURNER. 

(In  riianfory,  1700.     1   Iviuity  Cases  Ahridgod.  ?>S3.) 

But  notwithstanding  this  statute  [St.  27  Hen.  VIIT,  c.  10]  there 
are  three  ways  of  creating  an  use  or  a  trust,  which  still  remains  as  at 
common  law,  and  is  a  creature  of  the  court  of  equity,  and  sul)jcct  only 

1  Doan  Ames  in  an  article.  "The  Origin  of  Uses  and  Trusts,"  21  Harvard 
Law  Review,  2(11,  has  traced  the  evolution  of  the  use  upon  a  use  into  the 
modern  trust,  and  has  .shown  that  the  Statute  of  Uses  "so  far  accomjilished 
its  purpose  that  for  a  century  there  was  no  such  thing  as  the  separate  exist- 
ence in  any  form  of  the  equitable  use  in  land." 


Sec.  4)  CONSIDERATION.  39 

to   their   control    and    direction:      1st,    Where    a    man    seized    in    fee 
raises  a  term  for  years,  and  limits  it  in  trust  for  A.  etc.,  for  this  the 
statute   cannot  execute,   the   termor   not  being-   seized.     2dly,   Where 
lands  are  limited  to  the  use  of  A.  in  trust  to  permit  B.  to  receive  the        ^ 
rents  and  profits;   for  the  statute  can  only  execute  the  first  use.    3dly,  ' 
Where  lands  are  limited  to  trustees  to  receive  and  pay  over  the  rents     ^ 
and  profits  to  such  and  such  persons ;    for  here  the  lands  must   re- 
main   in    them    to    answer    these   purposes;     and    these    points    were 
agreed  to. 


DAW  V.  NEWBOROUGH. 

(Ill  Coiumon  Pleas,  1715.     Comyns.  242,  pi.  1.3.">.) 

King,  Ch.  J.  And  when  the  estate  is  limited  to  Thomas  and  his 
heirs,  to  the  use  of,  etc.,  the  use  must  of  necessity  arise  out  of  the 
estate  of  the  feoffee,  etc.  to  the  use,  etc.  and  therefore,  if  it  be  to  the 
use  of  Thomas  and  his  heirs,  and  after  to  the  use  others,  this  will 
be  an  use  upon  an  use  which  will  never  be  allowed  by  the  rules  of 
law;  for  the  use  is  only  a  liberty  or  authority  to  take  the  profits,  but 
two  cannot  severally  take  the  profits  of  the  same  land,  therefore 
there  cannot  be  an  use  upon  an  use. 

But  this  is  now  allowed  by  way  of  trust  in  a  court  of  equity.  -Jff 


It  was  agreed  that  a  devise  might  be  to  the  use  of  another. — 1 
Leon.  353  (1591).  Burchett  v.  Durdant,  2  Ventris,  311,  312  (1G91) 
acc.^ 


Ex  parte  PYE. 

Ex  parte  DUBOST. 

(In  Chancery,  before  Lord  Chancellor  Eldon,  1811.     18  Ves.  Jr.  140.) 

William  Mowbray,  by  his  will  dated  the  10th  of  April,  180G,  gave 
to  Marie  Genevieve  Garos  the  sum  of  i2,500  sterling  for  her  own  use 
over  which  her  husband  was  to  have  no  power. 

The  testator  died  on  the  8th  of  June,  1809.  His  widow  became  a 
lunatic;  the  petitioner,  Pye,  was  the  committee  under  the  commis- 
sion, and,  upon  her  deatli,  took  out  administration  to  her,  and  admin- 
istration de  bonis  non  to  the  testator. 

1  Though  the  statute  of  wills  (St.  32  Hen.  viii,  c.  1)  was  not  passed  till  1540. 
five  years  after  the  statute  of  uses,  it  has  been  held  that  the  hitter  statute 
applies  to  a  devise  of  land  to  a  use  and  that  the  statute  may  transfer  the 
le^'ul  title  to  the  cestui  que  use.  See  Sugdeu  on  Powers  (7th  Ed.)  star  pages 
171-173. 


40  TIIK   XATUKE   AND    i;i:Qr ISITIOS   OF   TKUSTS.  (Cll.  1 

The  Master's  report  stated  that,  by  a  letter  written  by  the  testator 
to  Christopher  Dubost,  in  Paris,  on  the  2oth  of  November  180T,  the 
testator  authorized  him  to  purchase  in  France  an  annuity  of  ilOO 
for  the  benefit  of  the  said  Marie  Genevieve  Garos  for  her  hfe,  and 
to  draw  on  hiin  for  £1,500  on  account  of  such  purchase;  and  under 
that  authority  Dubost  purchased  an  annuity  of  that  value ;  but  that, 
as  she  was  married  at  the  time,  and  also  deranged,  the  annuity  was 
purchased  in  the  name  of  the  testator;  and  the  testator  sent  to  Du- 
bost, by  his  desire,  a  power  of  attorney,  authorizing-  hini  to  transfer 
to  Marie  Genevieve  Garos  the  said  annuity,  dated  the  10th  of  June, 
1808. 

The  report  further  found,  upon  the  affidavit  of  Dubost  and  the 
copy  of  the  deed,  that  the  first  intimation  he  received  of  the  death 
of  the  testator,  vv^ho  died  in  June,  1809,  was  in  November,  1809  ;  and 
that,  in  ignorance  of  such  death,  Dubost,  on  the  21st  of  October, 
1809,  exercised  the  power  vested  in  him,  by  executing  to  Marie  Gene- 
vieve Garos,  her  late  husband  being  then  dead,  and  she  of  sound 
mind,  a  deed  of  gift  of  the  said  annuity;  and  the  Master  found 
.  that,  by  the  law  of  France,  if  an  attorney  be  ignorant  of  the  death 
of  the  partv  who  has  given  the  power  of  attorney,  whatever  he  has 
A.  V  done  while  ignorant  of  such  death  is  valid.  The  Master,  therefore, 
stated  his  opinion  that  the  annuity  was  no  part  of  the  personal  es- 
tate of  William  Mowbray. 

The  first^  petition  prayed  that  so  much  of  the  report  as  certifies 
;  the  French  annuity  to  be  no  part  of  the  testator's  personal  estate  may 
'  be  set  aside ;    and  that   it  may  be   declared  that  the  said  annuity  is 
part  of  his  personal  estate. 

Sir  Arthur  Piggott,  Mr.  Richards.  Mr.  Wingficld,  Mr.  Home,  and 
Mr.  Wear,  for  different  parties,  in  support  of  the  first  petition.  The 
French  annuity  being  purchased  in  the  testator's  name,  and  no  third 
person  interposed  as  a  trustee,  the  interest  could  not  be  transferred 
from  him  without  certain  acts,  which  were  not  done  at  the  time  of 
his  death.  It  was  therefore  competent  to  him,  during  his  life,  to 
change  his  purpose,  and  to  make  some  other  provision  for  this  lady 
by  funds  in  this  country;  conceiving,  perhaps,  that  she  might  re- 
turn here.  The  authority  given  to  purchase  this  annuity  could  not 
have  been  enforced  against  him  during  his  life  by  a  person  claiming 
as  a  volunteer;  nor  can  it  be  established  against  his  estate  after  his 
death,  the  act  whicli  would  have  given  the  benefit  of  it  against  the 
personal  representative  not  having  been  completed.  Where  a  ques- 
tion is  to  be  decided  by  a  foreign  law,  the  first  step  is  an  inquiry  by 
the  Master  to  ascertain  what  is  the  law  of  that  country. 

Sir  Samuel  Romilly  and  Mr.  Bell,  contra. 

The  Lord  Chanckllor.  The  other  question  involves  not  only 
the  construction  of  the  French  law,  and  the  point  whether  that  has 

1  Only  so  much  of  the  case  is  ^ivcn  as  relates  to  the  first  petition. 


Sec.  4)  CONSIDERATION,  41 

been  sufficiently  investigated,  but  farther,  whether  the  power  of  at- 
torney amounts  here  to  a  declaration  of  trust.  It  is  clear  that  this  ' 
court  will  not  assist  a  vohmtcer;  yet,  if  the  act  is  completed,  though 
voluntary,  the  court  will. act  upon  it.  It  has  been  decided  that,  upon 
an  agreement  to  transfer  stock,  this  court  will  not  interpose;  but  if 
the  party  had  declared  himself  to  be  the  trustee  of  that  stock,  it  be- 
comes the  property  of  the  cestui  que  trust  without  more;  and  the 
court  will  act  upon  it. 

June  13th.  The  Lord  Chancellor.  These  petitions  call  for  the 
decision  of  points  of  more  importance  and  difficulty  than  I  should 
wish  to  decide  in  this  way,  if  the  case  was  not  pressed  upon  the 
court.  With  regard  to  the  French  annuity,  the  IMaster  has  stated  his 
opinion  as  to  the  French  law,  perhaps  without  sufficient  authority,  or 
sufficient  inquiry  into  the  effect  of  it,  as  applicable  to  the  precise  cir- 
cumstances of  this  case ;  but  it  is  not  necessary  to  pursue  that,  as 
upon  the  documents  before  me  it  does  appear  that  though  in  one 
sense  this  may  be  represented  as  the  testator's  personal  estate,  ^^et  _.. 
he  has  committed  to  writing  what  seems  to  me  a  sufficient  declara-  ^]ji^  ~~-r 
tion  that  he  held  this  part  of  the  estate  in  trust  for  the  annuitant.  ^  '       '^*' 

Under    his    judgment,    the   order   was    pronounced    dismissing    the 
first  petition. 


WHEATLEY  v.  PURR. 

(In  Chnncery.  bofore  the  Master  of  the  Rolls,  Lord  Lnncjdale,  1S37.     1  Keen, 

551.) 

September  1,  1835,  Harriet  Oliver  made  her  will  and  named  the 
defendant   Purr  as   executor.     July   1,   1833    she   deposited  with   her 
bankers,  Oakes  &  Co.,  £2000.     This  sum  was  entered  in  the  books  of  T^y 
the  bankers  to   the   account   of  Harriet   Oliver  as   trustee    for   John  ^.-,^, 
Richardson   Wheatley,    ]\Iary   Wheatley   and   Harriet   W'heatley,   and   n 
the  following  promissory  note  w^as  given  by  them  for  it : 

"Sudbury  Bank,  July  1st,  1833.  Fourteen  days  after  sight  I 
promise  to  pay  Mrs.  Harriet  Oliver,  trustee  for  John  Richardson 
Wheatley,  ]\Iary  Wheatley  and  Harriet  Wheatley,  or  order,  two  thou- 
sand pounds,  with  interest  at  2i/o  per  cent.  For  Oakes,  Brown, 
Aloore  &  Hanbury.     [Signed]   Daniel  Hanbury." 

A  receipt  for  this  promissory  note  was  signed  by  ]\Irs.  Oliver, 
and  given  to  the  bankers. 

Harriet  Oliver  died  January  7,  1834,  possessed  of  said  promis- 
sory note.  Her  will  was  proved  by  James  Purr.  He  received  pay- 
ment of  the  £2000.  and  interest  from  Oakes  &  Co.  and  invested  the 
same  in  3  per  cent,  consols. 

This  bill  w^as  filed  by  the  infant  plaintiffs,  by  John  Wheatley 
their  father  and  next  friend,  and  prayed  a  declaration  that  Harriet 
Oliver  was  a  trustee  of  the  £2000.  and  interest  for  plaintiffs,  and  that 


c<^~ 


"l/J. 


42  THE   NATURE   AND   REQUISITES   OF   TRUSTS.  (Ch.  1 

such  sum  and  interest  be  paid  to  the  Accountant  General  in  trust 
for  the  benefit  of  plaintiffs  or  the  stock  in  whicli  the  same  had  l^ecn 
invested  transferred  into  his  name. 

TiiK  Master  of  the  Rolls.  The  question  is,  whether  in  the  acts 
done  by  Mrs.  Oliver,  for  the  purpose  of  constituting  herself  a  trustee 
for  the  benefit  of  Mrs.  Wheatley's  infant  children,  anything-  was 
wanting  to  accomplish  her  purpose.  I  am  of  opinion  that  she  did 
constitute  herself  a  trustee  for  the  infant  children,  and  that  a  trust 
was  completely  declared  so  as  to  give  to  the  plaintififs  a  title  to  the 
relief  which  they  claiuL  Upon  the  death  of  Mrs.  Oliver,  the  bankers 
were  called  upon  to  pay  the  money  by  her  executor,  who  had  un- 
doubtedly a  right  to  claim  it,  in  his  character  of  legal  personal  repre- 
sentative, upon  whom,  if  Mrs.  Oliver  was  a  trustee,  the  trust  devolv- 
ed. The  executor  received  the  money,  as  part  of  the  general  as- 
sets of  the  testator.  Those  assets  it  was  his  duty  to  defend  against 
tlie  claim  of  the  plaintififs,  until  their  right  should  be  ascertained, 
and  he  has  acted  very  properly,  therefore,  in  refusing  to  part  with 
the  fund,  without  the  authority  of  this  Court.^ 


CROSS  V.  SPRIGG. 

(In  riianfory.  bofrro  Vioo  Ohancollor  Sir  .7:unes  Wigram.  1840.     H  TTare,  r^r,2.) 

A  suit  for  the  administration  of  the  estate  of  the  testator,  Thomas 
Cross.  A  reference  was  directed  to  inquire  whether  the  defendant 
John  Gilbert  was  liable  to  pay  any  part  of  the  £1000  appearing,  by 
the  report,  to  be  due  from  him,  as  surety  for  William  Gilbert,  and, 
if  so,  to  certify  the  amount  due  for  principal  and  interest.  The  Mas- 
ter found  that  the  testator  lent  William  Gilbert  ilOOO  upon  his 
bond,  dated  the  3d  of  December,  1838,  for  the  purpose  of  establish- 
ing him  in  business,  in  partnership  with  another  person ;  that  John 
Gilbert  and  one  W^est  w^ere  sureties  in  the  bond,  each  for  £333.  6s,  8d. 
and  interest,  with  a  condition  that  no  proceedings  sliould  be  taken 

1  "EA-en  if  it  wore  a  deflaration  of  trust,  it  would  be  invalid  for  want  of 
fop.sidcrntion.  Merc  declaration  of  trust  by  tlie  owner  of  property,  in  favor 
of  a  volunteer,  is  inop<'rative,  and  tbis  eourt  will  not  interfere  in  sucb  a  case. 
The  case  is  different  wbere  tbere  lias  been  a  fhanse  of  legal  ownership,  and  so 
a  trust  has  been  constituted;  and  then  the  court  will  inquire  what  tlie  trusts 
are.  But  there  is  no  authority  in  fiivor  of  the  defendant's  contention." — Lord 
Chancellor  Cranworth.  in  Scales  v.  Maude,  6  De  C,  Macn.  &  G.  43,  51  (lSr).'->). 

When  the  chancellor's  attention  was  called  to  this  dictum  ten  years  later 
in  .Tones  v.  Locke,  L.  R.  1  Ch.  App.  Cas.  2~>,  28,  he  said  that  the  dictum  at- 
tributed to  him  in  Scales  v.  Maud(>  must  have  had  reference  to  the  special 
circunistances  of  the  case,  and,  tll(lu^'ll  he  considered  the  decision  in  that 
case  to  be  right,  the  dictum  was  clearly  wrong  as  a  general  statement  of 
the  law  ;  that  there  could  be  no  doubt  that  there  might  be  a  valid  declaration 
Qf  trust  in  favor  of  a  volunteer. 

The  validity  of  a  voluntary  declaration  of  trust,  made  after  the  analogy  of 
a  covenant  to  stand  seised,  is  uow  almost  universally  recognized. 


Sec.  4)  CONSIDEKATION,  43 

to  enforce  payment  against  John  Gilbert  and  West,  until  three 
months'  notice  should  have  been  given  to  them,  their  executors  etc. ; 
that  in  September,  1840,  William  Gilbert  and  his  partner  dissolved 
their  partnership,  and  their  creditors  agreed  to  accept  a  composition 
of  lis.  in  the  pound  on  their  debts;  that  the  testator  agreed  to  be- 
come surety  for  the  payment  of  such  composition,  and  agreed  with 
William  Gilbert  to  relinquish  and  give  up  the  bond  debt,  and  all  in- 
terest that  had  accrued  thereon,  and  promised  him  to  deliver  up  the 
bond  to  be  cancelled,  but  did  not  do  so,  because,  as  he  told  William 
Gilbert,  he  could  not  find  such  bond ;  that  the  testator  never  applied 
for  the  payment  of  the  principal  or  interest  on  the  bond,  and  a  short 
time  before  his  death  he  gave  William  Gilbert  i^jO.  and  told  him  that 
such  sum  and  all  other  monies  which  he  had  received  from  him  (the 
testator),  and  had  not  repaid,  were  to  be  considered  as  gifts.  And 
tlje._Master  found,  that,  under  the  circumstances  aforesaid,  the  de- 
fendant John  Gilbert  was  not  liable  to  pay  any  part  of  the  said  £1000. 
and  interest. 

Several  exceptions  were  taken  to  this  report. 

Vice  Chancellor.     The  question  raised  by  the  exceptions  in  this 
case  was,  whether  William  Gilbert,  the  obligor  in  a  bond  for  £1000., 
was  liable   for   the  amount  of   such  bond  to  the   defendant   Harriet 
Clara  Sprigg,  the  widow  and  administratrix  of  Cross,  the  obligee  in 
the  bond  and  the   testator  in  the  cause;    and   this  general   question 
resolved  itself  into  two — first,  whether  the  testator's  declarations  jus- y> 
tified  the  conclusion,  that  he  had  abandoned  all  intention  of  recover-  ^ 
ing  upon  the  bond,  and  intended  that  the  obligor  should  no  longer  be 
liable  upon  it;   and,  secondly,  if  that  were  answered  in  the  affirmative, '>~'^ 
what  were  the  consequences  in  respect  to  the  liability  of  the  obligor  ? ^^^^'^ 

Assuming  the  first  question  to  be  answered  in  the  affirmative,  I  had 
no  hesitation  in  holding,  at  the  close  of  the  argument,  that  the  debt 
remained  at  law,  and  to  that  opinion  I  adhere.  I  was  also  of  opinion, 
that,  if  the  debt  remained  at  law,  it  must  remain  in  equity  unless  some 
special  grounds  were  laid  for  a  different  conclusion;  and  I  was  of 
opinion,  that  a  mere  intention  on  the  part  of  the  testator,  which  he 
might  at  any  time  have  changed,  not  to  sue  upon  the  bond,  would 
not  give  such  an  equity.  But,  as  the  case  of  Flower  v.  ^larten  [2 
Myl.  &  Cr.  459]  appeared  to  have  escaped  the  recollection  of  counsel, 
I  requested  that  the  exceptions  might  be  spoken  to,  by  one  counsel 
on  a  side,  with  reference  to  some  of  the  principles  which  the  Lord 
Chancellor  laid  down  in  that  case,  and  upon  which  the  cases  there 
referred  to  were  decided.  This  was  accordingly  done,  and  I  have 
now  to  state  the  grounds  upon  which  I  have  come  to  the  conclusion, 
that  the  obligor,  having,  in  this  case,  no  defense  at  law,  has  none  in 
equity. 

In  Wekett  v.  Raby  [2  Bro.  P.  C.  386,  Toml.  Ed.],  Raby  was  in- 
debted to  the  testator,  Mr.  Piggott,  on  a  bond  for  securing  £335.  5s. 
Mr.  Piggott  made  his  will,  and  appointed  the  appellant,  Mary,  his 


44  THE  NATURE   AND   REQUISITES  OF  TRUSTS.  (Cll.  1 

executrix  and  residuary  legatee,  and  died  about  two  years  afterwards. 
In  his  last  sickness,  and  a  few  days  only  before  his  death,  he  said 
to  the  appellant,  i\Iary,  "I  have  Raby's  bond,  which  I  keep;  I  don't 
deliver  it  up,  for  I  may  live  to  want  it  more  than  he ;  bvit  when  I  die, 
he  shall  have  it;  he  shall  not  be  asked  or  troubled  for  it."  After 
the  death  of  the  testator,  Raby  asked  Mary  to  make  him  a  present  of 
the  bond,  but  did  not  pretend  to  have  any  right  to  it ;  her  answer 
was  "You  may  be  easy — it  is  safe  in  my  hands ;"  she  afterwards  add- 
ed, "If  I  marry,  I  will  deliver  the  bond  to  you  the  night  before.'* 
Mary  having  afterwards  put  the  bond  in  suit,  Lord  Macclesfield,  up- 
on Raby's  bill,  ordered  the  bond  to  be  cancelled,  and  the  House  of 
Lords  confirmed  that  decree.  The  circumstances  of  that  case  bring 
it  within  the  principle  examined  by  the  Vice  Chancellor  in  Padmore 
v.  Gunning  [7  Sim.  644],  and  to  that  principle  the  decision  in  Wekett 
V.  Raby  is  referred  by  the  Lord  Chancellor  in  the  case  of  Byrn  v. 
Godfrey.  It  would  have  been  a  fraud  in  the  residuary  legatee  to  en- 
force the  bond.  The  decision  did  not  proceed  upon  the  ground  of  re- 
lease. 

Richards  v.  Syms  [2  Eq.  Ca.  Ab.  617]  decided  that  a  creditor, 
whose  debt  was  secured  by  a  bond  and  mortgage,  released  the  debt  by 
delivering  up  the  bond  and  mortgage  with  the  declared  intention  of 
releasing  the  debt ;  but  that,  I  apprehend,  was  considered  by  Lord 
Hardwicke  as  a  legal  and  not  merely  as  an  equitable  discharge,  and; 
moreover,  was  a  different  thing  from  the  mere  declaration  of  inten- 
tion to  forgive  a  debt.  Lord  Hardwicke  seemed,  at  first,  to  be  of 
opinion,  that  it  was  an  equity  which  could  only  be  enforced  if  the 
creditor  was  plaintiff;  but  he  afterwards  said  it  was  otherwise,  for 
that  the  law  was  with  the  debtor. 

In  Aston  v.  Pye  [5  Ves.  350.  n.],  cited  in  a  note  on  Eden  v.  Smyth, 
and  commented  upon  by  the  Lord  Chancellor,  in  Byrn  v.  Godfrey, 
and  in  Eden  v.  Smyth,  the  following  entry  was  made  in  the  books  of 
the  testator,  the  payee  of  a  note :  "Pye  pays  no  interest,  nor  shall  I 
ever  take  the  principal,  unless  greatly  distressed."  The  testator  died. 
The  case  came  before  Lord  Kenyon,  at  the  Rolls,  upon  the  question, 
whether  the  debt  was  subsisting,  and  Lord  Kenyon  sent  the  parties 
to  law.  It  does  not  appear  that  Lord  Kenyon,  or  Lord  Loughborough 
noticing  this  case,  thought  that  the  maker  of  the  note  could  have  any 
equity,  if  the  law  was  against  him,  as  it  was  held  to  be. 

Byrn  v.  Godfrey  [4  Ves.  6]  is  the  next  case.  In  that  case  the  tes- 
tator held  a  promissory  note  for  £200.  He  frequently  told  his  execu- 
tor that  he  never  meant  to  call  for  payment  of  the  note,  and  made  a 
statement  to  that  effect  the  day  before  his  death.  Lord  Loughborough 
said,  that  the  case  relied  upon  was  not  a  release,  so  that  he  could  say 
that  the  debt  was  gone  by  the  act  of  the  party  to  whom  the  money 
was  due ;  nor  was  it  a  legacy ;  and  the  bill  was  dismissed,  so  far  as 
it  prayed  that  the  note  might  be  cancelled.  In  that  case  Lord  Lough- 
borough referred  to  Wekett  v.  Raby  and  Aston  v.  Pye,  and  the  case 


Sec.  4)  CONSIDERATION.  45 

of  Richards  v.  Synis  before  Lord  Hardwicke  to  which  T  have  already 
referred. 

The  next  case  is  Eden  v.  Smyth  [5  Ves.  341].  In  that  case  the 
question  was,  whether  a  legatee  was  entitled  to  his  legacy  discharged 
of  a  debt  he  owed  testator.  Letters  and  declarations  of  the  testator 
were  given  in  evidence,  and  also  accounts  of  the  testator,  and  memo- 
randa in  his  handwriting;  and,  upon  the  evidence,  the  court  held, 
that  the  debt  was  discharged.  The  judge  who  decided  this  case  was 
the  same  who  decided  Byrn  v.  Godfrey,  which  was  cited;  and  it  is 
not  to  be  assumed,  that  he  intended,  in  Eden  v.  Smyth,  to  act  upon 
a  different  principle  from  that  upon  which  he  decided  Byrn  v.  God- 
frey. In  Eden  v.  Smyth  the  Lord  Chancellor  did  that  which,  per- 
haps, would  be  considered  questionable  at  this  day ;  he  entered  into 
an  inquiry,  what  the  testator,  at  the  time  of  making  his  will,  consid- 
ered or  intended  to  consider  his  fortune  as  consisting  of,  as  distin- 
guished from  what  it  actually  consisted  of.  But  it  is  unnecessary 
to  rely  upon  this,  for  it  is  manifest  that  Lord  Loughborough's  judg- 
ment did  not  proceed  upon  any  distinction  between  legal  and  equita- 
ble discharges  of  a  debt.  His  judgment  was,  that  the  debt  was  gone 
at  law. 

Reeves  v.  Brymer  [6  A'es.  516]  is  a  most  important  case.  Nothing 
could  be  more  explicit  or  certain  than  the  intention  of  the  obligee  to 
discharge  the  obligor.  Lord  Alvanley  thought  it  a  hard  case  and 
desired  to  find  the  means  of  having  the  obligor  discharged.  But 
he  would  do  nothing,  except  give  the  parties  leave  to  proceed  at  law. 
Eden  v.  Smyth  and  Aston  v.  Pye  were  cited,  and  Lord  Alvanley's 
observations  show  that  he  considered  Eden  v.  Smyth  as  proceeding 
upon  the  same  grounds  as  I  have. 

Gilbert  v.  Wetherell  [2  S.  &  S.  254]  is  not  a  very  clear  case.  It 
was  a  transaction  between  father  and  son.  The  father  had  lent  the 
son  £10,000  and  took  his  promissory  note  for  it;  an  account  was 
afterwards  settled  between  them,  by  which  it  appeared,  that  more  than 
£9,000.  was  due  upon  the  note.  Further  transactions  took  place, 
by  which  it  was  said  the  son  became  further  indebted  to  his  father. 
The  father,  shortly  before  his  death,  burned  the  promissory  note  in 
the  presence  of  a  witness,  saying  at  the  time.  "Now  Thomas  owes  me 
£11,000."  Sir  John  Leech  said,  that  the  circumstances  under  which 
the  note  had  been  destroyed  amounted  to  an  equitable  release  of  the 
debt,  but  that  the  sum  of  £9,000  and  upwards,  which  remained  due 
by  the  account  stated,  must  be  considered  as  an  advancement.  None 
of  the  preceding  cases  were  cited;  and  this  is,  I  believe,  the  first  case 
in  which  the  principle  is  laid  down,  (if  it  be  there  laid  down,)  that 
voluntary  transactions  on  the  part  of  an  obligee,  which  at  law  are 
inoperative,  create  an  equity  in  favor  of  the  debtor  to  be  discharged 
from  his  debt.  But  the  case  cannot  be  an  authority  for  any  abstract 
proposition;    for  Sir  John  Leech  held,  that  the  transaction  converted 


46  THE  NATURE  AND  KEQUISITES  OF  TRUSTS.         (Ch.  1 

the  debt  into  an  advancement.     It  is  impossible  to  treat  the  case  as 
not  depending-  upon  the  relation  between  the  oblig-or  and  the  obliiii^ee. 

The  only  case  which  has  made  me  doubt  my  conclusion  is  that  of 
Flower  v.  Marten  [2  My.  &  Cr.  459]  which  contains  language  on  the 
part  of  the  Lord  Chancellor,  expressive,  it  is  said,  of  his  opinion,  that 
where  a  creditor  by  his  conduct  shows  an  intention  to  abandon  his 
rights  as  a  creditor,  and  treat  the  debt  as  a  gift  to  the  debtor,  equity 
will  not  permit  the  debt  to  be  enforced.  If  I  understood  the  case 
as  deciding  any  such  abstract  proposition,  I  should  unhesitatingly 
follow  it,  but  I  do  not  understand  that  such  is  the  effect  of  the 
judgment. 

The  cases  which  the  Lord  Chancellor  adverts  to  as  governing  his 
decision,  are  Wekett  v.  Raby  and  Eden  v.  Smyth,  which  certainly  es- 
tablish no  such  abstract  proposition;  and  the  judgment  of  the  Lord 
Chancellor  throughout,  by  a  pointed  reference  to  the  peculiar  circum- 
stances attending  the  creation  of  the  debt,  and  the  relation  in  which 
the  debtor  and  creditor  stood  to  each  other,  shows  that  he  did  not 
found  his  judgment  upon  any  such  proposition.  The  case  before 
me  is  the  case  of  a  creditor  declaring  (not  to  his  debtor)  his  intention 
not  to  sue  upon  a  bond;  for  I  have  no  evidence  of  the  alleged  era- 
sure of  the  bond  in  the  testator's  books,  and  I  do  not  propose  to  make 
that  erasure  the  subject  of  inquiry,  as  it  would  not  alter  my  opinion 
if  it  were  proved ;  and  if  the  case  rested  here,  I  should  hold  that  the 
debtor  remained  liable  on  his  bond. 

But  it  was  said,  that  the  defendant  Harriet  Clara  Sprigg  admits 
that  she  heard  the  testator  say,  that  the  bond  was  not  to  be  enforced, 
and  that  she,  as  residuary  legatee  for  life,  is  within  the  principle  of 
Wekett  V.  Raby.  The  utmost  extent  to  wdiich  that  observation  would 
carry  the  case  is  this,  that  Harriet  Clara  Sprigg  could  not  during- 
her  life  claim  the  interest  of  the  bond  ;  but  that  is  not  the  question 
I  have  now  to  decide. 

Xjie_ground  on  which  I  proceed  is,  that,  if  in  this  case  obligor  has^ 
no  defense  at  law,  he  has  none  in  c(iuity.     The  legal  question  may 
be  tried  by  an  action,  if  he  desires  it.^ 

1  The  holder  of  an  ol)lij,'ati()n  may  make  a  sift  of  the  same  to  the  oblicor,. 
in  whoh^  or  in  part,  by  extin^uishin.i::  the  ohliication  in  wluile  ov  in  part.  The 
extintcnishmont  may  in  tlie  case  of  any  ol)lij,'alion  bc>  effeeted  by  tlie  delivery 
to  liie  obligor  of  a  release  under  seal.  Stearns  v.  Tappin,  5  Dner  (N.  Y.)  204 
(18."(;)  ;  Wain  v.  Wain,  58  X.  J.  L.  040,  34  Atl.  IOCS  (1  «>('.). 

If  the  oblifratlon  be  a  specialty,  the  e.xtinsuislunent  may  be  effected  in  sev- 
eral other  wavs:  (1)  Bv  delivering  the  instrument  to  the  oblisor.  Siade  v. 
Mutrie,  156  Mass.  10,  30  N.  E.  1(J8  (1802);  Stewart  v.  Iliddeii,  13  IMin.  4.'',  (Gil. 
20)  (18G8);  Vanderbeck  v.  Vanderbeck.  ."'.0  N.  J.  Eq..  2r,r>.  210  (1878)  lOlIsworth 
v.  Fojrsr.  35  Vt.  355  (1S(;2):  I.ai-kin  v.  Ilardenbrook.  00  N.  Y.  3:!:>.  43  Am.  Kep. 
170  (1882).  (2)  V>y  physically  destroying  the  instruuKMit.  Bank  of  U.  S.  v. 
Sill,  5  Conn.  106,  111  (1823).  (3)  By  a  cancellation  of  the  iustrumt'nt. 
Yglesias  v.  River  Plate  Bank,  L.  R.  3  C.  P.  D.  60  (1877). 


Sec.  4)  CONSIDERATION.  47 

JEFFERYS  V.  JEFFERYS. 

(In  Chanrory,  bofdro  Lord  Chancollor  Cottciihani,  18-11.     Craig;  &  Phillips.  138.) 

John  Jefferjs_executed  certain  indentures  of  lease  and  release  of 
the  16th  and  17th  of  September,  1834,  whereby,  in  consideration  of 
the  natural  love  and  afifection  which  he  had  for  his  dau.e^htcrs,  and 
for  divers  other  good  considerations,  he  conveyed  certain  freehold 
hereditaments,  and  covenanted  to  surrender  certain  copyhold  heredita- 
nienTsV  to  Bowden  and  Thorn,  upon  trust,  after  his  death  to  sell  the 
same  and  after  paying  from  the  proceeds  certain  encumbrances  to 
stand  possessed  of  the  residue  of  such  moneys  upon  certain  trusts 
for  his  daughters. 

John  Jcfiferys  never  surrendered  the  copyholds,  and  died  in  1836 
leaving  a  will  by  which  he  gave  a  part  of  the  above  mentioned  free- 
hold and  copyhold  estates  to  his  wife,  Isabella,  who,  shortly  after 
his  death,  was  admitted  to  part  of  the  copyhold  estates. 

In  July,  1837,  his  daughters  filed  this  bill  against  their  mother  and 
trustees  praying  that  the  trust  be  carried  into  execution  and  that  the 
mother  be  decreed  to  surrender  the  copyholds  to  which  she  had  been 
admitted  to  the  trustees. 

The  Lord  Chancellor.  The_iitle  of  the  plaintiffs  to  the  free- 
hold is  complete ;  and  they  may  have  a  decree  for  carrying  the  settle- 
ment into  effect  so  far  as  the  freeholds  are  concerned.  With  respect 
to  the  copyholds,  I  have  no  doubt  that  the  court  will  not  execute  a 
yoluntary  contract ;  and  my  impression  is,  that  the  principle  of  the 
cour't  to  withhold  its  assistance  from  a  volunteer  applies  equally, 
whether  he  seeks  to  have  the  benefit  of  a  contract,  a  covenant,  or 
a  settlement.  As,  however,  the  decision  in  Ellis  v.  Nimmo  [Lloyd  & 
G.  Rep.  T.  Sugd.  333]  is  entitled  to  the  highest  consideration,  I  will 
not  dispose  of  this  case  absolutely,  without  looking  at  a  former  case, 
in  which  I  had  occasion  to  refer  to  that  decision.  Unless  I  alter 
the  opinion  I  have  expressed,  the  bill  must  be  dismissed  with  costs, 
so  far  as  the  copyholds  are  concerned. 

On  this  day  his  lordship  said  he  had  looked  at  the  case  alluded  to, 
and  that  he  saw  no  reason  for  altering  the  opinion  he  had  before  ex- 
pressed. 

ELLISON  V.  ELLISON. 

(In  Chancery,  before  Lord  Chancellor  Eldon,  1802.     6  Ves.  Jr.  656.) 

A  lease  of  certain  collieries  for  31  years  was  made  to  Charles  Wren 
and  others.  By  indenture  dated  July  1,  1791,  it  was  declared  that 
Wren  should  stand  possessed  of  the  lease  in  trust  as  to  one  moiety 
for  Ellison. 
•'  By  agjndcnture  dated  June  18,  1796,  Ellison  assigned  his  interest 
m  said  collieries  and  the  stock,  etc.  to  Wren  in  trust  for  Ellison  for 


48  THE   NATUKE   AND    REQUISITES   OF   TRUSTS.  (Ch.  1 

life  and  after  his  death  upon  other  trusts.  This  indenture  contained 
a  power  to  revoke  the  trusts  so  created. 

By  an  indenture  dated  July  .3,  17!)7,  Wren  assici^ned  to  Ellison  one 
undivided  moiety  of  all  the  said  collieries  demised  to  him,  with  a  like 
share  of  the  stock. 

Ellison  by  will  dated  June  22,  1796,  gave  all  the  residue  of  his  per- 
sonal estate  to  his  wife  and  Wren  upon  certain  trusts  and  appointed 
them  his  executors. 

Ellison  died  in  1T9S,  leaving  a  wife  and  ten  children  him  surviving; 
one  of  which  Charles  E.  died  in  1799,  an  infant.  Wren  also  died  in 
1799.  The  bill  was  filed  by  the  testator's  widow  and  Margaret  Clav- 
ering,  one  of  the  cestuis  que  trust  in  the  deed  of  June  IS,  179G,  pray- 
ing that  the  trusts  of  that  deed  might  be  established  and  new  trustees 
appointed. 

The  younger  children  by  their  answer  submitted,  whether  the  trusts 
of  that  deed  were  not  varied  or  revoked  by  the  indenture  of  July  3, 
1797,  from  Wren  to  EUison. 

Mr.  Steele  and  Mr.  W.  Agar  for  the  younger  children.  The  sub- 
sequent deed  is  an  implied  revocation.  What  use  could  there  be  in 
that  deed  but  to  give  Ellison  the  absolute  estate;  which  is  quite  in- 
consistent with  the  trusts  of  the  former  deed ;  which  are  very  special, 
and  give  a  large  discretion?  An  instrument  may  be  revoked  by  an- 
other, though  not  taking  notice  of  the  former,  but  only  making  a 
disposition  inconsistent  with  it.  *  *  *  There  is  no  instance,  in 
wdiich  a  voluntary  deed,  defective,  and  not  effectual  at  law,  has  been 
aided  in  this  Court;  and  though  this  is  in  some  respects  in  favor  of 
a  wife  and  children,  one  of  the  parties  claiming  under  it  is  a  volunteer; 
and  it  is  opposed  by  nine  out  of  ten  children.  This  deed,  like  that  in 
Coleman  v.  Sarrel  [1  Ves.  Jr.  50],  cannot  be  proceeded  upon  at  law. 
But,  if  the  trust  was  originally  well  created,  yet  if  the  subject  gets 
back,  and  is  vested  in  the  author  of  the  trust,  the  objection  lies. 

Lord  Chancellor  [Eldon].^  I  had  no  doubt,  that  from  the  mo- 
ment of  executing  the  first  deed,  supposing  it  not  to  have  been  for 
a  wife  and  children,  but  for  pure  volunteers,  those  volunteers  might 
have  filed  a  bill  in  equity  on  the  ground  of  their  interests  in  that  in- 
strument; making  the  trustees  and  the  author  of  the  deed  parties.  I 
take  the  distinction  to  be,  that  if  you  want  the  assistance  of  the  Court 
to  constitute  you  cestui  que  trust,  and  the  instrument  is  voluntary, 
you  shall  not  have  that  assistance  for  the  purpose  of  constituting  you 
cestui  que  trust ;  as  upon  a  covenant  to  transfer  stock,  etc.,  if  it  rests 
in  covenant,  and  is  purely  voluntary,  this  Court  will  not  execute  that 
voluntary  covenant :  but  if  the  party  has  completely  transferred  stock, 
etc.  though  it  is  voluntary,  yet  the  legal  conveyance  being  efTectually 
made,  the  equitable  interest  will  be  enforced  by  this  Court.  That  dis- 
tinction was  clearly  taken  in  Coleman  v.   Sarrel,  independent  of  the 

1  Tart  of  the  argument  of  counsel,  as  also  of  the  opinion,  is  omitted. 


Sec.  4)  CONSIDERATION.  40 

vicious  consideration.  I  stated  the  objection,  tliat  the  deed  was  vol- 
untary: and  the  Lord  Chancellor  went  with  me  so  far  as  to  consider 
it  a  good  objection  to  executing  wdiat  remained  in  covenant.  liut  if 
the^actiial  transfer  js  made,  that  constitutes  the  relation  between  triJs^ 
tee  and  cestui  que  trust,  though  voluntary,  and  without  good  or  meri- 
torious consideration;  and  it  is  clear  in  that  case,  that  if  the  stock- 
had  been  actually  transferred,  unless  the  transfer  was  affected  by  the 
turpitude  of  the  consideration,  the  Court  would  have  executed  it 
against  the  trustees  and  the  author  of  the  trust. 

In  this  case  therefore  the  person  claiming  imder  the  settlement 
might  maintain  a  suit,  notwithstanding  any  objection  made  to  it,  as 
being  voluntary.     *     *     * 

But  it  was  put  for  the  defendant  thus ;  that  tliough  the  instrument 
would  have  been  executed  originally,  if  the  subject  got  back  by  ac- 
cident into  the  author  of  the  trust,  and  was  vested  in  him,  then  the 
objection  will  lie  in  the  same  manner,  as  if  the  instrument  was  volun- 
tary. I  doubt  that  for  many  reasons :  the  trust  being  once  well  cre- 
ated; and  whether  it  would  apply  at  all,  where  the  trust  was  original- 
ly well  created ;  and  did  not  rest  merely  in  engagement  to  create  it. 
Suppose,  Wren  had  died ;  and  had  made  Ellison  his  executor :  it 
would  be  extraordinary  to  hold,  that  though  an  execution  would  be 
decreed  against  him  as  executor,  yet,  happening  to  be  also  author  of 
the  trust,  therefore  an  end  was  to  be  put  to  the  interest  of  the  cestui 
que  trust.  *  *  *  j  think,  therefore,  upon  the  whole,  this  trust 
does  remain  notwithstanding  this  re-assignment  of  the  legal  estate 
to  Ellison.     *     *     * 

Upon  the  whole  therefore  this  relief  must  be  granted;  though  I 
agree,  that,  if  it  rested  in  covenant,  the  personal  representative  might 
have  put  them  to  their  legal  remedies,  he  cannot,  where  the  character 
of  trust  attached  upon  the  estate,  while  in  Wren ;  which  character  of 
trust  therefore  should  adhere  to  the  estate  in  Ellison. 


VOYLE  V.  HUGHES. 

(In  Chancery,  before  Vice  Chancellor  Sir  John  Stuart,  18.j4.     2  Smale  &  Gif- 

fard,  IS.) 

The  Vice  Chancellor.^  The  question  in  this  case  is  as  to  the 
validity  of  a  voluntary  assignment  by  deed,  duly  executed,  of  a  re- 
versionary interest  in  a  sum  of  money  in  the  public  funds,  standing 
in  the  names  of  the  trustees  of  the  settlement  under  which  the  as- 
signor was  entitled.  According  to  the  decision  in  the  case  of  Meek 
V.  Kettlewell  [1  Hare,  464;  s.  c,  on  appeal,  1  Ph.  342],  as  affirmed 
on  appeal,  this  instrument  is  to  be  treated,  not  as  an  assignment  but 

1  Part  of  the  opinion  is  omittod. 
Ken.Tr. — 4 


50  THE   NATURE   AND    HKQT'ISITES   OF   TRUSTS,  (Ch.  1 

as  a  mere  agreement;  and  being  voluntary,  and  without  any  valuable 
consideration  to  support  it,  it  confers  no  rij;ht  on  the  seeming  as- 
signee to  which  this  Court  can  give  efifcct.  The  soundness  of  the  doc- 
trine which  treats  a  deed  of  assignment,  complete  in  form,  as  a  mere 
agreement,  although  it  in  terms  assigns  and  transfers  an  equitable  re- 
versionary interest  in  personal  property,  and  which  denies  to  it  in 
this  Court,  if  voluntary,  any  effect  as  a  transfer  of  the  right  to  prop- 
erty, has  been  much  questioned.  If  that  doctrine  is  to  prevail,  it  de- 
prives the  owners  of  reversionary  personal  property  of  the  right  of 
alienation  by  one  legitimate  mode.  As  abridging  the  right  of  aliena- 
tion, it  materially  lessens  the  value  to  its  owners  of  the  enormous  and 
increasing  amount  of  reversionary  personal  property.  Fortunately, 
in  the  recent  case  of  Kekcwich  v.  Manning  [1  De  G.,  IMac.  &  G. 
176],  a  more  liberal  and  enlightened  view  of  the  law  upon  this  sub- 
ject was  taken.  In  the  present  case,  the  question  arises  in  a  simple 
form.  Under  the  trusts  of  the  marriage  settlement  of  1820  the  sum 
of  £3900.  3  per  cent.  Consolidated  Bank  Annuities  was  vested  in  the 
names  of  trustees  (of  whom  the  defendant  Tooke  is  the  survivor), 
upon  trust,  after  the  death  of  Admiral  Noble,  and  in  case  his  wife 
should  die  in  his  lifetime  without  issue,  and  without  appointing  the 
fund  (all  of  which  events  happened)  for  her  next  of  kin,  according 
to  the  statute  of  distributions,  and  as  if  she  had  died  unmarried  and 
intestate.  In  1840  Mrs.  Noble  died,  so  that  upon  her  death  her  next 
of  kin  had  a  vested  interest,  subject  only  to  the  life  estate  of  Ad- 
miral Noble,  who  died  in  1851.  After  Mrs.  Noble's  death  in  1840, 
Mrs.  Kiirner,  one  of  her  next  of  kin,  having  thus  a  vested  interest  in 
one-fifth  of  the  fund,  subject  only  to  Admiral  Noble's  life  estate,  ex- 
ecuted the  deed  of  assignment  under  which  the  plaintiffs  claim..  The 
assignment  is  by  deed  dated  the  8th  day  of  November,  1840.  It  re- 
cites the  title  of  Mrs.  Kiirner  under  the  settlement,  and  is  in  form  an 
absolute  assignment  by  Mrs.  Kiirner  of  her  one-fifth  of  the  trust 
fund  to  Caroline  Sarah  Noble,  and  gave  her  a  power  of  attorney  to 
receive  it  from  the  trustees.  The  deed  contains  a  covenant  for  fur- 
ther assurance  and  quiet  enjoyment.  The  consideration  expressed  in 
the  deed  is  natural  love  and  affection ;  but,  as  Caroline  Sarah  Noble 
was  a  daughter  of  the  admiral  by  a  former  marriage,  there  was  no  re- 
lationship in  blood  to  Mrs.  Kiirner ;  the  assignment,  therefore,  is 
purely  voluntary.  Mrs.  Kurner,  the  assignor,  herself  transmitted 
the  deed  to  Mr.  Tooke,  the  trustee,  who  gave  a  copy  of  it  to  Miss 
Noble.  It  has  been  argued,  that,  as  this  assignment  is  purely  volun- 
tary, it  is  a  mere  agreement,  without  any  consideration  to  support  it; 
that  it  is  imperfect  as  a  gift;  imperfect,  too,  as  a  declaration  of  trust, 
and  must  wholly  fail.  Each  of  these  three  objections  assumes  an 
imperfection  in  the  assignment,  which  is  unfounded  in  fact ;  it  is  not 
an  agreement,  it  is  an  absolute  assignment  by  deed,  purporting  to 
transfer  the  estate  or  interest  of  the  assignor  to  the  assignee.  As 
between  them  the  transaction  is  complete ;    notice  was  given   to  the 


Sec.  4)  CONSIDERATION.  51 

trustee,  and  that  notice  completed  the  transaction  as  to  third  parties; 
it  established  the  right  of  the  assignee  on  any  question  of  priority, 
and  protected  her  against  any  fraudulent  receipt  by  the  assignor. 
All  this  carries  the  transaction  beyond  mere  agreement. 

Nevertheless,  Lord  Hardwicke  and  other  Judges  have  said  that 
the  assignment  of  reversionary  personal  property,  for  valuable  con- 
sideration, "operates  by  way  of  agreement  or  contract,  amounting, 
in  the  consideration  of  the  Court,  to  this,  that  one  agrees  with  the 
other  to  transfer  and  make  good  that  right  or  interest."  To  treat 
an  actual  assignment  by  deed  as  a  mere  agreement,  was  a  device  re- 
sorted to  in  the  earlier  efforts  to  get  rid  of  the  legal  doctrine,  "that 
no  possibility,  right,  title  nor  thing  in  action  shall  be  granted  or  as- 
signed to  strangers." 

The  progress  of  law  as  a  science,  keeping  pace,  although  not  uni- 
formly, with  the  advancement  of  civilization  and  wealth,  has  sanc- 
tioned modes  of  alienation  and  enjoyment  of  property,  both  real 
and  personal,  which  were  prohibited  by  the  common  law.  During  the 
successive  steps  of  this  progress,  strange  anomalies  occasionally  pre- 
vailed. Contingent  and  executory  interests  in  chattels  or  personal 
estate  were  allowed  to  pass  by  testamentary  disposition  before  con- 
tingent inheritable  interests  in  land.  It  is  only  by  modern  decisions 
that  the  same  power  of  testamentary  disposition,  before  allowed  to 
chattels  personal,  was  extended  to  inheritable  contingent  interests 
and  possibilities.  That  a  valid  voluntary  disposition  of  contingent 
and  executory  or  reversionary  interests  and  possibilities  might  be 
made  by  will,  but  not  by  deed,  was  an  anomaly  which  could  not  long 
be_tolerated.  Even  before  assignments  of  reversionary  interests,  pos- 
sibilities and  expectancies  of  personal  property  were  supported  on 
the  ground  of  agreements  or  by  force  only  of  a  valuable  considera- 
tion; more  than  one  great  Judge  of  this  Court  had  endeavored  to 
get  rid  of  the  strict  rule  of  law. 

Lord  Chancellor  Cowper,  in  the  case  of  Thomas  v.  Freeman  [2 
Vern.  563],  says:  "It  is  a  notion  that  has  obtained  at  law,  that  a 
possibility  is  not  assignable,  but  no  reason  for  it  if  res  integra;  but 
the  law  is  not  so  unreasonable  but  to  allow  that  it  may  be  released." 
And  that  same  Judge,  soon  after,  in  Crouch  v.  Martin  [Id.  595], 
held  that  a  chose  in  action  is  assignable  in  equity  upon  a  consideration 
paid.  In  the  case  of  Lord  Carteret  v.  Paschal  [3  P.  Wms.  19T] 
it  was  carried  further,  for  it  was  said  to  be  admitted  on  all  sides, 
that,  if  a  man  in  his  own  right  be  entitled  to  a  bond  or  other  chose 
in  action,  he  may  assign  it  without  any  consideration.  But  this  view 
was  not  constantly  adhered  to ;  and  there  are  several  subsequent 
cases  in  which  a  valuable  consideration  was  held  necessary  to  support 
an  assignment  of  mere  personal  property.  Even  after  the  deci>ions  in 
Sloane  v.  Cadogan  fSugd.  Vend.  &  Pur.  App.  24]  by  Sir  W.  Grant, 
and  Fortescue  v.  Barnett  [3  My.  &  K.  36]  by  Sir  John  Leach,  it  was 
held  by    Sir   James   Wigram  and  Lord   Lyndhurst,    in   the   case   of 


52  TnE  naturf:  and  requisites  of  trusts.  (Ch.  1 

Meek  v.  Kettlewell  [1  Hare,  4G4;  S.  C.  1  Ph.  342],  that  the  want 
of  vahiable  consideration  to  support  the  assignment  made  it  inef- 
fectual in  equity.  The  more  recent  decision,  in  the  case  of  Kekewich 
V.  Manning,  in  which  the  authorities  were  reviewed,  and  in  which 
the  assignment  was  held  to  be  valid,  notwithstanding  the  want  of 
valuable  consideration,  is  sufficiently  supported  by  authority,  and  rests 
on  a  sound  and  intelligible  principle.  The  argument  which  treats  the 
deed  of  assignment  as  a  mere  agreement  or  executory  instrument, 
rests  on  this,  that  the  property  is  not  transferable  at  law.  But  if 
that  be  a  reason  for  treating  the  deed  not  as  an  actual  conveyance, 
which  it  purports  to  be,  why  should  it  not  as  well  apply  to  all  con- 
veyances of  equitable  interests  in  real  or  personal  estate,  which  are 
not  transferrable  or  conusable  at  law? 

The  deed  of  assignment  being  a  perfect  instrument,  there  is  no 
room  for  the  argument  against  its  effectiveness  founded  on  the  doc- 
trine that  an  incomplete  gift  is  invalid  in  equity.  In  the  case  of  An- 
trobus  v.  Smith  [12  Ves.  39],  and  Edwards  v.  Jones  [1  My.  &  Cr. 
22G],  there  was  no  deed  of  assignment,  no  completeness  in  the  trans- 
action. In  Antrobus  v.  Smith  the  prayer  of  the  bill  was,  that  a 
proper  deed  of  assignment  might  be  executed. 

As  to  treating  an  assignment  by  deed  as  a  declaration  of  trust,  or 
refusing  to  it  any  operation  because  it  cannot  be  properly  treated  as  a 
declaration  of  trust,  there  seems  no  legitimate  ground  for  such  an 
argument.  If  a  deed  of  actual  assigniuent  of  an  equitable  interest 
has  any  operation  in  equity  as  divesting  the  assignor  of  his  equitable 
right,  it  is  an  operation  no  more  in  the  nature  of  declaring  a  trust 
tlian  any  other  actual  conveyance  of  any  equitable  estate  or  interest 
in  real  or  personal  property.  Therefore,  there  seems  no  other  just 
view  of  this  case  than  that  which  treats  the  instrument  as  an  actual 
deed  of  assignment,  and  not  as  a  mere  agreement  or  executory  in- 
strument. And,  if  in  the  case  of  an  assignment  of  an  equitable  re- 
versionary interest  in  personalty  for  valuable  consideration,  the  as- 
signment, being  by  deed,  transfers  the  property  from  the  assignor  to 
the  assignee,  and  is  not  a  mere  agreement,  the  actual  assignment  by 
deed  of  the  same  kind  of  property,  without  any  valuable  considera- 
tion, is  not  a  mere  agreement,  and  is  not  merely  executory,  but  is 
an  actual  transfer  of  an  equitable  right.  This  puts  it  beyond  the  in- 
firmity of  an  incomplete  gift,  or  the  case  of  a  right  resting  merely  in 
contract,  which  requires  a  valuable  consideration  to  induce,  a  Court 
of  Equity  to  interfere.     *     *     * 

Upon  the  whole,  my  opinion  is,  that,  by  force  of  the  deed  of  assign- 
ment, the  equitable  right  was  transferred  by  Mrs.  Kiirner  to  Miss 
Noble;  that  the  transaction  was  completed  by  Mrs.  Kiirner's  execu- 
tion of  the  deed,  and  that  no  valuable  consideration  was  necessary  to 
support  the  assignment.  The  plaintiffs,  therefore,  are  entitled  to  a 
decree  for  the  transfer  of  the  fund. 


Sec.  4)  CONSIDERATION.  53 

CLOUGH  V.  CLOUGH. 

(Supreme  Court  of  Massachusetts,  1875.    117  Mass.  83.) 

Contr^fit  foe.  money  had  and  received.  Trial  in  the  Superior 
Court,  before  Aldrich,  J.,  who  allowed  a  bill  of  exceptions  substan- 
tially as  follows:  _-  / 

The  plaintiff  is  the  widow  of  Charles  H.  Clough  and  administra-  //  ll^^  £h- 
trix  of  his  estate ;  he  left  a  minor  son,  a  mother,  one  sister  and  sev- 
eral brothers,  including  the  defendant.  The  defendant  admitted  that 
he  had  received  from  the  intestate  $400  as  a  donatio  causa  mortis; 
that  intestate,  during  his  last  sickness  and  a  few  days  before  his  death 
gave  and  delivered  to  him  the  $100  in  trust  for  his  minor  son,  with 
instructions  to  invest  and  hold  the  same  till  the  son  should  be  twenty- 
one  and  then  to  pay  the  same  with  all  accumulations  to  the  son;  but 
should  the  son  die  before  twenty-one  to  pay  the  same  in  equal  parts 
to  intestate's  mother  and  only  sister;  that  he  accepted  the  trust, 
took  the  money  and  retained  it  till  after  decedent's  death  and  then  de- 
posited it  in  a  savings  bank,  in  his  own  name,  as  trustee  for  the  minor 
son,  where  the  money  has  ever  since  remained. 

Plaintiff  requested  the  court  to  charge  "that  if  they  found  that 
the  deceased  directed  the  defendant  in  case  he  died  to  keep  the  money 
and  give  it  to  the  child  if  he  lived  to  be  twenty-one  years  of  age,  and, 
if  he  did  not,  to  divide  it  between  the  mother  and  sister  of  the  deceas- 
ed, that  would  not  be  in  law  a  gift  to  the  child,  mother  or  sister;  and 
that  such  a  disposition  could  only  be  made  by  will." 

The  judge  declined  this  request  and  told  the  jury  that  personal 
property  might  be  so  given  and  delivered  to  one  in  trust  for  another 
for  a  particular  purpose,  that  it  would  be  good  as  a  donatio  causa 
mortis;  and  that  in  the  present  case  if  the  jury  should  find,  upon 
the  evidence,  that  the  intestate,  in  contemplation  of  impending  death, 
did  give  and  deliver  to  the  defendant  the  $400  in  trust  to  be  paid  over 
as  contended  by  the  defendant,  and  that  the  defendant  accepted  the 
trust  and  at  the  same  time  received  the  money  and  retained  it  in  his 
possession  until  the  death  of  his  brother  a  few  days  after  this  trans- 
action, and  then  deposited  the  money  as  he  had  testified,  that  would 
constitute  a  valid  donatio  causa  mortis,  and  vest  the  property  in  the 
defendant  as  such  trustee;  and  that  if  they  so  found,  it  would  be 
their  duty  to  return  a  verdict  for  the  defendant  upon  this  part  of  the 
case.  The  jury  found  for  the  defendant,  and  to  the  instructions 
and  refusal  to  instruct  the  plaintiff  alleged  exceptions. 

Gray,  C.  J.  Upon  the  facts  which  must  have  been  found  by  the  jury 
under  the  instructions  of  the  court,  the  legal  title  in  the  subject  of 
the  gift  vested  in  the  donee,  subject  to  no  condition  or  contingency 
but  the  death  of  the  donor.  The  fact  that  the  donee  took  it  for  third 
persons  upon  a  trust,  the  terms  and  limitations  of  which  were  pre- 
scribed by  the  donor  and  might  vary  according  to  subsequent  events. 


54  THE   NATURE  AND   REQUISITES   OF  TRUSTS.  (Ch.  1 

did  not  affect  the  validity  of  the  gift  as  a  donatio  mortis  causa.  Hills 
V.  Hills,  8  M.  &  W.  401.  Sessions  v.  Moseley,  4  Cush  87.  Borne- 
man  V.  Sidlinger,  15  Maine,  429,  33  Am.  Dec.  626,  and  21  Maine, 
185.  Dresser  v.  Dresser,  4G  Maine,  48.  1  Story  Eq.  Jur.  (11th 
Ed.)  §  607e. 

Exceptions  overruled.  ^ 


WALKER,  Guardian,  v.  CREWS. 
(Supreme  Court  of  Alabaniii,  1882.     73  Ala.  412.) 

Appeal  from  Barbour  Chancery  Court. 

On  March  12,  1867,  Arthur  Crews  executed  a  deed  of  gift  to  his 
infant  daughter,  Ella  Corine  Crews,  purporting  by  its  terms  to 
"give,  grant  and  convey"  to  her  certain  designated  promissory  notes, 
made  by  divers  third  parties  for  money  loaned,  payable  to  him  in 
January  and  February,  18G8.  Arthur  Crews  died  January  31,  1872. 
A  son.  John  E.  Crews,  was  appointed  administrator  and  as  such  dis- 
tributed the  estate. 

This  bill  was  filed  January  15,  1880,  by  David  L.  Walker,  as 
guardian  for  Ella  Corine  Crews,  against  the  said  John  E.  Crews  and 
the  other  heirs  and  distributees  of  the  estate  to  recover  the  amount 
of  the  notes  so  given  which  had  been  collected  and  the  proceeds  of 
which  had  been  distributed.  The  bill  was  dismissed  by  the  Chan- 
cellor at  the  hearing. 

Stonk,  J.'  The  title  to  personal  property  given  by  deed  is  trans- 
ferred by  a  delivery  of  the  deed,  without  a  delivery  of  the  property. 
When  the  deed  is  delivered,  the  gift  is  irrevocable,  and  the  subse- 
quent possession  of  the  donor  does  not  impair  its  validity.     *     *     * 

It  is  contended  for  appellee  that  the  gift  in  the  present  case  is  exec- 
utory, and  that  the  decree  of  the  chancellor  must  be  affirmed  on  the 
authority  of  Borum  v.  King,  37  Ala.  606.  So  far  as  the  note  ot 
$475  on  Wm.  B.  Borum  mentioned  in  that  case,  is  concerned,  it  is 
difficult  to  draw  a  distinction  between  the  provisions  of  the  two  deeds, 
which  can  benefit  the  complainant  in  this  case.  If  there  be  a  differ- 
ence, it  is  in  favor  of  the  grandchild  Borum  under  the  deed  of  Mr. 
King.  That  deed  contains  words  of  present,  absolute  gift  and  convey- 
ance, with  a  superadded  provision,  appointing  the  donor's  son,  Harvey 
King,  his  (donor's)  special  agent,  and  guardian  of  his  said  grand- 
child (donee),  to  manage  and  control  the  beforementioned  sum  of 
money  to  the  best  advantage  of  said  grandson;    and  authorized  the 

1  A  gift  causa  mortis  of  real  estate  cannot  be  made.  Reeves  v.  Howard,  IIS 
Iowa.  121.  120.  91  N.  W.  800  (1002);  Wentwortli  v.  Shibles.  SO  Maine,  1G7, 
30  Atl.  IDS  (1800);  Gilmore.  Adinx.  v.  Whitesides,  Adin'r.  I>udk\v  (S.  C.)  Eq. 
14  18.  31  Am.  Doe.  503  (18.37);  Johnson  v.  Colley,  101  Va.  414.  416,  44  S.  E. 
721,  90  Am.  St.  Rep.  884  (1003);  Meach  V.  Meach,  24  Vt.  501,  595  (1852). 

2  Part  of  the  opinion  is  omitted. 


Sec.  4)  CONSIDERATION.  65 

said  Harvey,  if  he  thought  proper,  to  expend  the  interest  in  clothing 
and  educating  the  grandson.  There  was  a  disposition  of  the  money 
over,  in  the  event  the  grandchild  died  without  lawful  issue.  This 
court  ruled,  that,  in  as  much  as  the  legal  title  to  the  note — the  right 
to  sue  in  the  grantee's  name — was  not  conveyed,  the  gift  was  not 
perfected,  and  the  donee  could  not  maintain  an  action  for  its  re- 
covery. 

It  was  said  in  Connor  v.  Trawick,  37  Ala.  289,  79  Am.  Dec.  58, 
that  a  gift  by  deed  delivered  is  an  executed  gift,  without  the  actual 
delivery  of  the  thing  given.  The  delivery  of  the  deed  is  the  equiva- 
lent of  the  manual  delivery  of  the  subject  of  the  gift.  Such  is  the 
acknowledged  rule.  3  Wait's  Ac.  &  Def.  499.  The  gift  in  Borum 
v.  King  was  by  deed  delivered,  the  symbol  and  equivalent  of  the  actu- 
al delivery  of  the  note.  Under  the  ruling  in  that  case  the  title  and 
right  to  the  note  would  not  have  passed,  if  the  note  itself  had  been 
delivered,  without  indorsement  to  Borum,  the  donee.  We  apprehend 
this  lays  down  too  technical  a  rule.  The  true  sense  of  the  principle 
is,  that  dominion  over  the  thing  shall  be  parted  with,  and  not  that  the 
technical  right  to  maintain  an  action  in  the  name  of  the  donee  shall 
be  conferred.  What  will  amount  to  delivery,  so  as  to  perfect  a  gift, 
is  not  always  one  and  the  same  thing.  Much  depends  on  the  quality 
and  condition  of  the  thing  given.  The  delivery  should  be  as  com- 
plete as  the  circumstances  will  reasonably  permit;  nothing  more. 
*  *  *  If  we  adhere  to  the  ruling  in  Borum  v.  King,  we  affirm, 
not  only  that  an  absolute  parting  with  dominion  is  necessary  to  per- 
fect a  gift,  but,  when  the  subject  of  the  gift  is  a  promissory  note  or 
similar  security,  to  make  it  valuable  and  binding,  the  donor  must  go 
further  and  guaranty  the  payment  of  the  note  by  his  indorsement, 
unless  he  have  presence  of  mind  to  limit  the  effect  of  his  indorse- 
ment. In  Jones  v.  Deyer,  16  Ala.  221,  this  court  said:  "A  voluntary 
gift  may  be  made  inter  vivos  of  a  promissory  note  payable  to  the 
order  of  the  donor,  by  delivery  merely,  without  endorsement  or  other 
writing."  Grover  v.  Grover,  24  Pick.  (Mass.)  261,  35  Am.  Dec. 
319,  and  Elam  v.  Keen,  4  Leigh  (Va.)  333,  26  Am.  Dec.  322,  sup- 
port this  doctrine.  *  *  *  As  to  the  promissory  note  given  by 
Mr.  King  to  his  grandson,  Borum,  we  think  this  court  fell  into  an 
error,  and  to  that  extent  that  case  is  overruled. 

[The  decree  of  the  Chancellor  was  reversed  and  a  decree  rendered 
declaring  complainant  entitled  to  relief.]^ 

3  The  principal  case  is  one  of  an  absolute  gift  and  not  of  a  ^ft  in  trust; 
but  the  requisites  of  an  absolute  gift  and  of  a  gift  in  trust  are  the  same. 
See  uote  at  end  of  this  section. 


56  THE   NATURE   AND    REQT'l.SITES   OF   TRUSTS.  (Ch.  1 

STOXK  V.  ITACKETT,  Executor,  and  Others. 
(Supreme  Judicial  Court  of  Massacliusotts,  1858.     12  Gray,  227.) 

Bill  in  equity,  in  the  nature  of  a  bill  of  interpleader,  to  obtain 
the  instructions  of  the  court  in  the  disposition  of  shares  of  stock  held 
by  the  plaintiff  under  a  written  declaration  of  trust. 

'  About  December  1,  1853,  Dr.  Kittredge,  having  previously  purchas- 
ed the  stock  and  taken  certificates  thereof  in  the  name  of  Harriet 
P.  Kittredge,  or  Harriet  Kittredge,  trustee  (who  had  previously 
signed  a  similar  declaration  of  trusts,  and  afterwards  died)  sent  the 
certificates  of  stock,  with  blank  transfers  indorsed  upon  them  and 
signed  by  Harriet  P.  Kittredge,  to  the  plaintiff,  with  a  declaration 
of  trust,  which  he  requested  her  to  sign  and  return  it  to  him,  and  she 
did  so.  The  plaintiff  never  paid  any  consideration  for  the  shares, 
and  the  dividends  thereon  were  paid  to  Dr.  Kittredge  during  his  life. 

Dr.  Kittredge  died  in  February,  1854,  domiciled  in  New  Hampshire. 
Dr.  Kittredgc's  widow  waived  the  provision  made  for  her  in  her 
husband's  will  and  claimed  her  statutory  share,  namely  dower  and 
one  third  of  all  his  estate  after  payment  of  debts  and  expenses. 

After  Dr.  Kittredge's  death  and  before  filing  this  bill,  plaintiff  fill- 
ed up,  as  of  December  1,  1853,  the  blank  transfers  indorsed  on  the 
backs  of  the  certificates  of  stock  and  demanded  new  certificates; 
but  the  corporations  declined  to  issue  them. 

Dr.  Kittredge's  widow,  one  of  the  defendants,  answered  that  the 
stock  enumerated  in  the  declaration  of  trust  was  never  transfer- 
red or  delivered  to  plaintiff,  and  that  such  transfer,  if  made,  was 
testamentary  in  nature,  designed  to  avoid  the  effect  of  the  laws  of 
New  Hampshire,  and,  as  to  her,  fraudulent  and  void. 

BiGKLOW,  J.  ^  The  key  to  the  solution  of  the  question  raised  in 
this  case  is  to  be  found  in  the  equitable  principle,  now  well  established 
and  uniformly  acted  on  by  courts  of  chancery,  that  a  voluntary  gift 
or  conveyance  of  property  in  trust,  when  fully  completed  and  execut- 
ed, will  be  regarded  as  valid,  and  its  provisions  will  be  enforced  and 
carried  into  effect  against  all  persons  except  creditors  or  bona  fide 
purchasers  without  notice.  It  is  certainly  true  that  a  court  of  equity 
will  lend  no  assistance  towards  perfecting  a  voluntary  contract  or 
agreement  for  the  creation  of  a  trust,  nor  regard  it  as  binding  so  long 
as  it  remains  executory.  But  it  is  equally  true  that  if  such  an  agree- 
ment or  contract  be  executed  by  a  conveyance  of  property  in  trust, 
so  that  nothing  remains  to  be  done  by  the  grantor  or  donor  to  com- 
plete the  transfer  of  title,  the  relation  of  trustee  and  cestui  que  trust 
is  deemed  to  be  established,  and  the  equitable  rights  and  interests 
arising  out  of  the  conveyance,  though  made  without  consideration, 
will  be  enforced  in  equity.  [Cases  cited.] 

1  Part  of  the  opinion  is  omitted. 


Sec.  4)  CONSIDERATION.  57 

The  application  of  the  principle  established  by  these  authorities  is 
entirely  decisive  of  the  rights  and  duties  of  the  parties  to  this  suit. 
The  conveyance  or  transfer  of  the  shares  to  the  plaintiff  in  her  capaci- . 
ty  as  trustee  was  full  and  complete  and  vested  in  her  the  legal  title  -" '^  ■ 
to  the  property.  No  further  act  was  to  be  done  by  the  orij^^inal^  ^^^'V' 
owner  of  the  shares  to  consummate  the  plaintiff's  title.  As  between 
the  parties,  the  delivery  of  the  certificates  of  stock,  with  the  assig^n- 
ments  of  some  of  them,  and  the  power  of  attorney  to  transfer  the 
others,  was  equivalent  to  a  complete  transfer  of  the  shares.  Nor  is 
it  at  all  material  to  the  validity  of  the  plaintiff's  title,  that  transfers 
of  the  shares  had  not  been  recorded  in  the  books  of  the  different 
corporations  and  new  certificates  of  stock  taken  out  by  her.  That 
was  not  necessary  to  the  conveyance  of  the  legal  title  as  between  the 
donor  and  the  plaintiff.  This  is  well  settled  by  the  authorities  in 
this  state.  *  *  *  There  was  then  a  legal  transfer  of  the  prop- 
erty, fully  executed  to  the  plaintiff.  There  was  also  a  full  and  ex- 
plicit declaration  of  trust,  executed  by  her  and  delivered  to  the 
grantee,  by  which  she  accepted  the  gift  and  took  on  herself  the  exe- 
cution of  the  trusts  which  he  intended  to  establish.  Nothing  there- 
fore was  left  in  fieri.  The  transaction  was  a  completely  executed 
transfer  of  property,  and  fully  created  a  trust,  which,  according  to 
the  principle  already  cited,  a  court  of  equity  is  bound  to  recognize 
and  enforce. 

It  was  suggested  by  the  learned  counsel  for  the  widow  that  the 
donor  never  parted  with  his  power  or  dominion  over  the  property, 
because  he  retained  a  right  to  annul  or  revoke  the  trust.  But  this 
seems  to  us  quite  immaterial.     A  power  of  revocation   is  perfectly     ^  n 

consistent  with  the  creation  of  a  valid  trust.  It  does  not  in  any  de-  '*^  ''^"- 
gree  affect  the  legal  title  to  the  property.  That^asses  to  the  donee 
and  remains  vested  for  the  purposes  of  the  trust,  notwithstanding 
the  existence  of  a  right  to  revoke  it.  If  this  right  is  never  exercised 
according  to  the  terms  in  which  it  is  reserved,  as  in  the  case  at  bar, 
until  after  the  death  of  the  donor,  it  can  have  no  effect  on  the  validity 
of  the  trusts  or  the  rights  of  the  trustee  to  hold  the  property.^ 


PEARSON  V.  AMICABLE  ASSURANCE  OFFICE  and  Others. 

(In  Chancery,  before  the  Master  of  the  Rolls,  Sir  John  Romilly.  1859.    27 

Beavan,  220.) 

On  June  19,  1828,  the  defendant,  the  Amicable  Society,  issued  to 
George  Townsend  a  policy  of  insurance  on  his  life  for  iSOOO.  Sep- 
tember 15,  1828,  he  by  deed  assigned  the  policy  to  two  trustees  upon 
certain  trusts  for  his  father,  mother,  brothers  and  sisters.  The  deed 
contained  the  usual  irrevocable  power  of  attorney  and  a  covenant  for 

2  See  note  at  end  of  this  section. 


58  THE  NATURE  AND   REQUISITES   OF  TRUSTS.  (Ch.  1 

further  assurance.  Townsend  died  in  1857.  The  trustees  claimed 
the  amount  of  the  policy.  The  executors  resisted  this  claim,  and 
notified  the  company  not  to  pay  the  trustees.  The  trustees  broug-ht 
this  suit  aj^ainst  the  Society  and  the  executors,  praying  a  declaration 
that  the  plaintiffs  were  entitled  to  the  moneys  payable  on  the  policy 
and  to  apply  it  on  the  trusts  of  the  deed  of  1828. 

The  assurance  company  paid  the  amount  into  court  and  were  dis- 
missed before  the  hearing  but  without  prejudice  to  any  question. 

Mr.  Selwyn  and  Mr.  Hardy  for  the  plaintiffs.  The  case  is  govern- 
ed by  Fortescue  v.  Barnett  [3  Myl.  &  K.  36],  which  is  precisely  in 
point.  If  this  be  not  a  perfect  voluntary  settlement  of  the  policy 
it  would  be  impossible  to  make  one,  however  meritorious  might  be  the 
object. 

Mr.  R.  Palmer,  Mr.  Speed  and  Mr.  Fischer  for  the  defendants. 
It  is  now  settled,  by  a  series  of  authorities,  that  this  court  will  not 
assist  a  volunteer  under  a  voluntary  settlement  to  perfect  the  gift. 
Either  the  gift  is  perfect  or  it  is  not.  In  the  former  case  the  plain- 
tiffs have  no  right  to  come  into  equity;  by  taking  that  step  they  show 
that  the  settlement  is  not  perfect,  and  that  the  aid  of  this  court  is  re- 
quired to  make  it  effectual. 

The  Master  of  the  Rolls. ^  No  person  can  state  too  strongly  to 
command  my  assent  the  proposition,  that  if  a  voluntary  assignment  of 
any  property  is  imperfect  and  incomplete,  and  the  assistance  of  a 
court  of  equity  is  required  to  give  effect  to  it,  this  court  will  not  in- 
terfere to  perfect  the  instrument. 

I  also  fully  admit,  that  in  these  cases  there  is  a  distinction  between 
that  species  of  instrument  which,  by  assignment,  passes  the  prop- 
erty, and  that  which  simply  operates  as  a  declaration  of  trust,  and  I 
agree  that  this  is  not  a  declaration  of  trust.  The  question  is,  wheth- 
er this  is  a  complete  instrument,  or  whether  it  requires  the  assist- 
ance of  a  court  of  equity  for  its  enforcement?  I  am  of  opinion  that 
it  is  a  complete  and  perfect  instrument,  and  I  will  state  why  I  think 
so. 

If  this  were  an  assignment  of  the  policy  for  value,  and  the  pur- 
chaser had  come  to  this  court  for  its  assistance  to  render  the  assign- 
ment more  complete  what  would  remain  to  be  done?  The  assignor 
would  say:  "What  can  I  do  more  than  I  have  already  done?  If  you 
had  told  me,  out  of  court,  what  further  assurance  or  what  further 
deed  or  assignment  to  make  this  instrument  more  complete  I  would 
have  executed  it."  The  question,  whether  anything  remains  to  be 
done  to  complete  the  assignment  of  a  policy,  is  exactly  the  same, 
whether  it  arises  upon  a  voluntary  instrument  or  upon  one  for  valu- 
able consideration :  whether  it  be  one  or  the  other,  the  question 
must  be,  what  is  there  that  the  assignee  can  require  the  assignor  to 
do  to  make  the  instrument  more  complete.     The  error  in  the  argu- 

1  Part  of  the  (ipinion  is  ouiitted. 


Sec.  4)  CONSIDERATION,  59 

ment  of  the  defendants  is  this:  It  is  assumed  that  this  is  a  suit  in 
which  an  assignee  has  come  here  to  ask  the  aid  of  the  court  in  making 
this  instrument  more  complete;  but  he  does  nothing  of  the  sort.  It 
is  said  by  the  defendants,  "if  the  plaintiffs  do  not  require  the  assist- 
ance of  this  court,  why  do  they  not  proceed  at  law ;"  but  the  proceed- 
ing suggested  in  this  case  would  be  against  the  executors ;  this  is  not 
a  suit  against  the  executors,  it  is  a  suit  against  the  insurance  com- 
pany.    *     *     * 

The  plaintiffs  say  our  instrument  is  perfect  and  complete,  we  do 
not  ask  for  any  relief  against  the  executors,  why  should  we  not  have 
the  money?  The  insurance  oflfice  is  right  in  paying  it  to  us;  it  is 
for  the  executors  to  make  out  their  claim.  The  question  is,  whether 
the  executors  can  make  out  any  claim.  If  the  assignment  had  been 
made  for  value,  it  is  clear  that  the  assignor  could  not  have  prevented 
the  assignee  from  using  his  name  in  suing  the  insurance  company,  if 
they  had  resisted  the  demand,  and  this  court  could  not,  and  would  not, 
have  allowed  the  assignor  to  say  his  name  should  not  be  made  use  of. 
The  executors  can  stand  in  no  better  situation  than  the  assignor ;  this 
court  would  not  have  prevented  the  assignee  from  making  use  of  the 
name  of  the  assignor,  if  the  insurance  company  had  resisted  payment. 
But  here  the  power  of  attorney  is  voluntary;  it  is  irrevocable  and 
in  the  form  usual  in  all  these  instruments,  and  this  court  will  not  al- 
low the  grantor  to  contradict  his  deed.  The  court  will  not  assist  a 
volunteer,  but  it  does  not  say,  on  the  other  hand,  that  it  will  assist 
an  assignor  in  defeating  his  voluntary  deed.  The  argument  has  been 
founded  on  the  supposition  that  by  this  suit  the  trustees  are  asking 
the  assistance  of  a  court  of  equity ;  but  in  truth  they  come  here  only 
to  resist  the  executors  of  the  assignor,  who  have  raised  a  claim  which 
the  assignor  was  not  himself  entitled  to  raise,  and  which  they,  stand- 
ing in  his  shoes,  are  not  entitled  to  raise,  but  which  nevertheless 
makes  it  impossible  for  the  plaintiff  to  receive  the  money  until  the 
claim  of  the  executors  is  disposed  of. 

Decree  for  the  plaintiffs  with  costs.  ^ 


EDWARDS  v.  JONES. 

(In  Chancery,  before  Vice  Chancellor  Sir  Lancelot  Shadwell,  1835.     7  Simons* 

R<^ports,  325.) 

The  bill  which  was  filed  on  the  30th  of  May,  1833,  stated  that 
John  Nathaniel  Williams,  late  of  Castle  Hill,  in  the  County  of  Cardi- 
gan, executed  and  gave  to  Mary  Custance  a  bond,  dated  the  27th  of 
September,  1819,  for  securing  the  repayment,  with  interest,  of  £300. 
lent  to  him  by  Mary  Custance  and  that  he  executed  and  gave  to  her 
another  bond,  dated  the  27th  day  of  December,  182S,  for  securing 

2  See  note  at  end  of  this  section. 


00  THK   NATURE   AND   REQUISITES   OF   TRUSTS.  (Ch.  1 

the  payment,  with  interest,  of  il23.  15s.,  which  had  become  due  for 
arrears  of  interest  on  the  former  bond;  that  Mary  Custance  was 
aunt  to  and  had  a  great  affection  for  the  plaintiff;  and,  at  different 
times,  had  expressed  an  intention  to  give  or  leave  to  the  plaintiff 
the  money  due  on  the  bonds;  that  the  bonds  were  fastened  together 
by  a  pin,  and  that  I\Iary  Custance,  on  the  25th  of  May,  1830,  being  a 
few  days  before  her  death  and  during  her  last  illness,  signed  a  mem- 
orandum on  the  back  of  the  first  bond,  to  the  following  effect:  "I 
Mary  Custance,  of  the  Town  of  Aberyswith  in  the  County  of  Cardi- 
gan, widow,  do  hereby  assign  and  transfer  the  within  bond  or  obliga- 
tion, and  all  my  right,  title  and  interest  thereto,  unto  and  to  the  use 
of  my  niece,  Esther  Edwards  of  Llanilar  in  the  said  County  of  Cardi- 
gan, widow,  with  full  power  and  authority  for  the  said  Esther  Ed- 
wards to  sue  for  and  recover  the  amount  thereof  and  all  interest  now 
due  or  hereafter  to  become  due  thereon;  as  witness  my  hand  this 
25th  May,  1830;"  that  Mary  Custance,  immediately  after  signing 
the  same,  caused  the  bonds  to  be  delivered  to  the  plaintiff,  intending 
that  the  plaintiff  should  be  entitled  thereto  and  to  the  moneys  se- 
cured thereby  in  case  of  and  after  her  death,  and  expressed  herself 
to  that  effect;  that  Mary  Custance  died  on  the  30th  of  May,  1830, 
having  made  her  will,  dated  the  30th  of  May,  1829,  which  did  not 
mention  the  bonds  or  dispose  of  the  residue  of  her  property;  and 
she  thereby  appointed  the  defendant  her  executor;  that  the  testa- 
trix's personal  estate  was  more  than  sufficient  to  pay  her  debts  and 
legacies ;  that  the  bonds  and  the  money  due  thereon,  were  well  given 
to  the  plaintiff  by  the  testatrix,  either  as  a  gift,  or  as  a  donatio  mor- 
tis causa;  that  the  defendant  had  prevailed  upon  Williams  to  give 
him  a  new  bond  for  the  money  secured  by  the  two  former  bonds,  and 
had  given  Williams  a  bond  of  indemnity;  that  Williams  died  in 
January,  1832,  having  appointed  his  wife,  Sarah  Elizabeth  Williams, 
his  executrix ;  and,  in  April,  1833,  she  paid  the  amount  due  on  the 
new  bond  to  the  defendant. 

The  bill  prayed  for  a  declaration  that  the  plaintiff  was  entitled  to 
the  principal  and  interest  due  on  the  two  first  bonds  and  that  the 
defendant  was  a  trustee  thereof  for  her,  and  that  the  defendant  might 
be  decreed  to  pay  to  the  plaintiff  what  he  had  received  from  Sarah 
Elizabeth  Williams. 

The  Vice  Chancellor.  In  this  case  the  plaintiff  seeks  relief  with 
respect  to  a  gift,  or,  as  she  calls  it,  a  donatio  mortis  causa  of  two 
bonds.  If  the  case  made  by  this  bill  were  a  case  of  mere  gift,  this 
court,  clearly,  would  not  interfere;  for  the,  delivery  of  a  bond,  by 
the  obligee,  to  a  third  person,  would  give  the  bond  to  that  third  per- 
son, as  against  the  obligee;  yet  it  would  not  confer  on  the  donee  an 
absolute  right  to  recover  upon  the  bond.  I  take  it  to  be  perfectly 
plain  that,  if  the  obligee  in  a  bond  delivers  it  to  a  stranger,  and,  aft- 
erwards, thinks  proper  to  release  the  obligor,  the  debt  will  be  de- 
stroyed.    I  admit  that  if  the  obligee  gives  the   bond  to  a   stranger, 


Sec.  4)  CONSIDERATION.  61 

and  the  stranger  chooses  to  destroy  it,  the  debt  will  be  destroyed ; 
for  the  obligee  meant  to  give,  to  the  stranger,  the  same  dominion 
over  the  bond  that  he  himself  had;  and,  as  his  own  destruction  of 
the  bond  would  be  the  destruction  of  the  debt,  so  the  destruction  by 
the  donee,  would,  equally,  destroy  the  debt.  Again,  if,  after  the 
bond  has  been  delivered,  the  obligor  thinks  proper  to  pay  the  amount 
of  it  to  the  obligee,  the  donee  cannot  file  a  bill  or  support  an  action 
against  the  donor  for  the  amount  of  the  money  so  paid.  The  effect, 
therefore,  of  the  gift  of  the  bond,  is  to  leave  the  donee  at  liberty  to 
do  just  so  much  as  the  mere  having  possession  of  the  bond  would 
enalale  him  to  do,  that  is,  he  cannot  sustain  a  bill  in  equity  against 
the  representative  of  the  obligee  for  the  purpose  of  recovering  the 
amount;  and,  therefore,  if  the  plaintiff  rested  her  claim  upon  the  gift 
only,  this  court  would  not  interfere  on  her  behalf. 

[The  Vice  Chancellor  then  concluded  that  no  donatio  mortis  causa 
was  proved  and  dismissed  the  bill.]  ^ 


WADD  V.  HAZELTON  and  Others,  as  Executors. 

(Court  of  Appeals  of  New  York,  1893.    137  N.  Y.  215,  33  N.  E.  143,  21  L.  R.  A. 
G93,  33  Am.  St.  Rep.  707.) 

Defendants  appeal  from  a  General  Term  judgment  of  the  Supreme 
Court  which  affirmed  a  judgment  for  plaintiff,  entered  on  the  report 
of  referee. 

This  action  was  commenced  to  procure  a  judgment  directing  the- 
defendants  to  surrender  to  the  plaintiff  a  certain  bond  and  mortgage-* 
for  $3,000,  which  plaintiff  alleged  belonged  to  her.     She  claimed  title -'<- 
by  virtue  of  an  assignment  from  the  then  owner  of  the  bond  and  "" 
mortgage,  one  Albert  Hill,  executed  a  short  time  prior  to  his  death. 
This  assignment,  though  signed  by  Albert  Hill,  was  never  delivered. 

Peckham,  J.^  Whether  the  plaintiff  claims  the  bond  and  mort- 
gage by  virtue  of  an  absolute  gift  to  her  from  the  testator,  evidenced 
by  the  assignment,  or  whether  she  claims  through  the  assignment  as 
a  declaration  of  trust,  is  somewhat  difficult  to  determine  from  her 
complaint.  The  referee  has  taken  the  latter  position  and  has  found 
that  the  testator  constituted  himself  a  trustee  by  reason  of  his  exe- 
cution and  retention  of  the  assignment.  We  think  there  is  no  founda- 
tion in  the  evidence  for  the  claim  of  an  absolute  gift. 

There  is  no  proof  of  a  delivery  or  of  any  executed  intention  to  make 
a  gift,  and  the  papers  themselves  are  found  among  those  of  the  tes- 
tator at  the  time  of  his  decease.     *     *     * 

We  are  also  of  the  opinion  that  no  trust  was  proved. 

1  Affirmed  by  Lord  Chancellor  Cottingham  in  1  Myl.  &  Cr.  226  (1836). 
See  note  at  end  of  this  section. 

2  Part  of  the  opinion  is  omitted. 


<=i-^ 


62  THE   NATURE   AND   REQUISITES   OF   TRUSTS.  (Ch.  1 

While  it  is  true  that  no  particular  form  of  words  is  necessary  to 
create  a  trust  of  this  nature,  and  while  it  may  be  created  by  parol 
or  in  writing,  and  may  be  implied  from  the  acts  or  words  of  the  per- 
son creating-  it,  yet  it  is  also  true  that  there  must  be  evidence  of  such 
acts  done  or  words  used  on  the  part  of  the  creator  of  the  alleged 
trust,  that  the  intention  to  create  it  arises  as  a  necessary   inference 
therefrom  and  is  unequivocal;    the  implication  arising  from  the  evi- 
dence must  be  that  the  person  holds  the  property  as  trustee  for  an- 
other.    The  acts  must  be  of  that  character  which  will  admit  of  no 
other   interpretation    than    that    such   legal    rights   as    the    settlor    re- 
tains are  held  by  him  as  trustee  for  the  donee ;  the  settlor  must  either 
transfer  the  property  to  a  trustee  or  declare  that  he  holds  it  himself 
in  trust.     An  intention  to  give,  evidenced  by  a  writing,  may  be  most 
satisfactorily  established  and  yet  the  intended  gift  may  fail  because 
no  delivery  is  proved.     And  where  an  intention  to  give  absolutely  is 
evidenced  by  a  writing  which   fails  because  of  its  nondelivery,  the 
court  will  not  and  cannot  give  effect  to  an  intended  absolute  gift  by 
construing  it  to  be  a  declaration  of  trust  and  valid,  therefore,  without 
a  delivery.     These  principles   have  been   decided   in  this  court  and 
must  be  regarded  as  settled.      (Martin  v.   Funk,   75  N.  Y.   134,  31 
Am.  Rep.  446;    Young  v.  Young,  80  N.  Y.  423,  36  Am.  Rep.  634; 
Matter  of  Crawford,  113  N.  Y.  560,  21  N.  E.  692,  5  L.  R.  A.  71; 
Beaver  v.  Beaver,  117  N.  Y.  421,  22  N.  E.  940,  6  L.  R.  A.  403,  lo 
Am.  St.  Rep.  531;    Id.,  137  N.  Y.  59,  32  N.  E.  998.)     It  is  true  that 
in  Richardson  v.  Richardson   (L.  R.  3  Eq.  Cas.  686)  Vice  Chancellor 
W.   Page   Wood   does   say,   in    speaking  of  Ex  parte   Pye    (18   Ves. 
140),  that  the  holding  in  that  case  amounted  to  a  decision  that  an  in- 
strument executed  as  a  present  and  complete  assignment  (not  being 
a  mere  covenant  to  assign  on  a  future  day)  is  equivalent  to  a  declara- 
tion of  trust.     The  expression  was  unfavorably  criticised  by  Jessel, 
M.  R.,  in  Richards  v.   Delbridge    (L.  R.   18  Eq.   Cas.   11),  while  in 
Baddeley  v.  Baddeley  (L.  R.  9  Ch.  Div.  113),  Vice  Chancellor  Mal- 
ins  says  he  is  not  disposed  to  disagree  with  Richardson  v.  Richardson, 
notwithstanding   the   remarks   of    Sir   George   Jessel   in   Richards   v. 
Delbridge. 

In  this  court,  however,  and  in  the  case  already  cited  of  Young  v. 
Young,  this  doctrine  is  substantially  repudiated.  We  are  of  opinion 
that  no  such  rule  obtains  or  ought  to  obtain  in  this  state.  An  in- 
tended absolute  gift  by  way  of  a  written  assignment,  which  camiot 
take  effect  because  of  the  absence  of  delivery,  ought  not  to  be  enforc- 
ed as  a  declaration  of  trust  when  there  is  no  such  declaration  and 
when  there  is  no  evidence  of  an  intention  to  create  a  trust.  (Milroy 
V.  Lord,  4  D.  F.  &  J.  274.)     *     *     * 

Judgment  reversed. 


Sec.  4)  CONSIDERATION.  63 

SLANNING  and  Others  v.  STYLE, 
(lu  Chancery,  before  Lord  Chancellor  Talbot,  1734.    3  P.  Wms.  334.) 

Three  sisters  and  their  husbands,  claiming  as  residuary  legatees 
under  the  will  of  Robert  Style,  brought  their  bill  against  his  widow 
for  divers  goods  of  the  testator  detained  by  her,  which  were  not 
given  her  by  the  said  will ;  and  the  widow  preferred  her  bill  for 
goods  detained  by  the  executors,  and  which  (as  was  alleged)  she 
was  entitled  to  by  the  will. 

Another  thing  insisted  upon  on  behalf  of  the  defendant,  the  wnd- 
ow,  was,  that  the  testator  allowed  his  first  wife  to  dispose  and 
make  profit  of  all  such  butter,  eggs,  poultry,  pigs,  fruit  and  other 
trivial  matters  arising  from  the  said  farm  (over  and  besides  what 
was  used  in  the  family)  for  her  own  separate  use,  calling  it  her  pin- 
money;  and  upon  the  death  of  the  first  wife,  and  until  the  testator 
married  the  defendant.  Style,  the  testator's  sister,  the  defendant, 
Felling,  kept  his  house,  and  had  the  same  allowance,  which  was 
also  continued  to  the  defendant,  the  widow,  after  her  marriage, 
by  way  of  pin-money;  and  it  was  proved  in  the  cause  that  her  hus- 
band, whenever  any  person  came  to  buy  any  fowls,  pigs,  &c.,  would 
say  he  had  nothing  to  do  with  those  things,  which  were  his  wife's; 
and  that  he  also  confessed,  that,  having  been  making  a  purchase  of 
about  il,000.  value  and  wanting  some  money,  he  had  been  obliged  to 
borrow  about  £100.  of  his  wife  to  make  up  the  purchase  money; 
therefore  now  the  widow  claimed  to  be  paid  this  ilOO.  ^;«^-v-,_^ 

To  which  it  was  answered,  that  here  was  no  deed  touching  this 
agreement,  nor  any  writing  whatsoever,  whereby  to  raise  a  separate 
property  in  a  feme  covert,  which  was  what  the  law  did  not  favor ;  that 
it  was  no  more  than  a  connivance  or  permission,  that  the  wife  should 
take  these  things  and  continue  to  enjoy  them  during  his  (the  hus- 
band's) pleasure,  which  pleasure  was  determined  by  his  death ;  be- 
sides, this  agreement,  being  after  marriage,  was  but  a  voluntary 
one,  for  which  a  court  of  equity  usually  leaves  the  party  to  take  his 
remedy  at  law;  and  that,  in  truth,  the  husband's  borrowing  thiS(_,;_^^^ 
£100.  of  his  wife  was  no  more  than  borrowing  his  own  money.  -^  ^ 

But  the  Lord  Chancellor  decreed  that  the  widow,  the  defendant, 
was  well  entitled  to  come  in  for  this  £100.  as  a  creditor  before  the 
Master,  observing  that  the  courts  of  equity  have  taken  notice  of 
and  allowed  feme  coverts  to  have  separate  interests  by  their  hus- 
bands' agreement;  and  this  £100.  being  the  wife's  savings,  and  here 
being  evidence  that  the  husband  agreed  thereto,  it  seemed  but  a  rea- 
sonable encouragement  to  the  wife's  frugality,  and  such  agreement 
would  be  of  little  avail  were  it  to  determine  by  the  husband's  death; 
that  it  was  the  strongest  proof  of  the  husband's  consent,  that  the  wife 
should  have  a  separate  property  in  the  money  arising  by  these  sav- 
ings, in  that  he  had  appHed  to  her  and  prevailed  with  her  to  lend  him 


64  THE  NATURE  AND  REQUISITES  OF  TRUSTS.         (Ch.  1 

this  sum;    in  which  case  he  did  not  lay  claim  to  it  as  his  own,  but 
submitted  to  borrow  it  as  her  money. 

Wherefore,  and  especially  as  here  was  no  creditor  of  the  hus- 
band to  contend  with,  it  was  ordered  that  the  wife  should  be  allowed 
to  come  in  for  this  £100.  as  a  creditor  before  the  Master;  and  the 
court  cited  the  case  of  Calmady  v.  Calmady  [2  Eq.  Cas.  Abr.  409], 
where  there  was  the  like  agreement  made  betwixt  the  husband  and 
wife,  that  upon  every  renewal  of  a  lease  by  the  husband  two  guineas 
should  be  paid  by  the  tenant  to  the  wife,  and  this  was  allowed  to  be 
her  separate  money. 


^^■,  ^^.^^^  -^   ■        BEARD  V.  BEARD. 

(In  Chancery,  boforo  Lord  Cliaiiccllor  Ilardwicko,  1744.     3  Atkyns,  72.) 

The  plaintiff's  husband,  a  freeman  of  London,  being  at  variance 
with  his  wife,  in  January,  1739,  by  his  will,  executed  at  a  tavern, 
gives  all  his  estate,  real  and  personal  to  his  brother,  and  makes  him 
his  executor. 

In  November,  1740,  by  a  deed  poll,  he  gives  and  grants  unto  his 
wife  all  his  substance  which  he  now  has  or  may  hereafter  have. 

The  bill  was  brought  by  the  wife,  who  insists  upon  the  deed  poll, 
and  that  the  will  was  revoked  by  this  subsequent  act  of  the  husband  in 
his  lifetime. 

The  counsel  for  the  plaintiff  cited  Boughton  v.  Boughton,  the  5th 
of  December,  1739  [1  Atk.  625],  and  Hervey  v.  Hervey,  November 
12,  1739  [1  Atk.  561]. 

Lord  Chancellor.^  A  man  here  has  done  two  very  unreasonable 
acts;  if  it  should  happen  one  trips  up  the  heels  of  the  other,  it  is  a 
very  fortunate  thing  to  set  everything  right  again. 

A  wife  appears  here  to  be  unprovided  for,  both  before  and  after 
marriage. 

A  will  is  made  at  a  tavern,  probably  in  a  passion,  for  the  husband 
was  parted  from  his  wife  at  that  time,  by  which  he  gives  his  whole 
estate  to  his  brother. 

Afterwards  he  is  guilty  of  another  unreasonable  act, — a  gift  to  his 
wife,  by  deed  poll,  of  all  his  substance. 

The  question  is.  Which  is  to  take  effect? 

The  latter  cannot  take  effect  as  a  grant  or  deed  of  gift  to  the  wife, 
because  the  law  will  not  permit  a  man  to  make  a  grant  or  conveyance 
to  the  wife  in  his  lifetime,  neither  will  this  court  suffer  the  wife  to 
have  the  whole  of  the  husband's  estate  while  he  is  living,  for  it  is 
not  in  the  nature  of  a  provision,  which  is  all  the  wife  is   entitled 

4-j-^  SjC  #jC  «fC 

1  Part  of  the  opinion  is  omitted. 


Sec.  4)  CONSIDERATION.  65 

He  declared,  likewise,  that  the  will  was  revoked  as  to  all  the  per- 
sonal estate  by  the  deed  poll,  and  yet  it  cannot  take  effect  as  a  j^ift  or 
grant  of  such  personal  estate  to  the  plaintiff,  but  the  said  personal 
estate  must  be  distributed.  ^ 


MEWS  V.  ]\IEWS. 

(In  Chancery,  before  the  Master  of  the  Rolls,   Sir  John  Romilly,  1852.     15 

Beavan,  529.) 

William  Mews  (deceased),  carried  on  the  business  of  a  farmer, 
with  his  brother  John  Mews  (a  bachelor),  at  Apton  Hall,  in  Essex, 
where  they  resided  together,  having  one  joint  establishment.  William 
attended  principally  to  the  farming,  and  exclusively  to  the  accounts, 
acting  as  cashier;  John  devoted  himself  to  the  stock  and  sales;  and 
the  plaintiff,  Harriet  Mews,  the  wife  of  William  kept  the  house,  and 
superintended  the  management  and  sale  of  the  butter,  eggs  and 
poultry. 

It  appeared  that  in  1835,  the  plaintiff  Harriet  Mews  placed  in  the 
hajids  of  Messrs.  Eastman  and  Hill  a  sum  of  £90.  at  interest,  and 
they  opened  a  separate  account  in  her  name  in  their  books.  This 
sum  was  afterwards  increased  by  addition  from  the  produce  of  the 
butter,  eggs  and  poultry,  and  ultimately  amounted  to  i557.  8s. 

William  and  John  ]\Iews  both  died.  In  1851  Harriet  Mews  institut- 
ed^ this  suit  against  the  representatives  of  John  Mews,  and  sought  to 
have  it  declared  that  she  was  entitled  to  this  sum,  with  interest,  and  to 
make  the  estate  of  John  Mews  liable  for  the  same. 

The  Master  of  the  Rolls.'  Having  had  an  opportunity  of  read- 
ing the  evidence  very  carefully,  I  have  come  to  the  conclusion  that 
there  is  not  sufficient  evidence  to  establish  a  gift  from  the  husband 
to  the  wife.     *     *     * 

1  entertain  no  doubt  that  there  may  be  a  gift  made  by  a  husband 
to  his  wife,  which  though  bad  at  law,  would  be  supported  in  equity. 
*  *  *  Lord  Hardwicke,  in  the  case  of  Lucas  v.  Lucas  [1  Atk. 
271],  which  has  been  referred  to,  distinctly  states,  that  "in  this 
Court,  gifts  between  husband  and  wife  have  often  been  supported, 
though  the  law  does  not  allow  the  property  to  pass."  Though  the 
property  does  not  pass  at  law,  yet,  in  equity,  a  husband  being  the 

2  A  gift  cansa  mortis,  however,  might  be  made  directly  by  a  husband  to 
his  wife.  Miller  v.  IVIiller,  3  P.  Wms.  350  (173.5)  ;  Lawson  v.  Lawson.  1  V. 
Wms.  441  (17181 ;  Walter  v.  Hodge,  2  Swanston.  92  (1818) ;  Whitney  v.  Wheel- 
er, 116  Mass.  490  (187.5) ;  Meaeh  v.  Meach,  24  Vt.  591,  59G,  597  (1852). 

3  Part  of  the  opinion  is  omitted. 

Ken.Tb.— 5 


66  THE   NATURE   AND    REQUISITES   OF   TRUSTS.  (Cll.  1 

owner  at  law.  may  become  a  trustee  for  his  wife ;  and  if  by  clear 
and  irrevocable  acts  he  has  made  himself  such  trustee,  the  i^itt  to 
his  wife  will  be  conclusive.- 


In  re  BRETON'S  ESTATE. 
BRETON  V.  WOOLLVEN. 

(In  Chancorv.  before  Vice  Chancellor  Sir  Charles  Hall,  ISSl.     L.  R.  17  Ch. 

Div.  41G.) 

Frederick  Breton,  the  testator,  intermarried  with  the  plaintilT  in 
January,  1868. 

The  testator  having  previously  purchased  some  furniture,  on  the 
22d  of  April,  18GS,  wrote  and  handed  to  his  wife  the  following 
paper : 

"This  is  to  certify  that  there  being  now  at  ^Messrs.  Maple  &  Co., 
I      145  Tottenham  Court  Road,  one  hundred  pounds  worth  of  furniture 
belonging  to  me,  I  give  the  same  to  my  dear  wife  Agnes  A.  Breton, 
absolutely  and  unreservedly,  for  her  own  use  and  benefit. 

"Haxeil's  Hotel,   Strand,  London,  April  22d,  1868. 

"Fredk.  Breton,  Major  Rl.  Wilts  Militia." 

The  testator,  having  purchased  some  plate  and  plated  articles, 
wrote  to  the  plaintiff  thus : 

"London,  June  1st.  18GS. 

"My  dearest  W^ife:     I  this  day  make  you  a  present  of  the  plate, 
&c.,  now  at  Mappin  and  Webb's,  and  which  they  are  taking  care  of 
•'A    for  me,  for  vour  sole  use  and  benefit.     The  sum  I  paid  for  it  is  £59. 
7s.  lOd. 

"Ever  3T  affecte  husband,  Fredk.   Breton." 

The  testator  and  his  wife  subsequently  hired  a  house  at  Forest 
Hill,  where  they  went  to  reside,  and  thereupon  the  furniture,  plate, 
and  plated  articles  were  removed  thither.  Other  furniture  and  house- 
hold goods  purchased  by  or  belonging  to  the  testator  were  placed 
in  the  same  house,  and  on  the  18th  of  June,  1868,  he  wrote  and  handed 
the  following  to  the  plaintiff: 

"My  dearest  Wife :  Having  previously  made  over  to  you  for  your 
sole  use  and  benefit  a  certain  amount  of  furniture,  plate,  etc.,  I  now 
present  you  with  everything,  furniture,  linen,  etc.,  plate,  china  and 
glass,  and  all  jewelry  now  belonging  to  me  at  No.  1  Dulwich  A^illas, 
Devonshire  Road,  Forest  Hill.  All  this  to  be  yours  and  yours  only 
from  this  date,  June  eighteenth,  18G8.     This  gift  from 

"Yr  ever  affecte  husband,  Fredk.  Breton." 

2  Grant  v.  Grant,  34  Beav.  623  (1865)  ace. 


Sec.  4)  CONSIDHUATION.  G7 

The  testator  and  his  wife  subsequently  went  to  reside  in  a  house 
in  the  Belvedere  Road,  where  they  lived  at  the  time  of  his  death. 
To  that  house  all  the  furniture,  plate  and  plated  and  other  articles 
and  goods  were  taken  from  the  house  at  Forest  Hill.  While  the 
testator  and  his  wife  resided  together  at  the  two  houses,  the  articles 
mentioned  were  used  in  the  ordinary  way,  and  from  time  to  time 
various  additions  were  made  thereto  by  the  testator;  but  during 
his  life  he  always,  as  alleged,  spoke  of  all  the  furniture  and  other 
articles  and  goods,  and  the  said  additions  theretOj  as  being  the  sole 
property  of  his  wife,  and  often  referred  to  the  useful  provision  for 
her  comfort  which  she  would  have  therein  and  by  means  thereof 
after  his  death. 

The  trustees  and  executors  having  insisted  that  all  the  said  jew- 
elry, furniture,  plate  and  plated  and  other  articles  and  goods,  and 
the  said  additions  thereto,  formed  part  of  the  testator's  estate,  the 
widow  brought  this  action  to  have  it  ascertained  and  declared  wheth- 
er the  same,  or  any  and  which  of  them,  or  any  and  what  parts  thereof, 
belonged  to  her  or  formed  part  of  the  testator's  estate;  and  if  nec- 
essary an  administration  of  the  trusts  by  the  Court. 

Hall,  V.  C.  I  am  unable  to  support  this  gift  to  the  plaintiff,  the 
wife,  as  a  trust  declared  by  her  husband  in  her  favor.  I  am  very 
sorry  for  it,  because  it  is  a  monstrous  state  of  the  law  which  prevents 
effect  being  given  to  such  a  gift.  I  think  that  the  difficulty  in  the 
case  is  occasioned  by  two  or  three  of  the  decisions  which  have  been 
referred  to,  and  which  seem  to  favor  the  contention  that  these  paper 
writings  can  be  supported  as  a  declaration  of  trust  by  the  husband  in 
favor  of  his  wife.  It  was  submitted  that  the  husband  must  be  taken 
to  have  intended,  knowing  what  the  law  is,  to  constitute  himself  a 
trustee  for  her,  that  being  the  only  way  of  giving  effect  to  the  paper 
writings,  i,  e.,  as  other  trustees  were  not  appointed,  he  must  be  held 
to  have  constituted  himself  a  trustee.  That  argument  appears  to  me 
to  come  to  this,  that  in  every  case  of  an  imperfect  gift  on  the  part 
of  the  alleged  donor,  if  the  gift  be  not  effectual  by  reason  of  an  in- 
complete transfer  of  the  property  from  the  alleged  donor  to  the  in- 
tended donee,  or  to  some  person  who  is  to  be  a  trustee  for  the  intend- 
ed donee,  the  Court  must  give  effect  to  the  donation  by  holding  that 
the  alleged  donor  was  a  trustee,  as  it  must  be  considered  that  he 
knew  the  law,  and  that  if  he  did  not  effectuate  his  object  in  the  one 
way  in  which  it  would  have  been  valid,  it  must  be  done  in  another. 
But  in  truth,  in  the  one  case  as  well  as  in  the  other,  whether  a  wife 
or  a  stranger  be  the  object  of  the  gift,  it  is  manifest  from  the  trans- 
action taken  by  itself  that  the  alleged  donor  was  mistaken  as  regards 
the  proper  and  legal  mode  of  effectuating  that  which  he  intended  to 
do.  It  is  plain  that  the  husband  was  mistaken,  and  it  is  not  necessary 
to  impute  to  him  that  he  meant  to  make  the  gift  in  an  ineffectual  way. 
Looking  at  the  documents,  they  are  a  contradiction  of  any  intention 
on  his  part  to  do  that. 


68  Tllli   NATUIU:   AND    REQUISITES   OF   TRUSTS.  (Cll.  1 

The  case  of  Grant  v.  Grant  [3-i  Beav.  623]  was  that  of  a  gift  to  a 
wife,  and  if  the  late  ^Master  of  the  Rolls  had  hased  his  judL,nnent  on 
that  ground,  supporting  it  as  being  a  special  and  peculiar  case,  and 
creating  a  dififerent  law  as  applicable  to  husband  and  wife  in  every 
case,  I  should  have  nothing  more  to  do  than  to  follow  that  decision. 
But  it  is  plain,  from  the  reasons  given  for  the  decision,  that  it  was 
meant  to  be  applical)le  to  every  other  case  of  the  kind,  and  not  mere- 
ly to  that  of  husband  and  wife.  No  other  cases  of  a  gift  by  a  hus- 
band to  his  wife  have  been  referred  to  excepting  the  two  recent  deci- 
sions of  Vice  Chancellor  Malins  in  the  case  of  Baddeley  v.  Baddeley 
[9  Ch.  Div.  113],  and  of  Vice  Chancellor  Bacon  in  the  case  of  Fox 
V.  Hawks  [13  Ch.  Div.  822],  As  to  the  former  case,  I  observe  that 
Vice  Chancellor  Malins  said  that  the  law  was  correctly  stated  in  the 
case  of  Grant  v.  Grant,  and  that  he  was  not  disposed  to  disagree  with 
the  judgments  in  Richardson  v.  Richardson  [L.  R.  3  Eq.  CSG],  and 
in  Morgan  v.  Malleson  [L.  R.  10  Eq.  475],  notwithstanding  the 
remarks  of  the  Master  of  the  Rolls  in  the  case  of  Richards  v.  Del- 
bridge  [L.  R.  18  Eq.  4].  IMiat  being  so,  there  is,  as  Vice  Chancellor 
Malins  seems  to  have  meant  there  should  be  a  clear  difference  of 
opinion  between  himself  and  the  IMaster  of  the  Rolls  upon  this  ques- 
tion, because  he  adopted  the  decision  in  the  two  cases  of  Richardson 
v.  Richardson  and  Morgan  v.  Malleson, — decisions  which  the  Master 
of  the  Rolls  would  not  follow.  That  being  so,  I  must  look  at  all  the 
authorities  and  endeavor  to  find  a  correct  statement  of  the  law  on 
the  subject.  I  consider  that  the  principal  authority  in  these  cases  is 
that  of  the  case  of  Milroy  v.  Lord  [4  De  G.,  F.  &  J.  264],  where 
there  is  a  very  clear  and  elaborate  statement  of  the  law  by  the  late 
Lord  Justice  Turner.  A  portion  of  the  judgment  of  the  Lord  Justice 
was  quoted  by  the  Master  of  the  Rolls  in  Richards  v.  Delbridge,  and 
there  is  much  in  it  which  is,  I  think,  applicable  to  this  case.  The 
Lord  Justice,  after  stating  that  under  the  circumstances  of  the  case 
before  him  it  would  be  difficult  not  to  feel  a  strong  disposition  to  give 
effect  to  the  settlement  to  the  fullest  extent,  said,  "But  in  order  to 
render  the  settlement  binding,  one  or  the  other  of  these  modes" — 
i.  e.,  transfer  of  the  property  or  declaration  of  trust — "must,  as  I  un- 
derstand the  law  of  this  Court,  be  resorted  to,  for  there  is  no  equity 
in  this  court  to  perfect  an  imperfect  gift."  What  I  am  asked  to  do 
in  this  case  is  to  read  that  sentence  as  having  introduced  into  it  the 
words,  "except  as  to  a  gift  from  husband  to  wife."  The  Lord  Justice 
Turner  also  said,  "The  cases,  I  think,  go  further  to  this  extent,  that 
if  the  settlement  is  intended  to  be  effectuated  by  one  of  the  modes  to 
which  I  have  referred,  the  Court  will  not  give  effect  to  it  by  applying 
another  of  those  modes."  To  give  effect  to  this  gift  I  must  introduce 
the  word,  "except  in  the  case  of  a  wife."  The  Lord  Justice  proceed- 
ed to  say,  "If  it  is  intended  to  take  effect  by  transfer,  the  Court  will 
not  hold  the  intended  transfer  to  operate  as  a  declaration  of  trust,  for 
then  every   imperfect  instrument  would  be  made  effectual   by  being 


Sec.  4)  CONSIDERATION.  69 

converted  into  a  perfect  trust ;"  and  he  added  that  it  must  be  plainly 
shown  that  it  was  the  purpose  of  the  settlement,  or  the  intention  of 
the  settlor,  to  constitute  himself  a  trustee.  It  is  clear  in  this  case 
that  it  was  not  so  intended.  It  was  not  the  purpose  or  meaning  of 
the  husband  in  writing  these  letters  to  constitute  himself  a  trustee 
for  his  wife.  I  can  well  understand  in  such  a  case  a  husband  saying 
to  his  wife,  "I  mean  to  give  you  this  as  your  own,  but  when  you  ask 
me  to  be  a  trustee  for  you  I  must  respectfully  decline.  I  do  not  want 
to  be  involved  in  a  trust  of  that  kind  or  in  any  trust."  Therefore  it 
appears  to  me  that,  notwithstanding  the  decisions  of  Vice  Chancellor 
Malins  and  Vice  Chancellor  Bacon  in  the  two  cases  which  have  been 
observed  upon — and  here  I  may  just  state  that  the  case  before  Vice 
Chancellor  Bacon  of  Fox  v.  Hawks  had  many  special  circumstances 
in  it  which  are  not  unlikely  to  have  influenced  his  mind  in  arriving 
at  the  conclusion  to  which  he  came — I  must  hold  that  the  furniture, 
plate,  and  other  particulars,  excepting  the  jewelry,  do  not  belong  to 
the  plaintiff,  but  form  part  of  the  late  husband's  estate. 


FLETCHER  v.  FLETCHER. 

(In  Chancery,  before  Vice  Cbancellor  Sir  James  Wigram,  1844.     4  Hare,  67.) 

The  bih  was  filed  by  Jacob,  a  natural  son  of  the  testator,  Ellis 
Fletcher,  for  the  payment,  by  the  defendants,  his  executors,  out  of 
the  assets,  of  a  sum  of  £60,000.  with  interest  thereon,  from  the  ex- 
piration of  twelve  months  from  the  decease  of  the  testator.  The 
claim  was  founded  upon  a  voluntary  deed,  executed  by  the  testator, 
between  four  and  five  years  before  his  death,  which  was  thenceforth 
retained  by  the  testator  in  his  own  possession,  without  having  been 
communicated  either  to  the  trustees  appointed  in  the  deed,  or,  so  far 
as  it  appeared  to  the  plaintiff  or  the  other  parties  interested  under  it, 
and  which  was  ultimately  discovered  some  years  after  the  death  of 
the  testator,  by  a  person  the  executors  employed  to  make  a  schedule 
of  his  papers,  by  whom  it  was  found,  wrapped  together  with  an  ex- 
amined copy  of  the  same  deed,  in  a  brown  paper-  parcel. 

[By  the  indenture  in  question  dated  September  1,  1829,  made  he-\ 
tween  Ellis  Fletcher  and  five  trustees,  he  covenanted  with  them  that 
his  heirs,  executors  or  administrators  should  in  twelve  months  after 
his  death  pay  said  trustees  £60,000.  to  be  held  by  them  upon  certain 
trusts,  the  last  of  which  in  the  events  that  had  occurred  was  to  pay 
the  plaintiff  on  his  attaining  twenty-one  said  sum  of  £60,000.  with 
any  arrears  of  interest  thereon.] 

The  testator  died  April  26,  1834.  Plaintiff  attained  the  age  of 
twenty-one  in  September,  1843.  The  bill  prayed  that  the  indenture 
might  be  established;   that  plaintiff  might  be  declared  entitled  to  have 


70  THE  NATURE   AND   REQUISITES   OF  TRUSTS.  (Ch.  1 

the  £60,000.  and  interest  and  that  the  defendants,  the  executors,  pay 
the  plaintiff  what  should  be  due  him. 

The  executors  admitted  assets.  The  surviving-  trustees  in  their 
answer  said  that  they  had  not  accepted  or  acted  in  the  trusts  of  the 
indenture,  but  were  willing  to  act  as  the  Court  should  direct. 

Mr.  Romilly  and  Mr.  Webster,  for  the  plaintiff,  submitted  first  that 
the  deed  though  voluntary,  was  yet  complete  and  effectually  created 
a  trust  for  the  object  of  it;   leaving  nothing  for  the  Court  to  perfect. 

I\Ir.  Tinney  and  Mr.  FoUett,  for  the  infant  children  of  the  testator, 
contended  that  the  deed  was  at  the  most  executory,  and,  being  found- 
ed on  no  valuable  consideration,  the  Court  would  not  interfere  to  give 
effect  to  the  instrument. 

Vice  Chancellor.^  According  to  the  authorities,  I  cannot,  I  ad- 
mit, do  anything  to  perfect  the  liability  of  the  author  of  the  trust, 
if  it  is  not  already  perfect.  This  covenant,  however,  is  already  per- 
fect. The  covenantor  is  liable  at  law,  and  the  Court  is  not  called  up- 
on to  do  any  act  to  perfect  it.  One  question  made  in  argument  has 
been,  whether  there  can  be  a  trust  of  a  covenant  the  benefit  of  which 
shall  belong  to  a  third  party;  but  I  cannot  think  there  is  any  diffi- 
culty in  that.  Suppose,  in  the  case  of  a  personal  covenant  to  pay  a 
certafn  annual  sum  for  the  benefit  of  a  third  person,  the  trustee  were 
to  bring  an  action  against  the  covenantor;  would  he  be  afterwards 
allowed  to  say  he  was  not  a  trustee?  If  he  cannot  do  so  after  once 
acknowledging  the  trust,  then  there  is  a  case  in  which  there  is  a  trust 
of  a  covenant  for  another.  In  the  case  of  Clough  v.  Lambert  [10 
Sim.  174]  the  question  arose;  the  point  does  not  appear  to  have 
been  taken  during  the  argument  but  the  Vice  Chancellor  of  Eng- 
land was  of  opinion  that  the  covenant  bound  the  party;  that  the 
cestui  que  trust  was  entitled  to  the  benefit  of  it;  and  that  the  mere 
intervention  of  a  trustee  made  no  difference.  The  proposition,  there- 
fore, that  in  no  case  can  there  be  a  trust  of  a  covenant,  is  clearly  too 
large,  and  the  real  question  is,  whether  the  relation  of  trustee  and 
cestui  que  trust  is  established  in  the  present  case.     *     *     * 

If  the  trustees  have  in  this  case  accepted  the  trust.  I  think  the  deci- 
sion in  Clough  v.  Lambert  applies;  and  if  they  have  not  accepted 
the  trust,  I  scarcely  think  that  fact  can  make  a  difference.  It  is  an 
extraordinary  proposition  that  nothing  being  wanted  to  perfect  the 
liability  of  the  estate  to  pay  the  debt,  the  plaintiff  has  no  right  in 
equity  to  obtain  the  benefit  of  the  trust. 

I  I'avt  of  the  opinion  is  omitted. 


Sec.  4)  COxNSlDHUATION.  71 

NOTE. 
Gifts. 

Gifts  are  Inter  vivos,  causa  mortis,  or  by  last  will.  The  requisites  of  a  gift 
are,  of  course,  the  same  whether  iu  trust  or  not. 

Real  Estate.  As  we  have  seen,  a  gift  causa  mortis  of  real  estate  caiiiMit 
be  made.  A  gift  of  real  estate,  therefore,  must  be  inter  vivos  or  by  last  will, 
and  cannot  be  perfect  unless  the  donee  be  vested  with  the  legal  title,  or  at 
l^st^have  the  right  to  call  for  it  without  further  action  by  tlie  donor. 

Legal  Cuoses  in  rossi:ssioN,  ok  Tangible  Chattels.  A  gift  of  a  tangible 
chattel  may  be  inter  vivos,  causa  mortis,  or  by  last  will.  '  It  cannot  be  per- 
fect unless  the  legal  title  be  vested  in  the  donee.  The  ordinary  way  of  mak- 
ing such  a  gift  is  by  delivering  the  chattel  to  the  donee  with  the  intention  of 
passing  to  liim  the  title.     Faxon  v.  Durant.  9  Mete.  (Mass.)  ;ttf)  (]S4.j). 

A  gift  of  a  chattel  may,  howevei-,  be  made  by  a  delivery  of  a  deed  of  gift 
without  a  delivery  of  the  chattel.  Gifts  inter  vivos:  Bunn  v.  Winthrop,  1 
Johns.  Ch.  329  (181.5) ;  Davis,  Adm'r,  v.  Garrett.  91  Tenn.  147,  18  S.  W.  113 
(1892).     Gifts  causa  mortis:     Meach  v.  Meach,  24  Vt.  591  (1S.")2). 

Legal  Ciioses  in  Action.  How  is  a  perfect  gift  of  a  legal  chose  in  action 
made?  It  is  for  the  most  part  in  dealing  with  gifts  of  choses  in  action  that 
variety  of  decision  has  developed. 

The  legal  title  to  some  choses  in  action  may  be  transferred.  The  legal  title, 
for  example,  to  a  bill  of  exchange  or  promissory  note  payable  to  bearer  may 
be  transferred  by  a  delivery  of  the  instrument  with  the  intent  of  passing  the 
title.^  So  the  legal  title  to  a  bill  of  exchange  or  promissory  note  payable  to 
oi-der  may  be  transferred  by  indorsing  and  delivering  the  instrument  with  like 
intent  But  the  legal  title  to  many  choses  in  action  is  incapable  of  transfer. 
The  assignment,  so  called,  of  such  a  chose  in  action,  is  not  a  true  assignment. 
The  assignee  does  not  get  the  legal  title  and  cannot  sue  in  his  own  name.  He 
getSj  not  the  legal  title,  but  a  power  of  attorney,  which  enables  him  to  sue 
tiie  obligor  in  a  court  of  law  in  the  assignor's  name  and  to  retain  for  his 
own  use  what  he  may  collect.  The  courts  frequently  speak  of  such  an  assign- 
ment as  an  equitable  assignment.  The  expression  lacks  accuracy,  as  the  right  "  }Zr  a_^,, 
to  sue  given  by  such  an  assignment  is  a  right  to  sue  in  a  court  of  law.  not  in  a,  ChL-^.^^ 
court  of  equity.  Hammond  v.  Messenger,  9  Sim.  327  (1838) ;  Hayward  v.  An-  "- 
drews,  lOG  U.  S.  072,  1  Sup.  Ct.  544,  27  L.  Ed.  271  (1SS2) ;  Walker  v.  Brooks. 
125  Mass.  241  (1878). 

Tlie  law  of  the  assignment  of  choses  in  action  has  been  a  growth.  In  Co. 
Lit.  232a,  we  read:  "A  man  may  give  or  grant  his  deed  to  another,  and  such 
grant  by  parol  is  good.  And  it  is  also  implied,  that  if  a  man  hath  an  obliga- 
tion, though  he  cannot  grant  the  thing  in  action,  yet  he  may  give  or  grant 
the  deed,  viz.  the  parchment  and  wax  to  another,  who  may  cancel  and  use  the 
same  at  his  pleasure." 

In  Coke's  time  an  assignment  of  a  chose  in  action  was  deemed  valid  onlyj 

when  made  to  a  creditor  on  account  of  a  precedent  debt.  Y.  B.  H.  T.  15  Hen. 
VII,  2,  pi.  3;  Brooke's  Abridgment.  Chose  in  Action,  pi.  3;  South  v.  Marsh.  3 
Leon.  2.34.  pi.  320  (1590) ;  Harvey  v.  Bateman.  Noy.  52  (IGOO).  If  made  by 
way  of  gift,  the  assignment  was  invalid.  South  v.  Marsh.  3  Leon.  234,  pi.  320 
(1.51K0).  So  if  made  to  a  vendee.  Y.  B.  37  Hen.  VI.  13.  pi.  3 :  Harvey  v.  Bate- 
man, No.v.  52  (1600) ;  Jenkin's  Century  Cases.  108.  pi.  7. 

Riuity  maintained  the  same  distinction  as  late  as  1077.  Freeman's  Ch.  14". 
In  Tx)rd  Carteret  v.  Paschal.  3  P.  Wms.  197  (17.3.",).  the  validity  of  a  voluntary 
assignment  of  a  ch(  se  in  action  was  said  to  be  admitted  on  all  sidt;s.  And  in 
Row  V.  Dawson,  1  Ves.  Sr.  331.  332  (1749).  Lord  Chancellor  Ilardwicke  said  ' 

that,  though  the  law  did  not  admit  an  assignment  of  a  chose  in  action,  the 
court  of  chancery  did,  and  that  in  tlie  case  of  a  bond  it  might  be  assigned 
in  ecjuity  for  valuable  consideration  and  the  assignment  be  good,  though  no 
special  form  were  used. 

Furthermore  in  Coke's  time  the  assignee  who  would  sue  at  law  in  his  as- 
signor's name  must  have  an  express  power' of  attorney.     ^Mallory  v.  Lane.  Cro.     "^ 
Jac.  .342  (101.")).     An   inq)Iied   power  of  attorney  was  a   thing  then  unknown. 
All  this  is  now  changed.    A  power  of  attorney  in  favor  of  a  vendee  or  donee 


72  Tin:  NA'irui:  and  iuxh'isitks  of  trusts.  (Ch.  1 

is  as  valid  as  if  in  favor  of  a  creditor,  and  it  need  not  be  express,  but  may 
be  implied  from  circumstances.  See  Dean  Ames,  1  Harvard  Law  Kov.  G,  and 
3  Harvard  Law  Kev.  340,  3-41. 

Greater  consistency  mijrht  have  been  secured  had  the  courts  agreed  that  to 
a  perfwt  gift  of  a  chose  in  action  it  is  enouj,'h  that  the  donee  obtain  a  power 
of  attorney  entitling  him  to  sue  at  law  in  the  assignor's  name,  even  though  the 
legal  title  to  the  particular  chose  in  action  may  be  capable  of  transfer. 

\'.\Kious  Kinds  of  Legai,  Cuosks  in  Action.  (1)  Bonds.  In  Snellgrove  v. 
Kaily.  3  Atk.  1214  (1744),  lAM'd  Chancellor  Ilardwicke  held  that  a  gift  causa 
mortis  of  a  bond  might  be  made  by  a  mere  delivery  of  the  bond  without  writ- 
ing. So  in  Dulliold  v.  Elwes,  1  P.Iigh,  N.  R.  407  (1827),  the  House  of  Lords 
held  that  a  gift  causa  mortis  of  a  bond  and  mortgage  might  be  made  by  mere 
deliverv  of  the  same  without  writing. 

In  Edwards  v.  Jones,  1  :\Iyl.  &  Cr.  22G  (1&3G),  Lord  Chnnc-ellor  Cottenham 
held  that  a  gift  of  a  bond  inter  vivos  could  not  be  made  by  a  delivery  of  the 
bond,  even  though  accompanied  by  an  express  i)ower  of  attorney  indorsed 
thereon.  No  justification  appears  for  this  distinction  botween  gifts  of  bonds 
causa  mortis  and  inter  vivos.  The  doctrine  of  Edwards  v.  Jones  leads  to  this 
unfortunate  result:  The  donee  of  a  bond  has  the  legal  title  to  it  as  a  chattel, 
but  cannot  sue  at  law  in  the  obligor's  name  to  collect  the  debt;  the  donor  can- 
not recover  the  bond  from  the  donee,  and  yet  for  want  of  it  is  remediless 
against  the  obligor. 

In  the  United  States  this  result  is  avoided  by  treating  gifts  inter  vivos  and 
gifts  causa  mortis  alike.  The  mere  delivery  of  the  bond,  without  writing,  not 
only  gives  the  donee  the  legal  title  to  the  bond  as  a  chattel,  but  confers  on  him 
an  implied  power  of  attorney  to  sue  at  law  th<^  obligor  in  the  assignor's  name. 
Gifts  causa  mortis:  AV:iring,  Adm'r.  v.  I<:)dnionds.  11  Md.  424  (18.'»7)  ;  Wells, 
Adm'r,  v.  Tucker  and  Wife.  3  Bin.  (I'a.)  3(;C)  (1811).  Gifts  inter  vivos:  Elam 
v.  Keen,  4  Leigh  (Va.)  333,  2G  Am.  Dec.  322  (1833);  Hunter  v.  Hunter,  19 
Barb.  (X.  Y.)  G31  (1855)  ;  Gannon  v.  McGuire,  ICO  N.  Y.  47G,  55  N.  E.  7,  73  Am. 
St.  Rep.  G94  (189J)). 

The  delivery  of  a  deed  of  gift  of  a  bond,  without  a  delivery  of  the  bond, 
should  be  effectual  to  pass  the  legal  title  to  the  bond  as  a  chattel,  and  also  to 
confer  upon  the  donee  a  power  of  attorney  to  sue  in  the  assignor's  name.  See 
Brownlow  &  Goldesborough,  40;  Drakeford  v.  Wilks,  3  Atk.  539  (1747). 

(2)  Life  Jnsuranrc  Policirs.  A  perfect  gift  inter  vivos  of  a  life  insurance 
policy  may  be  made  by  a  delivery  of  the  policy  without  writing.  :\Iarcus  v. 
St.  Louis  Mut.  Life  Ins.  Co.,  GS  N.  Y.  G25  (1877)  ;  McGlynn  v.  Curry,  82  App. 
Div.  431,  81  N.  Y.  Supp.  8.55  (1903);  Travelers'  Ins.  Co.  of  Hartford,  Conn.,  v. 
Grant,  Adm'r,  54  N.  J.  E(i.  208,  33  Atl.  lOGO  (189G). 

A  gift  causa  mortis  of  a  life  insurance  policy  may  be  made  by  a  mere  de- 
livery of  the  policv  without  writing.  Witt,  Adm'r,  v.  Amis,  1  B.  &  S.  109 
(18G1);  Amis  v.  Witt,  .33  I'.eav.  G19  (1SG4). 

The  delivery  of  a  deed  of  gift  of  a  policy  of  lifo  insurance  is  as  effectual  as 
the  delivery  of  the  policy  of  insurance  itself.  Gifts  inter  vivos:  Fortescue  v. 
Barnett,  3  Myl.  &  K.  3G  (18.'!4)  ;  Bearson  v.  Amicable  Assurance  Office,  27 
Beav.  229  (18.59).  Gifts  causa  mortis:  AVilliams,  Adm'r,  v.  Guile,  117  N.  Y. 
343,  22  N.  E.  1071,  6  L.  R.  A.  3GG  (1889).  In  the  last  case,  however,  the  policy 
as  well  as  the  deed  of  gift  were  delivered  to  the  donee. 

(3)  J'romissory  Notes.  A  perfect  gift  inter  vivos  of  a  promissory  note  pay- 
able to  the  order  of '  the  donor  may  be  made  by  a  delivery  of  the  note  to  the 
donee,  without  indorsement  and  without  writing.  Wing  v.  iMei-chant.  57  Me. 
383  (18G9);  Grover  v.  Grover,  24  Pick.  2G1,  35  Am.  Dec.  319  (1835);  Hopkins  v. 
Manchester.  IG  R.  I.  <;G3,  10  Atl.  243.  7  L.  R.  A.  387  (1889);  Corle  v.  Monk- 
house,  .50  N.  J.  E(i.  537,  25  Atl.  157  (1892).  A  perfect  gift  causa  mortis  of 
such  a  note  mav  be  made  in  the  same  manner.  Bates  v.  Kempton,  7  Gray 
(Mass.)  382  (18.5G). 

That  a  gift  inter  vivos  of  a  promissory  note  payable  to  the  donor's  order 
mav  be  made  by  a  delivery  of  a  dee<l  of  gift  without  a  delivery  of  the  note 
(was  held  in  Waiker  v.  Crews.  73  Ala.  412  (1882). 

A  gift  inter  vivos  of  the  donor's  own  promissory  note  payable  to  the  donee 
or  order  cannot  be  made.  Warron"v.  Durfee.  12G  Mass.  .338  (1879);  Bartlett, 
Petitioner.  lf>,3  Mass.  509,  515,  40  N.  E.  899  (1895);  IloUiday  v.  Atkinson,  5  B. 
&  C.  501  (1S2G). 


Sec.  4)  CONSIDERATION,  73 

Nor  can  a  gift  rausa  mortis  of  such  a  note  be  made.  Parish  v.  Stone,  14 
Piclv.  (Mass.)  11)8,  25  Am.  Dec.  378  (1833) ;  Harris  v.  Clarii,  3  N.  Y.  93,  51  Am. 
Dec.  352  (1840). 

A  gift  causa  mortis  of  a  promissory  note  payable  to  the  donor's  order  can 
be  made  by  a  delivery  of  the  note  without  writing.  Veal  v.  Veal,  27  Beav.  303 
(1859). 

A  gift  causa  mortis  of  a  promissory  note  and  mortgage,  made  by  a  de- 
livery of  the  note  and  mortgage  to  the  donee,  is  good.  Borneman  v.  Sidlinger, 
15  Me.  429,  33  Am.  Dec.  ('>2(>  (18;»). 

But  in  McIIugh  v.  O'Connor,  01  Ala.  243,  9  South.  165  (1801)  a  delivery  of 
a  moa-tgage  without  the  note  was  held  to  be  ineffectual  as  a  gift  of  the  note. 

(4)  Sliarcs  of  Stock.  A  gift  inter  vivos  of  stock  may  be  made  by  a  delivery 
of  the  certificate  with  an  express  power  of  attorney,  r'ushman  v.  Thayer 
Mfg.  Jewelry  Company,  70  N.  Y.  3G5,  32  Am.  Rep.  315  (ISTO) ;  Walker  v.  Dixon 
Crucible  Co..  47  N.  J.  Eq.  342.  20  Atl.  885  (1800) ;  Matthews  v.  Hoagland,  48 
N.  J.  Kq.  455,  21  Atl.  1054  (1801). 

A  gift  inter  vivos  of  stock  may  be  made  by  a  delivery  of  the  certificate  with- 
out auv  express  power  of  attorney.  First  Nat.  Bank  of  Richmond  v.  Holland, 
99  Va.*495.  30  S.  E.  120,  .55  L.  R.  A.  155,  80  Am.  St.  Rep.  808  (1901) ;  Common- 
wealth V.  Compton.  1.37  Pa.  138.  20  Atl.  417  (1800);  Leysou  v.  Davis,  17  ISIont. 
220,  42  Pac.  775.  31  L.  R.  A.  429  (1805). 

A  gift  causa  mortis  of  stock  may  be  made  by  a  delivery  of  the  certificate 
without  an  express  power  of  attorney.  Walsh  v.  Sexton,  55  Barb.  (N.  Y.)  251 
(1860). 

A  gift  causa  mortis  of  stock  may  be  made  by  a  delivery  of  a  deed  of  gift 
without  a  delivery  of  the  certificate.  Grymes  v.  Hone,  49  N.  Y.  17,  10  Am. 
Rep.  313  (1872). 

In  De  Caumont  v.  Bogert,  30  Hun,  3S2  (1885),  the  donor,  who  owned  shares 
of  stock  for  which  certificates  had  not  been  issued,  by  voluntary  deeds  assign- 
ed the  same  to  different  persons,  and  it  was  held  that  the  gifts  were  valid  as 
against  the  donor's  legal  representative. 

In  England  a  difference  of  opinion  seems  to  exist  as  to  what  is  essential  to 
constitute  a  gift  of  shares  of  stock.  In  Milroy  v.  Lord,  4  De  G.,  F.  &  J.,  204 
(1802),  and  Bridge  v.  Bridge,  10  Beav.  315,  321  (18.52),  it  was  considered  neces- 
sary to  a  perfect  gift  that  the  donee  should  have  the  legal  title  by  being  reg- 
istered as  owner  upon  the  books  of  the  company.  In  Kiddill  v.  Faruell.  3 
Smale  &  G.  428  (1857),  Vice  Chancellor  Stuart  thought  that  the  gift  was  per- 
fect if  the  donee  had  a  power  of  attorne.y  giving  him  the  right  to  force  the 
registration  of  his  name  upon  the  books  of  the  company  as  owner.  The  same 
view  was  taken  in  Ireland  in  the  case  of  West  v.  West,  L.  R.  9  Ir.  Ch.  121 
(1882). 

(.5)  Savings  Bank  Books.  A  gift  inter  vivos  of  a  savings  bank  book  may  be 
made  by  a  delivery  with  an  express  power  of  attorney.  Kimball  v.  Leland,  110 
Mass.  325  (1872);  Foss  v.  Lowell  Five  Cents  Savings  Bank,  111  Mass.  285 
(1873). 

A  gift  inter  vivos  of  a  savings  bank  Iwok  may  be  made  by  a  delivery  of  the 
book  without  any  writing.  Camp's  Appeal.  30  Conn.  88.  4  Am.  Rep.  30  (1800) ; 
Hill  V.  Stevenson.  03  Me.  304,  18  Am.  Rep.  231  (1873) ;  Pollev  v.  Hicks,  58  Ohio 
St.  218,  50  N.  E.  809.  41  L.  R.  A.  858  (1808) ;  Providence  Institution  for  Savings 
V.  Taft.  14  R.  I.  502  (1884) ;  Watson  v.  Watson.  GO  Vt.  243.  30  Atl.  201  (1890). 

A  gift  caxisa  mortis  of  a  savings  bank  book  may  be  made  by  a  delivery  of 
the  book  with  an  express  power  of  attorney.  Sheedy  v.  Roach.  124  Mass.  472, 
20  Am.  Rep.  080  (1878).  It  may  also  be  made  by  a  delivery  of  the  book  with- 
out any  express  power  of  attorney.  Ridden  v.  Thrall,  125  N.  Y.  572,  20  N.  E. 
627,  11  L.  R.  A.  084,  21  Am.  St.  Rep.  758  (1801) ;  Pierce  v.  Boston  Five  Cents 
Savings  Bank,  120  IMass.  425,  37  Am.  Rep.  371  (1880)  ;  Tillinghast  v.  Wheaton, 
8  R.  I.  530,  5  Am.  Rep.  021,  94  Am.  Dec.  120  (1807). 

In  Jones  v.  Weakley.  00  Ala.  441.  12  South.  420,  19  L.  R.  A.  700,  42  Am.  St. 
Rep.  84  (1803)  it  was  held  that  the  delivery  of  a  pass  book  upon  an  ordinary 
bank  of  deposit  was  not  a  gift  of  the  deposit. 

(0)  Certificates  of  Deposit.  A  gift  causa  mortis  of  a  certificate  of  deposit 
may  be  made  by  a  delivery  of  it  unindorsed.  Westerlo  v.  De  Witt.  30  N.  Y. 
340,  93  Am.  Dec.  517  (1867)  ;  Moore  v.  Moore,  L.  R.  18  Eq.  474  (1874)  ;  In  re 
Dillon,  L.  R.  44  Ch.  Div.  70  (1800).     A  doubt  is  suggested  in  Re  Dillon  as  to 


<* 


74  THE    NATUKIO    AM)    UlXinslTKS    OF    TRUSTS.  (Ch.  1 

,]^      uiiL'thor  a  gift  inter  vivos  of  a  cortitieate  of  doiwsit  can  be  uuulo  by  a  delivery 
'    '         of  it  unindorsed. 

(7)  Luticri/  Tickets.    A  gift  of  a  lottery  ticket  may  be  made  by  a  delivery  of  it 
without  writ  ins.    Intpr  vivos:    Grangiac  v.  Arden.  10  Johns.  (N.  Y.)  293  (1813). 
Cau.sa  mortis:     (inid  v.  Rutland,  1  I>li.  Ab.  340  (1710). 
'(8)  Exchequer  TdUii.    Causa  mortis:     Jones  v.  Selby,  Proo.  Ch.  300  (semblo). 

(9)  Judi/mcnts.  It  is  said  that  a  ^jift  of  a  judjimont  may  be  made  without  a 
written  assignment  and  by  a  delivery  of  the  same.  IMa<'k  v.  INIack,  3  llun, 
323  (1S74).  Presumably  what  is  meant  is  by  a  delivery  of  a  eopy  of  the 
judu'ment.  It  is  doubtful  whether  a  gift  of  a  judgment  can  be  so  made  in 
England.     See  Patterson  v.  Williams.  LI.  &  G.  t.  PI.  'Xt  (1834). 

What  has  been  said  as  to  the  gift  of  a  chose  in  action  is  limited  to  a  gift 
of  the  whole  of  a  chose  in  action.  A  gift  of  part  of  a  chose  in  action  does  not_ 
create  a  power  of  attorney,  and  give  the  so-called  assignee  a  right  to  sue  in 
the  assignor's  name  in  a  connnon-law  court.  The  operation  of  an  assignment 
of  a  part  of  a  legal  chose  in  action  is  to  create  an  e<iuitable  charge  enforceable 
onlv  in  a  court  of  eijuitv,  and  to  the  creation  of  such  a  charge  a  consideration 
is  necessary.     Alger  v.  Scott,  54  N.  Y.  14  (1873). 

Equitai!LE  Cuoses  in  Action.  That  a  cestui  que  trust  could  make  an  as- 
signment by  way  of  gift  of  his  interest,  whether  present  or  reversionary, 
seems  to  have  been  settled  by  the  decision  of  Lord  Eldon  in  Ellison  v.  Ellison, 
G  Vos.  Jr.  G'lO  (1S02).  and  of  Sir  William  Grant  in  Sloane  v.  Cadogau.  Sugdt^n 
V.  &  P.  (10th  Ed.)  Appendix.  GG  (180S).  The  principles  involved  in  these  deci- 
sions seem  to  have  been  <lisregarded  for  a  time  in  England.  See  Meek  v.  Ket- 
tlewell,  5  Hare.  4G4  (1842),  affirmed  1  Phillips.  343  (184.3).  The  case  of  Keke- 
wich  V.  Planning.  1  De  G.,  Macn.  &  G.  17G  (1S.")1).  did  much  to  restore  the  law 
as  lt>ft  by  Lord  Eldon  and  Sir  William  Grant.  To-day  a  cestui  que  trust  may 
without  doubt  make  a  gratuitous  assignment  of  the  whole  of  his  equitable  in- 
terest, whether  present  or  reversionary. 

Here,  also,  what  has  been  said  in  reference  to  the  assignment  is  limited  to 
the  assignment  of  the  whole  of  the  cestui  que  trust's  interest.  An  assignment 
of  a  part  of  a  cestui  que  trust's  interest  creates  but  an  equitable  charge,  and 
is  not  valid  without  a  consideration.     In  re  Luean,  L.  R.  4.1  Ch.  Div.  470  (1890). 

A  di.stinction  should  be  not(>d  between  a  gift  by  will  of  real  estate  and  of 
personal  property.  The  title  to  real  estate  passes  by  the  will  diroctly  to  the 
devisee.  The  title  to  personal  ju-operty  always  i>asses  to  the  executor,  iind 
the  legatee  in  trust  derives  his  title  from  the  executor.  Lockman  v.  Reilly, 
95  N.  Y.  G4,  72  (1884). 

^  ^-^-1 

SECTION  5.— THE  SUBJECT-MATTER  OF  A  TRUST. 


JEWELL  V.  BARNES'  ADMINISTRATOR. 

(Court  of  Appeals  of  Kentucky,   l!Mn.     110  Ky.  329,  Gl   S.   W.  3G0,  .53  L.   R. 

A.  377.) 

HoBSON,  J.^  Appellant,  Robert  M.  Jewell,  filed  this  suit  against 
the  appellees,  the  Lotiisville  Trust  Company,  as  the  administrator 
with  the  will  annexed,  and  S.  S.  Barnes,  the  residuary  devisee  of 
C.  P.  Barnes,  deceased.  The  court  below  sustained  a  demurrer  to  his 
petition,  and,  he  failing  to  plead  further,  dismissed  the  action.  The 
only  question  on  the  appeal  is,  therefore,  did  the  petition  state  a 
cause  of  action? 

1  Part  of  the  opinion  is  omitted. 


Sec.  5)  THE    SUB.TECT-MATTKK    OF   A   TKUST.  75 

It  was  allcj^cd  in  the  petition  that  C.  P.  Barnes  was  at  the  time  of 
his  death,  and  had  been  for  many  years  theretofore,  engaged  in  busi- 
ness as  a  jeweler,  with  his  brother,  J.  B.  Barnes  under  the  firm  name 
of  C.  P.  Barnes  &  Co. ;  that  the  business  was  a  large  one,  and  C.  P. 
Barnes  became  a  wealthy  man ;  that  in  the  year  1877,  when  appel- 
lant was  a  small  boy,  the  deceased  took  him  into  his  employ  and 
treated  him  as  if  he  had  been  his  own  son,  often  promising  him  an 
interest  in  the  business ;  that  appellant  started  with  a  small  salary, 
which  was  increased  from  time  to  time  until  the  death  of  the  de- 
ceased, when  he  was  receiving  $'^0  a  week ;  that  the  deceased  died, 
leaving  a  will  which  was  duly  admitted  to  probate,  and  by  the  seventh 
clause  of  the  will  the  testator  provided  for  him  in  the  following  lan- 
guage: "I  desire  that  my  friend  Robert  M.  Jewell  be  retained  in 
the  employ  of  the  firm  on  such  liberal  terms  as  his  long  and  faithful 
service  entitles  him  to."  It  is  also  alleged  that  on  February  23, 
1895,  within  a  month  after  the  death  of  the  testator,  against  his  pro- 
test, his  salary  was  cut  down  from  $20  to  $15  a  week,  and  three 
years  later,  on  February  26,  1898,  to  $13.50  a  week;  that  about  two 
months  after  this,  without  fault  on  his  part,  he  was  discharged; 
against  his  protest,  and  had  been  unable  to  earn  anything  like  $20  a 
week  from  the  time  of  his  discharge  to  the  filing  of  the  suit;  that 
appellees  were  running  the  store  with  great  profit,  and  it  was  incum- 
bent on  them,  under  the  will,  to  keep  him  in  their  employment  at  $20 
a  week;  that  his  wages  for  the  time  amounted  to  $1,780,  and  he  had 
only  received  $3,045.70,  leaving  a  balance  due  him  of  $1,734.30; 
that  C.  P.  Barnes  was  the  owner  of  a  larger  interest  in  the  firm  than 
his  brother,  J.  B.  Barnes,  and  by  his  will  gave  to  his  brother  enough 
of  his  holdings  in  the  firm  to  make  the  brother  and  the  testator's  wid- 
ow, appellee,  S.  S.  Barnes,  equal  partners  in  the  business ;  that  they 
continued  the  business  under  the  same  firm  name  from  the  death  of 
the  testator,  on  February  5,  1895,  until  May  19,  1897,  when  the 
brother,  J.  B.  Barnes,  sold  out  his  interest  in  the  firm  to  the  widow, 
appellee,  S.  S.  Barnes;  and  that  she  has  continued  the  business  under 
the  name  of  C.  P.  Barnes  &  Co.  It  will  be  observed  that  'the  brother, 
J.  B.  Barnes,  is  not  sued.  The  suit  is  brought  against  the  personal 
representative  and  the  widow,  as  residuary  devisee.  It  will  be  also 
observed  that,  although  appellant's  salary  was  cut  down  to  $15  soon 
after  the  testator's  death,  he  continued  with  the  firm  and  continued 
to  accept  the  salary  that  was  paid  him ;  and  things  remained  in  this 
shape  until  after  J.  B.  Barnes  sold  out,  and  appellee  S.  S.  Barnes 
took  charge  of  the  business  in  her  own  right,  after  the  dissolution  of 
that  firm,  and  appellant  continued  to  work  for  her  and  to  accept  the 
reduced  salary  from  her  until  he  was  discharged  by  her  something 
like  a  year  afterwards. 

It  is  insisted  for  appellant  with  great  earnestness  that  the  will 
creates  a  precatory  trust  in  his  favor,  and  that  he  is  entitled  under  the 
will  to  his  wages  at  $20  per  week.     The  will  does  not  fix  the  salary 


76  THE   NATURE   AND   REQUISITES   OF   TRUSTS.  (Ch.  1 

that  appellant  is  to  receive  if  retained  in  the  employ  of  the  firm,  nor 
does  it  require  that  he  shall  be  retained.  The  language  imports  no 
more  than  an  expression  of  the  testator's  desire,  and  the  clause  was, 
no  doubt,  put  in  tliis  shape  so  as  not  to  embarrass  the  devisees  in  the 
management  of  their  affairs.  The  will  contemplated  that  the  broth- 
er and  wife  of  the  testator,  as  a  firm,  would  continue  the  business; 
and  to  this  firm  the  testator  expressed  the  desire  that  it  would  retain 
appellant  in  its  employ  on  such  liberal  terms  as  his  long  and  faithful 
service  entitled  him  to.  The  amount  of  compensation  is  expressly 
left  to  the  firm,  and  no  desire  is  expressed  as  to  anything  that  should 
be  done  after  that  firm  went  out  of  business.  The  suit  here  is  not 
against  that  firm,  and  if  this  action  can  be  maintained,  the  clause 
in  question  will  amount,  in  substance,  to  a  charge  of  an  annuity  up- 
on the  widow,  appellee,  S.  S.  Barnes,  in  favor  of  appellant,  unless 
she  quits  the  business.  The  testator  clearly  intended  no  such  result. 
In  Shaw  v.  Lawless,  5  Clark  &  F.,  129,  the  testator  expressed  his 
"particular  desire"  that  the  devisee,  when  he  received  the  property, 
should  continue  L.  "in  the  receipt  and  management  thereof,  and  like- 
wise employ  and  retain  him  in  the  receipt,  agency  and  management 
of  the  rents,"  at  the  usual  fees  allowed  to  agents,  for  this  reason,  as 
expressed  in  the  will:  "He  having  acted  for  me  since  I  became 
possessed  of  said  estate,  fully  to  my  satisfaction."  It  was  held  that 
no  precatory  trust  resulted.  Among  other  things,  the  Lord  Chancel- 
lor said:  "All  cases  upon  a  subject  like  this  must  proceed  on  a  con- 
sideration of  what  was  the  intention  of  the  testator.  Now,  the  first 
observation  that  strikes  one  with  reference  to  that  matter  is  that 
during  the  life  of  the  testator  Lawless  was  his  agent.  But  then  he 
was  agent  only  during  the  testator's  pleasure,  and  by  the  terms  of 
the  will  the  testator  desired  that  he  should  continue  in  the  agency. 
Is  that  desire  to  be  considered  a  command?  If  so,  for  what  length 
of  time  is  he  to  continue.  *  *  *  jf  Lawless  is  the  equitable 
incumbrancer  to  the  amount  of  one-twentieth  part  of  the  income  of 
the  estate,  he  has  a  clear  interest  in  the  residue,  for  he  might  take 
one-twentieth  part  of  the  residue ;  he  might  file  a  bill  in  chancery  in 
order  to  control  the  application  of  the  residue  and  claim  to  be  abso- 
lutely invested  in  what  he  is  entitled  to  receive,  namely,  this  one- 
twentieth  part."  So,  here,  if  the  clause  in  question  created  a  preca- 
tory trust,  appellant  would  have  been  entitled  to  maintain  a  bill  in 
equity  to  protect  his  rights  and  prevent  the  firm  from  taking  any 
steps  that  might  imperil  his  annuity.  Such  a  right  might  render  the 
estate  of  the  devisee  materially  less  valuable,  and  make  appellant  to 
no  small  extent,  the  real  beneficiary  under  the  will.  The  case  above 
referred  to  was  followed  in  Foster  v.  Elsley,  19  Ch.  Div.  518,  and  Fin- 
den  V.  Stephens,  22  Eng.  Ch.  142.  See,  also.  Perry,  Trusts,  §  123. 
The  firm  composed  of  the  widow  and  the  brother  were  not  required 
to  continue  the  business.     They  might  close  it  out  at  pleasure.     If 


Sec.  G)  THE  CESTUI   QUE  TRUST.  77 

they  had  sold  to  a  stranger,  clearly  no  trust  would  have  attached  in 
favor  of  appellant  to  the  assets  in  their  hands  received  from  the  sale. 
When  the  brother  sold  to  the  widow,  he  was  acquit  of  all  responsi- 
bility. It  was  not  the  testator's  purpose  to  create  a  permanent  charge 
on  the  corpus  of  the  estate  in  the  hands  of  the  devisees;  and  the 
widow  after  her  purchase  was  under  no  obligation  to  keep  appellant 
indefinitely  in  her  service,  regardless  of  the  amount  of  the  business 
she  did,  or  other  circumstances  affecting  her  interest.  Judgment  af- 
firmed.^ 


SECTION  G.— THE  CESTUI  OUE  TRUST.* 


MORICE  V.  BISHOP  OF  DURHAM. 

(In  Chancery,  before  the  Master  of  the  Rolls,   Sir  William  Grant,  1S04.     9 

Ves.  Jr.  399.) 

Ann  Cracherode,  by  her  will,  dated  the  IGth  of  April,  1801,  and 
duly  executed  to  pass  real  estate,  after  giving  several  legacies  to  her 
next  of  kin  and  others,  some  of  which  she  directed  to  be  paid  out  of 
the  produce  of  her  real  estate,  directed  to  be  sold,  bequeathed  all  her 
personal  estate  to  the  Bishop  of  Durham,  his  executors,  &c.,  upon 
trust  to  pay  her  debts  and  legacies,  &c. ;  and  to  dispose  of  the  ulti- 
mate residue  to  such  objects  of  benevolence  and  liberality  as  the 
Bishop  of  Durham  in  his  own  discretion  shall  most  approve  of;  and 
she  appointed  the  Bishop  her  sole  executor.  , 

The  bill  was  filed  by  the  next  of  kin  to  have  the  will  established 
except  as  to  the  residuary  bequest,  and  that  such  bequest  may  be 
declared  void.     The  Attorney  General  was  made  a  defendant.     The 

2  The  trust  res  may  be  realty  or  personalty.  A  chose  in  action  as  well  as 
a  chose  in  possession  may  form  the  trust  res.  Fletcher  v.  Fletcher,  4  Hare, 
67  (1844) ;  Fogg  v.  Middleton,  2  Hill,  Ch.  (S.  C.)  591  (1837). 

Purely  personal  rights  cannot  be  held  in  trust,  such  as  a  peerage  or  office. 
The  right  of  either  party  to  a  contract  of  marriage,  doubtless,  could  not  be 
made  the  subject  of  a  trust.  On  grounds  of  public  policy  some  rights  tbat  are 
assignable  are  in  some  jurisdictions  forbidden  to  be  made  the  subject  of  a 
trust. 

3  The  cases  in  this  section  should  be  read  in  connection  with  two  papers.^ 
"The  Failure  of  the  'Tilden  Trust,'"  by  Dean  Ames,  5  Harvard  Law  Review,] 
389,  and  "Gifts  for  a  Noncharitable  Purpose,"  by  Prof.  Gray,  15  Harvard  Law  | 
Review,  509;  the  first  attacking  and  the  second  supporting  the  doctrine  of_ 
Morice  v.  Bishop  of  Durham. 

A  direct  result  of  Dean  Ames'  criticism  of  the  decision  in  the  Case  of  the 
Tilden  Will,  130  N.  Y.  29,  28  N.  E.  880,  14  L.  R.  A.  33,  27  Am.  St.  Rep.  487 
(1891).  was  the  passage  by  the  Legislature  of  New  York  of  chapter  701,  p. 
1748,  Laws  1893  (amended  by  chapter  291.  p.  751,  Laws  1901),  which  restored 
the  English  law  of  charitable  trusts.  The  principal  case,  however,  still  re- 
mains the  law  of  New  York,  and  makes  a  definite  cestui  necessary  to  the  va- 
lidity of  a  noncharitable  trust. 


78  THE   NATURE   AND   REQUISITES  OP  TRUSTS.  (Ch.  1 

Bishop  by  his  answer,  expressly  disclaimed  any  beneficial  interest  in 
himself  personally. 

The  Master  of  the  Rolls. ^  The  only  question  is,  whether  the 
trust,  upon  which  the  residue  of  the  personal  estate  is  bequeathed,  be 
a  trust  for  charitable  purposes.  That  it  is  upon  some  trust,  and  not 
for  the  personal  benefit  of  the  Bishop,  is  clear  from  the  words  of  the 
will,  and  is  admitted  by  his  Lordship,  who  expressly  disclaims  any 
beneficial  interest.  That  it  is  a  trust,  unless  it  be  of  a  charitable  na- 
ture, too  indefinite  to  be  executed  by  this  court,  has  not  been,  and 
cannot  be,  denied.  There  can  be  no  trust  over  the  exercise  of  which 
this  court  will  not  assume  a  control ;  for  an  uncontrollable  power  of 
disposition  would  be  ownership,  and  not  trust.  If  there  be  a  clear 
trust,  but  for  uncertain  objects,  the  property,  that  is  the  subject  of 
the  trust,  is  undisposed  of,  and  the  benefit  of  such  trust  must  result 
to  those,  to  whom  the  law  gives  the  ownership  in  default  of  disposi- 
tion by  the  former  owner.  But  this  doctrine  does  not  hold  good  with 
regard  to  trusts  for  charity.  Every  other  trust  must  have  a  definite 
object.  There  must  be  somebody,  in  whose  favor  the  court  can  de- 
cree performance.  But  it  is  now  settled,  upon  authority,  which  it  is 
too  late  to  controvert,  that  where  a  charitable  purpose  is  expressed, 
however  general,  the  bequest  will  not  fail  on  account  of  the  uncer- 
tainty of  the  object;  but  the  particular  mode  of  api)lication  will  be 
directed  by  the  King  in  some  cases,  in  others  by  this  court. 

Then  is  this  a  trust  for  charity?  Do  purposes  of  liberality  and 
benevolence  mean  the  same  as  objects  of  charity?  That  word  in  its 
widest  sense  denotes  all  the  good  aflfections  men  ought  to  bear  to- 
wards each  other;  in  its  most  restricted  and  common  sense,  relief  of 
the  poor.  In  neither  of  these  senses  is  it  employed  in  this  court. 
Here  its  signification  is  derived  chiefly  from  the  Statute  of  Elizabeth 
[St.  43  Eliz.  c.  4].  Those  purposes  are  considered  charitable,  which 
that  Statute  enumerates,  or  which  by  analogies  are  deemed  w'ithin  its 
spirit  and  intendment ;  and  to  some  such  purpose  every  bequest  to 
charity  generally  shall  be  applied.  But  it  is  clear  liberality  and  be- 
nevolence can  find  numberless  objects,  not  involved  in  that  Statute  in 
the  largest  construction  of  it.  The  use  of  the  word  "charitable" 
seems  to  have  been  purposely  avoided  in  this  will,  in  order  to  leave 
the  bishop  the  most  unrestrained  discretion.  Supposing,  the  uncer- 
tainty of  the  trust  no  objection  to  its  validity,  could  it  be  contended 
to  be  an  abuse  of  the  trust  to  employ  this  fund  upon  objects,  which 
all  mankind  would  allow  to  be  objects  of  liberality  and  benevolence; 
though  not  to  be  said,  in  the  language  of  this  court,  to  be  nlijects 
also  of  charity?  By  what  rule  of  construction  could  it  be  said,  all 
objects  of  liberality  and  benevolence  are  excluded,  which  do  not  fall 
within  the  Statute  of  Elizabeth?  The  question  is,  not  whether  he 
may  not  apply  it  upon  purposes  strictly  charitable,  but  whether  he  is 

1  Part  fif  thp  opinion  is  omitted. 


Sec.  6)  THE   CESTUI   QUE   TRUST.  79 

bound  so  to  apply  jt.  *  *  *  The  trusts  may  be  completely  ex- 
ecuted without  bestowing  any  part  of  tliis  residue  upon  purposes 
strictly  charitable.  The  residue  therefore  cannot  be  said  to  be  given 
to  charitable  purposes;  and,  as  the  trust  is  too  indefinite  to  be  dis- 
posed of  to  any  other  purpose  it  follows  that  the  residue  remains 
undisposed  of;    and  must  be  distributed  among  the  next  of  kin.^ 


MUSSETT  V.  BINGLE. 

(In  the  Ili.ch  Court  of  Justice,  Chancery  Division,  before  Vice  Chancellor  Sir 
Charles  Hall,  1876.    Wkly.  Notes  [1876]  170.) 

In  this  cause,  which  now  came  on  upon  further  consideration, 
the  testator  had  by  his  will  directed  his  executors  to  apply  iSOO  in 
erecting  a  monument  to  his  wife's  first  husband,  and  also  to  invest 
£200  and  apply  the  interest  in  keeping  up  the  monument.  It  was 
admitted  that  the  latter  direction  was  bad,^  and  the  question  argued 
was  whether  the  former  direction  was  good. 

The  trustees  were  ready  to  carry  out  the  testator's  wishes,  but 
some  of  the  beneficiaries  contended  that  the  first  direction  was  void 
as  purely  "honorary." 

The  Vice  Chancellor  said  that  the  direction  to  the  executors 
was  a  perfectly  good  one,  and  one  which  they  were  ready  to  perform, 
and  it  must  be  performed  accordingly.* 


GOTT  V.  NAIRNE. 

(In  the  High  Court  of  Justice,  Chancery  Division,  before  Vice  Chancellor  Sir 
Charles  Hall,  1876.     35  Law  Times  Reports,  209.) 

Demurrer.  William  Gott,  by  a  codicil  to  his  will,  bequeathed  to 
R.  Nairne  and  T.  W.  Nelson  the  sum  of  £12,000.,  upon  trust  that 
they  or  the  survivor  of  them,  or  the  executors  or  administrators  of 

2  Affirmed  on  appeal  by  Lord  Chancellor  Eldon,  10  Yes.  Jr.  522. 

3  Previous  to  the  decision  in  Lloyd  v.  Lloyd.  2  Sim.  N.  S.  255  (1852),  a  gift 
for  the  repair  of  a  monument  was  considered  a  gift  for  a  charitable  purpose, 
and  therefore  valid,  though  to  last  for  all  time.  That  case,  which  held  that 
such  a  gift  was  not  for  a  charitable  puriMJse,  has  been  generally  followed. 

4  The  cost  of  erecting  a  monument  to  a  dead  man  is  part  of  his  funeral 
expense,  and  to  be  justified  as  such.  Fife  v.  Beasley.  12  Lea  (Tenu.)  828 
(18S.3) ;  xMcGlinsey's  Appeal,  14  S.  &  K.  (Pa.)  64.  66  (1826) ;  Fairman's  Appeal, 
30  Conn.  20."'>.  209  (ISCl) ;  Killebrew  v.  Murphy.  3  Heisk.  (Tenn.)  546,  558 
(1871) ;  Detwiller  v.  Hartman,  37  N.  J.  E<i.  ;?47  (1883). 

In  Gilmer's  Legatees  v.  Gilmer's  Executors,  42  Ala.  9  (1808),  a  bequest  for 
the  erection  of  monuments  to  the  memory  "of  Gen.  Stonewall  Jackson,  of 
Virginia,  and  Cols.  Thomas  Cobb  and  Bartow,  of  Georgia,"  was  held  valid. 
This,  however,  may  be  sustained  as  a  gift  for  a  charitable  purpose. 

The  question  involved  in  the  principal  case  seems  quite  different.  It  was 
not  a  question  of  funeral  expense. 


80  THE   NATURE   AND   REQUISITES   OF   TRUSTS.  (Ch.  1 

such  survivor,  should,  as  soon  as  conveniently  might  be  after  the  tes- 
tator's decease,  but  nevertheless  at  their  sole  and  absolute  discretion, 
invest  the  whole  or  such  part  as  they  should  think  fit  of  the  said  sum 
of  £12,000.  in  the  purchase  of  an  advowson  and  right  of  patronage 
of,  in,  and  to  some  ecclesiastical  benefice  in  England,  with  the  right 
of'  next   presentation   thereto.      And    the   testator   directed   that   until 
his   son,   John  Gott,  should   he   duly   presented  to   and  inducted   into 
some   ecclesiastical   benefice   wliich   should   produce   a  net   annual   in- 
come of  £1,000.  at  the  least   (after  deducting  the  necessary  charges 
and   outgoings   in  respect  thereof),   or   should  previously   depart  this 
life,  the" trustees  should  nominate  to  the  said  ecclesiastical  benefice, 
when  and  so  often  as  any  vacancy  should  occur,  such  fit  and  proper 
person  as  they  might  in  their  uncontrolled  discretion  select  or  choose 
for  that  purpose.     Subject  as  aforesaid,  the  trustees  were  to  stand 
possessed  of  the  advowson  and  right  of  presentation  in  trust  for  John 
Gott,  his  heirs  and  assigns.     The  testator  also  directed  that  until  the 
£12,000.,  or  such  part  of  it  as  the  trustees  should  think  fit,  had  been 
invested  as  aforesaid,  they  should  invest  it  in  specified  securities,  and 
for  the  term  of  twenty-one  years  from  the  date  of  his  death,  accumu- 
late it  and  the  income  thereof,  by  way  of  compound  interest.    And  he 
declared  that  such  accumulated  fund  should  be  applicable  to  the  pur- 
chase of  the  advowson,  and  that  the  interest  of  the  £12.000.  and  the  ac- 
cumulations thereof,  together  with  the  securities  in  which  they  might 
be  invested  at  the  expiration  of  the  twenty-one  years,  should,  so  far 
as  they  had  not  been  laid  out  in  the  purchase  of  the  advowson,  belong 
and  be  paid  to  John  Gott,  his  executors  or  administrators.    Provided, 
however,  that  if  John  Gott  should  die  or  be  inducted  into  some  ecclesi- 
astical benefice  of  the  annual  value  aforesaid  before  the  trustees  had 
entered  into  any  contract  for  the  purchase  of  an  advowson,  or  if  any 
part  of  the  £12,000.,  or  the  accumulations  thereof,  should  remain  un- 
disposed of  after  completing  such  contract,  then  the  £12,000.  and  the 
accumulations  thereof,  or  so  much  of  the  same  as  should  remain  un- 
disposed of,  should  belong  and  be  paid  to  John  Gott,  his  executors 
or  administrators. 

The  testator  died  in  1863.  The  trustees  had  received  the  £12,000. 
and  invested  it  and  the  accumulations  as  directed,  but  no  purchase  of 
an  advowson  had  been  made. 

John  Gott,  the  son,  had  been  presented  to  the  vicarage  of  Leeds, 
and  it  was  in  dispute  between  the  trustees  and  himself  whether  or 
not  the  benefice  was  worth  a  clear  £1,000.  a  year. 

The  action  was  brought  by  John  Gott  against  the  trustees. 

The  statement  of  claims  set  out  the  above-mentioned  facts,  but 
claimed  to  have  the  trust  fund  handed  over  to  the  plaintiff,  irrespec- 
tive of  any  question  as  to  the  value  of  his  present  living. 

The  defendants  demurred  generally. 

G.  Hastings,  Q.  C.,  and  Kekcwich,  for  the  demurrer.  The  de- 
fendants do  not  decline  to  carry  out  the  trust  created  by  this  will. 


Sec.  C)  THE   CESTUI   QUE   TRUST.  81 

The  plaintiff,  therefore,  cannot  claim  this  fund,  unless  he  can  show 
that  he  is  the  exclusive  object  of  the  trust.  But  it  is  clear  that  the 
trustees  may,  at  any  time  until  the  expiration  of  twenty-one  years 
from  the  testator's  death,  create  a  cestui  que  trust  by  purchasing  an 
advowson  and  presenting  some  person  other  than  the  plaintiff  to  it. 
The  case  is  like  that  of  Mussett  v.  Bingle,  where  a  bequest  to  erect 
a  tombstone  was  upheld,  the  trustees  being  willing  to  carry  it  out. 
They  cited  Harbin  v.  Masterman  [25  L.  T.  Rep.  N.  S.  200,  L.  R.  13 
Eq.  559],  and  Talbot  v.  Jevers  [L.  R.  20  Eq.  255]. 

Dickinson,  Q.  C,  and  Ingle  Joyce  for  the  plaintiff.  Both  the  fund 
and  the  advowson  belong  to  the  plaintiff,  subject  to  the  direction  to 
accumulate  the  interest  on  the  fund  and  the  purchase  of  and  presenta- 
tion to  an  advowson.  As  to  the  accumulation,  it  is  clear  that  where 
there  is  a  simple  direction  to  accumulate  a  fund  and  give  it  to  A. 
twenty-one  years  hence,  he,  if  of  full  age,  is  entitled  to  receive  it  at 
once.  As  to  the  purchase  of  the  advowson,  there  are  a  series  of 
cases  of  which  Gosling  v.  Gosling  [John.  2G5]  is  the  most  important, 
showing  that  the  legatee  in  such  a  case  is  entitled  to  have  the  fund 
at  once,  unless  the  testator  has  shown  a  clear  intention  that  someone 
shall  have  the  enjoyment  of  it  in  the  meantime.  Here  the  testator's 
object  was  evidently  to  benefit  the  plaintiff  alone,  it  being  clear  that 
there  was  no  other  person  whom  he  specially  wished  to  benetit. 
There  is  no  trust  for  any  person  except  the  plaintiff,  no  person  who 
now  or  at  any  time  can  call  upon  the  trustees  to  purchase  a  living. 
Harbin  v.  Masterman  is  in  our  favor,  for  there  the  Vice  Chancelloi' 
would  have  divided  the  fund  amongst  the  residuary  legatees,  had 
they  not  been  charities.  They  cited  Thomson  v.  Shakespeare  [John. 
612,  1  De  G.,  F.  &  J.]  ;  Lewin  on  Trusts  (6th  Ed.)  94. 

The  Vice:  Chancellor.  In  this  case  the  trustees  disclaim  any 
beneficial  interest  in  the  fund  in  question,  but  do  not  say  that  they  are 
unwilling  to  perform  the  trust.  They  do  not  look  upon  this  trust 
as  beneficial  to  themselves,  but — there  being  something  to  be  done, 
perfectly  legal — the  trustees  are  desirous  to  do  it.  The  plaintiff,  then, 
not  having  shown  that  the  trusts  are  simply  and  solely  for  his  benefit, 
and  such  as  he  has  a  right  to  put  an  end  to,  the  demurrer  must  be  al- 
lowed. I  see  no  reason  why  the  trustees  should  not  be  allowed  to 
carry  out  this  trust.  And  it  is  to  be  observed,  that  they  are  to  nomi- 
nate to  the  benefice,  when  purchased,  "when  and  so  often  as  any  va- 
cancy shall  occur."  So  that  even  if  they  purchased  an  advowson 
and  presented  the  plaintiff  himself  to  it,  that  would  not  at  once  put 
an  end  to  their  trust.  Moreover,  it  does  not  follow  that  the  whole 
fund  would  be  expended  in  purchasing  the  advowson.  The  demur- 
rer must,  consequently,  be  allowed ;  but  the  plaintiff  \vill  have  leave 
to  amend,  and  thus  raise  the  question  of  the  net  value  of  his  present 
benefice. 

Ken.Tb.— 6 


82  THE  NATURE  AND   KEQUISITES  OF  TRUSTS.  (Ch.  1 

In  re  DEAN. 
COOPER-DEAN  v.  STEVENS. 

(In  the  High  C^urt  of  Justice,  ChaiK-rry  Division.  iss!>.     L.  R.  41  Ch.  Div.  552.) 

William  Clapcott  Dean,  by  his  will  dated  the  12th  of  November, 
1887,  devised  all  his  freehold  estates,  subject  to  and  charged  with 
certain  annuities,  and  with  an  annuity  of  i750.  thereinafter  mention- 
ed to  his  trustees,  and  to  a  term  of  fifty  years  thereinafter  granted 
to  his  trustees,  to  the  use  of  his  trustees,  for  the  term  of  one  year 
from  the  day  preceding  his  death,  upon  certain  trusts,  and,  subject 
thereto,  to  the  use  of  James  Cooper  (the  plaintiff)  for  his  life,  with 
remainder  to  the  use  of  the  plaintiff's  first  and  other  sons,  successive- 
ly in  tail  male,  with  remainders  over.  The  will  continued :  "I  give 
to  my  trustees  my  eight  horses  and  ponies  (excluding  cart  horses) 
at  Littledown,  and  also  my  hounds  in  the  kennels  there.  And  I 
charge  my  freehold  estates  hereinbefore  demised  and  devised,  in  pri- 
ority to  all  other  charges  created  by  this  my  will,  with  the  payment  to 
my  trustees  for  the  term  of  fifty  years  commencing  from  my  death, 
if  any  of  the  said  horses  and  hounds  shall  so  long  live,  of  an  annual 
sum  of  £750.  And  I  declare  that  my  trustees  shall  apply  the  said  an- 
nual sum  payable  to  them  under  this  clause  in  the  maintenance  of  the 
said  horses  and  hounds  for  the  time  being  living,  and  in  maintaining 
the  stables,  kennels  and  buildings  now  inhabited  by  the  said  animals 
in  such  condition  of  repair  as  my  trustees  may  deem  fit;  but  this 
condition  shall  not  imply  any  obligation  on  my  trustees  to  leave  the 
said  stables,  kennels,  and  buildings  in  a  state  of  repair  at  the  deter- 
mination of  the  said  term ;  but  I  declare  that  my  trustees  shall  not 
be  bound  to  render  any  account  of  the  application  or  expenditure  of 
the  said  sum  of  £750.,  and  any  part  thereof  remaining  unapplied  shall 
be  dealt  with  by  them  at  their  sole  discretion."     *     *     * 

The  testator  died  on  the  3d  of  December,  1887.  This  was  an  origi- 
nating summons  by  James  Cooper,  who  had  assumed  the  name  of 
Dean,  as  plaintiff,  against  the  trustees  of  the  will,  asking  a  declara- 
tion that  the  gift  of  the  £750.  a  year  to  the  defendants  for  the  pur- 
poses mentioned  in  the  will  was  invalid,  or,  in  the  alternative,  a  decla- 
ration that  the  plaintiff  was  entitled  under  the  trusts  of  the  will  to  the 
balance  from  time  to  time  in  any  year,  commencing  from  the  testa- 
tor's death,  of  the  £750.,  after  making  provision  for  the  maintenance 
of  the  testator's  horses,  hounds,  stables,  kennels,  and  buildings  men- 
tioned in  his  will. 

North,  J.^  The  first  question  is  as  to  the  validity  of  the  provision 
made  by  the  testator  in  favor  of  his  horses  and  dogs.  It  is  said  that 
it  is  not  valid;  because  (for  this  is  the  principal  ground  upon  which 
it  is  put)   neither   a  horse  nor  a  dog  could  enforce   the   trust;    and 

1  Part  of  tlie  statement  of  the  case,  as  also  of  the  oiiiiiioii,  is  omitted. 


Sec.  6)  THE   CESTUI   QUE   TRUST.  83 

there  is  no  person  who  could  enforce  it.  It  is  obviously  not  a  chari- 
ty, because  it  is  intended  for  the  benefit  of  the  particular  animals 
mentioned,  and  not  for  the  benefit  of  animals  generally,  and  it  is 
(|uite  distinguishable  from  the  gift  made  in  a  subsequent  part  of  the 
will  to  the  Royal  Society  for  the  Prevention  of  Cruelty  to  Animals, 
which  may  well  be  a  charity.  In  my  opinion  this  provision  for  the 
particular  horses  and  hounds  referred  to  in  the  will  is  not,  in  any 
sense,  a  charity,  and,  if  it  were,  of  course  the  whole  gift  would  fail, 
because  it  is  a  gift  of  an  annuity  arising  out  of  land  alone.  But,  in 
my  opinion,  as  it  is  not  a  charity,  there  is  notlnng  in  the  fact  that 
the  annuity  arises  out  of  land  to  prevent  its  being  a  good  gift. 

Then  it  is  said,  that  there  is  no  cestui  que  trust  who  can  enforce 
the  trust,  and  that  the  Court  will  not  recognize  a  trust  unless  it  is 
capable  of  being  enforced  by  someone.  I  do  not  assent  to  that  view. 
There  is  not  the  least  doubt  that  a  man  may,  if  he  pleases,  give  a 
legacy  to  trustees,  upon  trust  to  apply  it  in  erecting  a  monument 
to  himself,  either  in  a  church  or  in  a  church  yard,  or  even  in  uncon- 
secrated  ground,  and  I  am  not  aware  that  such  a  trust  is  in  any  way 
invalid,  although  it  is  difficult  to  say  who  would  be  the  cestui  que 
trust  of  the  monument.  In  the  same  way,  I  know  of  nothing  to  pre- 
vent a  gift  of  a  sum  of  money  to  trustees,  upon  trust  to  apply  it  for 
the  repair  of  such  a  monument.  In  my  opinion  such  a  trust  would 
be  good,  although  the  testator  must  be  careful  to  limit  the  time  for 
which  it  is  to  last,  because  as  it  is  not  a  charitable  trust,  unless  it  is 
to  come  to  an  end  within  the  limits  fixed  by  the  rule  against  perpetu- 
ities, it  would  be  illegal.  But  a  trust  to  lay  out  a  certain  sum  in 
building  a  monument,  and  the  gift  of  another  sum  in  trust  to  apply 
the  same  to  keeping  that  monument  in  repair,  say  for  ten  years,  is, 
in  my  opinion,  a  perfectly  good  trust,  although  I  do  not  see  who 
could  ask  the  Court  to  enforce  it.  If  persons  beneficially  interested 
in  the  estate  could  do  so,  then  the  present  plaintiff  can  do  so ;  but  if 
such  persons  could  not  enforce  the  trust,  still  it  cannot  be  said  that 
the  trust  must  fail  because  there  is  no  one  who  can  actively  enforce  it. 

Is  there  then  anything  illegal  or  obnoxious  to  the  law  in  the  nature 
of  the  provision,  that  is,  in  the  fact  that  it  is  not  for  human  beings, 
but  for  horses  and  dogs?  It  is  clearly  settled  by  authority  that  a 
charity  may  be  established  for  the  benefit  of  horses  and  dogs,  and 
therefore  the  making  of  a  provision  for  horses  and  dogs,  which  is 
not  a  charity,  cannot  of  itself  be  obnoxious  to  the  law,  provided,  of 
course,  that  it  is  not  to  last  for  too  long  a  period.  Then  there  is 
what  I  consider  an  express  authority  on  this  point  in  Mitford  v.  Rey- 
nolds.    *     *     * 

It  is  impossible  to  suppose  that,  from  the  beginning  to  the  end  of 
these  proceedings,  the  question  whether  the  gift  was  good  or  bad 
was  never  brought  to  the  attention  of  all  the  learned  judges  before 
whom  the  case  came.  I  do  not  indeed  find  that  any  formal  discus- 
sion took  place  upon  it.     This  may  have  been  because  all  the  parties 


84  THE   NATURE   AND    REQUISITES   OF   TRUSTS.  (Cll.  1 

agreed  upon  the  point,  or  it  may  have  been  disposed  of  by  the  judge 
in  the  course  of  the  argument.  But  it  is  impossible  to  suppose  that 
the  matter  was  not  fully  present  to  the  learned  counsel  who  argued 
the  case,  or  to  the  various  judges  before  whom  it  came,  and  that  they 
did  not  treat  the  gift  as  valid.  The  point  must  have  been  raised,  be- 
cause the  fund  out  of  which  it  was  to  take  effect  (if  it  were  good) 
was  given  to  a  charity.  It  was  the  duty  of  the  counsel  for  the  Gov- 
ernor General  and  the  East  Indian  Government  to  raise  the  point  on 
behalf  of  the  charity,  if  there  was  anything  in  it,  because  the  charity 
would  have  taken  so  much  more,  if  the  provision  for  the  horses  were 
invalid.  That  being  so,  I  think  that  I  may  treat  that  case  as  a  deci- 
sion by  very  high  authority  that  such  a  provision  is  good,  and,  if  I 
had  felt  any  doubt  about  the  point  myself,  I  should  have  considered 
that  authority  as  settling  it,  so  far  as  I  am  concerned.  There  is  noth- 
ing, therefore,  in  my  opinion,  to  make  the  provision  for  the  testa- 
tor's horses  and  dogs  void. 

Then  the  next  question  is  this:  The  gift  is  of  an  annuity  of  iToO., 
during  the  lives  and  life  (to  put  it  shortly)  of  the  horses  and  dogs, 
and  the  survivors  or  survivor  of  them,  and  of  course  a  time  would  ar- 
rive when  the  provision  which  the  testator  thought  right  to  make  for 
all  the  animals  would  be  much  more  than  sufficient  for  the  three  or 
the  two  or  the  one  which  might  survive.  The  annuity  is  to  cease 
entirely  when  the  last  survivor  dies,  and  it  is  obvious  that  nothing 
like  that  sum  could  or  would  be  applied  for  the  benefit  of  the  animals 
when  they  became  greatly  reduced  in  number.  The  question  is, 
whether  the  annuity  was  given  for  the  trustees  beneficially.  In  my 
opinion  it  was  not  given  to  them  beneficially.     *     *     * 

I  must,  therefore,  declare  that  the  trustees  do  not  take  the  suri)lus 
beneficially,  but,  upon  the  question  whether  the  surplus  belongs  to 
the  heir  at  law  or  to  the  devisee  of  the  real  estate,  by  reason  of  its 
not  being  raisable  out  of  the  estate.  I  say  nothing  in  the  absence  of 
the  heir  at  law.^ 


BOYLE  V   BOYLE. 

dn  Chanrory,  bofore  Vice  Chancellor  Ilodcos  E.  Chattorton,  1877.     Ir.  R.  11 

Eq.  4:53.) 

Suit  to  administer  the  assets  of  Daniel  Boyle.  Hearing  on  further 
consideration.  By  his  will,  dated  the  26th  of  March,  1871,  Daniel 
Boyle,  the  deceased,  after  several  pecuniary  bequests,  devised  and 
bcf|ucathed  the  residue  of  his  real  and  personal  estate  to  his  executors, 
upon    the    following   trust:      "upon    trust    that    they    shall    apply    the 

/|  2  The  j;lft  was  coiicededly  not  for  a  charitable  i)uri)()se,  yet  it  mijiht  last  for 
';r>0  years,  or  more  than  21  years  after  the  death  of  all  liuman  beings  in  life 
/  at  the  decease  of  the  testator. 


Sec.  6)  THE   CESTUI   QUE   TKUST.  85 

residue  of  my  estate  to  works  of  charity,  such  as  masses  for  the 
eternal  repose  of  my  soul,  and  whatever  else  they  may  judge  most 
charitable." 

Thk  Vice  Chancellor.  The  next-of-kin  of  the  testator  contend 
that  this  gift  is  void  for  uncertainty.  It  Would,  of  course,  have  been 
impossible  to  support  this  contention,  but  for  the  occurrence  of  the 
words  pointing  to  masses,  as  otherwise  there  was  an  express  general 
charitable  intention  which  could  be  executed  or  controlled  by  this 
court.  It  has,  however,  been  established  by  the  case  of  Attorney 
General  v.  Delaney  [Ir.  R.  10  Eq.  104]  that  a  legacy  for  masses  is 
not  a  legacy  for  a  charitable  purpose  in  the  sense  in  which  this  court 
considers  gifts  for  charity.  The  testator  consequently  has  shown  that 
he  does  not  use  the  expression  "works  of  charity"  in  its  legal  ac- 
ceptation, for,  by  his  own  interpretation  of  it,  he  extends  it  to  a  pur- 
pose not  charitable.  If  the  gift  were  valid,  it  would  have  been  open 
to  the  executors  to  apply  the  whole  subject  of  the  gift  to  this  purpose 
— that  is  to  say,  otherwise  than  for  charity.  I  had  occasion  in  the  re- 
cent case  of  Copinger  v.  Crehane  [Ir.  R.  11  Eq.  429]  to  consider  the 
authorities  upon  the  subject  of  uncertain  gifts  not  exclusively  chari- 
table, and  I  need  only  now  say  that,  in  my  opinion,  the  rule  is  that 
when  the  purpose  of  a  testamentary  gift  is  uncertain,  and  the  gift, 
if  not  charitable,  would  therefore  fail,  and  it  appears  sufficiently  that 
the  legatee  is  not  intended  to  take  beneficially,  but  upon  trust,  it  will 
be  supported  by  this  court,  and  carried  out  when  the  terms  of  the 
gift  are  such  that  the  legatee  is  bound  to  apply  it  wholly  to  purposes 
specifically  charitable;  but  that  when  there  is  a  discretion  given  to 
the  legatee  to  apply  it  to  charitable  purposes,  and  also  to  purposes 
not  charitable,  and  the  trust  is  indefinite,  the  gift  fails,  and  the  bene- 
fit of  the  trust  results  to  the  residuary  legatees  or  next-of-kin,  as  the 
case  may  be.  The  question  is  not,  as  Sir  William  Grant  says,  wheth- 
er the  trustee  may  not  apply  it  upon  purposes  strictly  charitable,  but 
whether  he  is  bound  so  to  apply  it.  Here,  from  the  terms  of  the 
gift,  the  executors  are  at  liberty  to  apply  any  part  of  it,  or  the  whole 
of  it,  to  purposes  not  charitable  in  the  legal  acceptation.  It  is  not  a 
case  within  the  principle  on  which  Doyley  v.  The  Attorney  General 
[4  Vin.  Abr.  285]  and  Salusbury  v.  Denton  [3  K.  &  J.  529]  were 
decided,  for  it  is  not  a  gift  to  certain  definite  objects  and  to  charitable 
purposes,  in  which  case  the  subject  of  it  may  be  divided  between  the 
two.  Here,  the  executors  were  not  bound  to  apply  any  part  upon 
purposes  strictly  charitable  and  the  trust  is  altogether  of  an  indefi- 
nite character.  I  am,  therefore,  of  opinion,  that  upon  this  ground 
the  gift  fails. 


86  THE   NATURE   AND    KEQI'ISITES   OF   TRUSTS.  (Ch.  1 


REICHENBACH  v.  QUIN. 

(In  Ihe  High  Court  of  Justice,  Chancery  Division,  Ireland,  before  Vice  Chan- 
cellor Hedges  E.  Chatterton,  1888.     L.  R.  21,  Ir.  138.) 

Jane  Cowley,  by  her  will,  dated  the  30th  October,  1881,  devised 
and  bequeathed  all  her  property  to  the  defendants,  upon  the  trusts 
therein  declared ;  and,  after  giving  certain  other  directions  in  respect 
thereof,  proceeded :  "And  v\'hatever  interest  I  have  in  the  lands  of 
\Newcastle,  County  Dublin,  and  in  the  premises  in  Bridge  foot  Street, 
Dublin,  now  forming  a  portion  of  Darcy's  Brewery,  I  direct  that  the 
same  shall  be  sold  after  my  decease,  if  not  previously  disposed  of* 
land  out  of  the  amount  realized  thereby,  after  payment  of  the  ex- 
penses of  such  sale,  I  direct  my  trustees  to  apply  ilOO.  towards  hav- 
ing masses  offered  up  in  public  in  Ireland  for  the  repose  of  my  soul 
and  the  souls  of  my  father,  mother,  brother,  and  sisters,  and  of  my 
servant  Anne  Hagerty,  and  apply  the  balance  towards  such  chari- 
table purposes  in  Ireland  as  my  trustees  shall  select."  And  the  tes- 
tatrix appointed  the  defendants  executors  of  her  said  will. 

The  testatrix  died  on  the  16th  June,  1882,  and  on  the  21th  July, 
1882,  probate  of  her  will  was  granted  to  the  defendants. 

Anne  Hagerty  survived  the  testatrix. 

An  action  was  brought  by  certain  legatees  under  the  said  will  for 
the  purpose  of  having  the  trusts  thereof  carried  out  and  the  personal 
estate  of  the  testatrix  administered,  and  a  decree  was,  on  the  4th 
March,  1885,  made  to  that  effect. 

The  case  now  came  before  the  Court  on  further  consideration  of 
the  Chief  Clerk's  certificate,  and  a  question  arose  as  to  the  validity 
of  the  bequest  for  masses. 

The  Vice  Chanckij<or.  I  am  of  opinion  that  there  is  no  attempt 
to  create  a  perpetuity  by  the  trust  in  reference  to  the  ilOO.  for  mass- 
es. There  is  a  direction  in  the  will  that  the  lands  of  Newcastle  and' 
the  testatrix's  premises  in  Bridgefoot  Street  should  be  sold,  and  that 
out  of  the  amount  realized  her  trustees  should  apply  £100.  towards 
having  masses  offered  up  in  public  in  Ireland  for  the  repose  of  her 
soul  and  the  souls  of  the  other  persons  mentioned. 

I  do  not  consider  that  there  is  any  attempt  here  to  create  a  per- 
petuity, and  on  that  ground — and  I  wish  it  be  understood  that  on 
that  point  only  I  give  a  decision — I  shall  declare  that  the  gift  is 
valid. ^ 

1  The  Vice  Chancellor  seenis  to  have  overlooked  the  ground  of  his  decision 
In  Boyle  v.  Boyle,  supra,  p.  84. 


Sec.  6)  THE   CESTUI   QUE   TRUST.  87 

FESTORAZZI     and     Others     v.     ST.     JOSEPH'S     CATHOLIC 
CHURCH  OF  MOBILE  and  Others. 

(Supreme  Court  of  Alabama,  1894.     104  Ala.  327,  18  South.  394,  25  L.  R.  A. 
3G0,  53  Am.  St.  Rep.  48.) 

Appeal  from  the  chancery  court  of  Mobile. 

The  bill  was  filed  by  the  appellants,  Sylvester  Festorazzi  and  Ama- 
bile  Muscat,  as  executors  of  the  estate  of  Joseph  Peter,  deceased, 
and  prayed  to  have  the  will  of  their  testator  construed,  and  to  be 
directed  as  to  how  to  distribute  the  estate. 

The  second  and  third  items  of  the  will  were  as  follows :  "Second. 
I  give  and  bequeath  to  the  Roman  Catholic  Cathedral  in  the  city  of 
Mobile,  the  sum  of  three  thousand  dollars,  the  same  to  be  used  in 
solemn  masses  for  the  repose  of  my  soul."  "Third.  I  give  and  be- 
queath to  the  Roman  Catholic  Church  of  Saint  Joseph  in  the  city  of 
Mobile,  the  sum  of  two  thousand  dollars,  also  to  be  used  in  solemn 
masses  for  the  repose  of  my  soul."  The  Catholic  Cathedral  made  no 
answer  to  the  bill,  and  a  decree  pro  confesso  was  entered  against  it. 

The  St.  Joseph's  Catholic  Church  answered  the  bill,  and  filed  a 
cross-bill,  setting  up  its  claim  to  the  legacy  of  two  thousand  dollars 
bequeathed  to  it  by  the  will.  To  the  cross-bill  of  the  St.  Joseph's 
Catholic  Church  the  executors  demurred,  on  the  ground  that  the 
said  St.  Joseph's  Catholic  Church  of  Mobile  was  not  entitled  to  the 
relief  prayed  for  in  said  cross-bill  against  the  said  executors,  because 
it  does  not  appear  from  said  cross-bill  that  the  complainant  therein 
is  entitled  to  the  enforcement  of  said  legacy  under  the  laws  of  Ala- 
bama.    This  demurrer  was  overruled. 

On  the  final  submission  of  the  cause,  the  Chancellor  decreed  that 
the  bequest  made  to  the  said  St.  Joseph's  Catholic  Church  of  Mobile 
was  a  legal  and  vaUd  bequest  and  directed  that  the  executors  pay 
the  same  out  of  the  money  in  their  hands  belonging  to  the  testator's 
estate.  The  executors  appealed  from  this  decree,  and  assigned  the 
same  as  error. 

Head,  J.  The  validity  of  the  bequest  brought  to  our  view,  in  this 
case,  must  be  upheld,  if  at  all  upon  one  of  three  propositions,  viz. : 

1.  That  it  is  a  direct  bequest  to  the  church  for  its  general  uses. 

2.  That  it  creates  a  charitable  use. 

3.  That  it  creates  a  valid  private  trust. 

[The  court  held  the  first  and  third  propositions  to  be  untenable.] 
Third:  It  is  not  valid  as  a  private  trust,  for  the  want  of  a  living 
beneficiary.  A  trust  in  form,  with  none  to  enjoy  or  enforce  the  use, 
is  no  trust.  Argument  is  unnecessary  to  show  that  there  is  no  imag- 
inable being  possessing  power  to  enforce  the  use  declared  in  this  be-« 
quest.  The  executor  cannot  do  it,  for  he  succeeds  only  to  the  proper- 
ty rights  of  the  testator.    His  powers  and  functions  do  not,  and  can- 


yS  TBE   NATURE   AND   REQUISITES   OF   TRUSTS.  (Ch.  1 

not,  extend  to  the  well  being  of  the  soul  of  his  testator.  As  said  by 
appellants'  counsel,  "If  the"  church  should  recover  this  bequest  and 
apply  it  to  paying  its  debts,  repairing  its  building,  supporting  its 
priests  and  paying  the  expenses  of  their  ceremonies,  the  purpose  of 
the  bequest  would  be  clearly  violated.  Cut  what  living  person  is  au- 
thorized to  call  the  trustee  to  an  account  for  the  misuse  of  the  fund?" 
Reversed  and  remanded.^ 
BkiCKi'LL,  C.  J.,   dissenting. 


ROSS  and  ROSS  v.  DUNCAN  and  Others. 

(Superior  Court  of  Chancery  of  Mississippi,  before  Chancellor  Kobert  TI.  Buck- 
ner,  1839.     1  Freeui.  Ch.  r)87.) 

The  Chancellor.  The  complainants  bring  this  suit  as  the  heirs 
and  distributees  of  Margaret  A.  Reed,  deceased.  The  allegations  of 
the  bill,  so  far  as  the  demurrer  is  concerned,  are : 

That  Mrs.  Reed,  about  the  14th  June,  1838,  made  her  last  will 
and  testament,  appointing  the  defendants  her  executors,  to  whom 
she  devised  and  bequeathed  the  most  of  her  estate,  consisting  in  part 
of  a  large  number  of  negro  slaves;  that  said  devises  and  bequests 
were  made  upon  the  secret  trust  and  confidence  that  the  negroes 
should  be  taken  by  the  defendants  as  the  executors  of  the  will  to 
Liberia,  there  to  remain  free,  etc.  A  letter  from  the  testatrix  of  even 
date  with  the  will  is  referred  to  in  the  bill,  which  it  is  alleged  is 
declarative  and  expressive  of  the  secret  trust  aforesaid.  It  is  al- 
leged that  this  secret  trust  is  in  violation  of  the  laws  of  Mississippi, 
and  was  intended  to  evade  and  defraud  the  statute  which  prohibits 
the  emancipation  of  slaves  by  last  will  and  testament,  except  under 
the  restrictions  therein  einmierated.  The  complainants  pray  that  the 
will  be  set  aside,  that  the  estate  may  be  decreed  to  them,  etc.  To 
this  bill  there  is  a  general  demurrer,  which  at  once  presents  the  ques- 
tion of  the  validity  of  the  will  as  coupled  with  the  alleged  secret 
trust.  If  the  trust  be  an  illegal  one,  it  can  make  no  difiference  wheth- 
er it  be  tacit  or  express;  the  same  consequences  must  follow  it  in 
either  character.  I  shall  therefore  elect  to  consider  the  will  as  hay- 
ing upon  its  face  a  devise  and  bequest  to  the  defendants  upon  the 
express  trust  that  the  negroes  therein  mentioned  should  be  taken  to 
Lil3eria,  there  to  reniain  free.  Several  collateral  questions  were  made 
on  the  argument,  all  of  which  it  is  believed  resolve  themselves  into 

1  See  Holland  v.  Alcock.  lOS  N.  Y.  .'^■12.  322-324.  IG  N.  E.  305,  2  Am.  St.  Rep. 
420  (18SS) ;  O'Connor  v.  Gifford.  117  N.  Y.  27.">.  2S0,  et  seq.,  22  N.  E.  1030  (1S89). 

In  England  a  trust  for  sayiiig  massifs  is  void  as  a  trust  for  a  superstitious 
use.    West  v.  Shuttleworth,  2  Myl.  &  K.  (;S4.  007  (183.">). 

A  trust  for  sayinj:  masses  is  not  regarded  as  a  trust  for  a  charitable  use 
except  in  Iilassachusctts,  Schouler,  Tetitioner,  134  Mass.,  426  (1883);  and 
Pennsylvania,  Rhymer's  Appeal,  93  Pa.  142,  39  Am.  Rep.  736  (1880). 


Sec.  6)  THE   CESTUI   QUE   TRUST.  89 

this  plain  and  broad  proposition:  Is  a  will  made  within  this  State, 
by  one  of  its  citizens,  in  which  negro  slaves  are  bequeathed  upon  the 
trust  that  they  shall  be  taken  to  Liberia,  on  the  coast  of  Africa,  there 
to  remain,  void,  as  being  in  fraud  and  violation  of  our  laws,  and  in 
contravention  of  their  policy  upon  the  subject  of  domestic  slav- 
ej-y  p      *      *      + 

It  is  difficult  to  conceive  how  an  act  done  in  Liberia,  according  to 
its  laws,  should  involve  a  violation  of  those  of  this  State.  The  rule 
that  every  contract,  act,  or  agreement  is  to  be  governed  by  the  laws 
of  the  place  where  the  execution  or  performance  is  to  take  place,  is 
one  of  universal  application.  The  execution  of  the  trust  in  this  case, 
according  to  the  allegations  of  the  bill,  is  to  take  place  in  Liberia. 
The  laws  of  that  place,  then,  according  to  the  rule,  must  decide  up- 
on its  legality.  The  ground  was  taken,  that,  as  the  negroes  for  whosej^-.^-^/^ 
benefit  tlie  trust  was  raised,  can  maintain  no  suit  in  our  courts  to  enj 
force  it,  and  there  being  no  one  who  can  enforce  it,  the  trust,  it  is  in- 
sisted, is  therefore  void.  The  conclusion  does  not  necessarily  follow 
from  the  premises.  A  trust  may  be  created  which  may  be  perfectly 
consistent  with  the  law,  and  yet  the  law  may  have  pointed  out  no 
mode  of  enforcement;  still  it  would  not  interpose  to  prevent  it,  but 
would  leave  its  execution  to  the  voluntary  action  of  the  trustee.  A 
person  may  convey  his  property  upon  what  trust  or  condition  he 
pleases,  so  that  it  be  not  against  law ;  and  the  Court  would  only  inter- 
fere at  the  instance  of  the  heirs  or  distributees  of  the  grantor  or  tes- 
tator, when  there  had  been  a  failure  or  refusal  to  perform  the  condi- 
tion or  trust.  These  principles,  I  think,  are  plainly  deducible  from  the 
case  in  Philadelphia  Baptist  Ass'n  v.  Hart,  4  Wheaton,  35,  4  L.  Ed. 
499.     *     *     ♦ 

The  demurrer  must  be  sustained  and  the  bill  dismissed.' 

1  See  Hooper  v.  Hooper,  32  Ala.  669  (1858) ;  Cleland  v.  Waters.  19  Ga.  35 
a855). 

Prof.  Gray  calls  attention  to  the  fact  that  in  all  the  slavoholdin^  states  (save 
Louisiana,  in  which  the  civil  law  prevailorl).  except  Alabama.  Georgia,  and 
Mississippi,  a  slave  had  a  standing  in  conn   to  mfont^  his  emancipation. 

Who  may  be  a  Cestui  que  Trust.  J^n  almost  nil  jurisdictions  any  person^ 
artificial  or  natural,  may  at  this  day  be  a  cestui  que  trust.  Formerly  aliens 
and  slaves  were  exceptions  to  this  rule. 

(1)  Aliens.  An  alien  could  take,  but  could  not  hold,  as  cestui  que  trust, 
where  the  trust  res  was  real  estate.  The  sovereign  became  at  once  entitled  to 
the  benefit  of  the  trust,  and  could  enforce  its  rights  in  a  court  of  equity.  Bar- 
row V.  Wadkin.  24  Beav.  1  (1857) ;  Hubbard  v.  Goodwin.  3  Leigh  (Va.)  492 
(1832).  Where  the  trust  res  was  personalty,  there  never  was  any  objection  to 
an  alien  taking  and  holding  as  cestui  que  trust.  Craig  v.  Leslie,  3  Wheat.  563, 
4  L.  Ed.  460  (1818). 

(2)  Slaves.  A  slave  could  not  be  a  cestui  que  trust.  Haywood  v.  Craven, 
2  Law  Repos.  (N.  C.)  5.")7  (1816t :  Cunningham  v.  Cunningham.  Taylor  &  Con- 
ference (N.  C.)  353  (1801).  The  trust  was  void,  ana  the  trustee  became  a  con- 
structive trustee  for  the  creator  of  the  trust  or  his  representative.  Craig  v. 
Beatty,  11  S.  C.  375  (1878). 


A--^-^-co 


90  THE   NATURE   AND    REQUISITES   OF   TRUSTS.  (Ch.  1 

SECTION  7.— THE  TRUSTEE. 


PRESIDENT  AND  FELLOWS  OF  YALE  COLLEGE  and  Others. 
(Supreme  Court  of  Errors  of  Onnecticut,  1896.     67  Coun.  237,  34  Atl.  1036.) 

Appeal  from  probate. 

Philip  Marett  left  a  will  by  which  he  devised  property  to  trustees 
and  provided  that,  after  the  death  of  his  wife  and  daughter,  the  re- 
mainder of  the  trust  property  should  be  distributed  to  seven  different 
legatees.  One  of  the  legacies  was  in  these  words:  "One-tenth  part 
to  the  State  of  Connecticut,  in  trust,  the  income  to  be  applied  toward 
the  maintenance  of  any  institution  for  the  care  and  relief  of  idiots, 
imbeciles  or  feeble-minded  persons." 

The  will  contained  this  provision :  "Should  any  of  the  trusts  not 
be  accepted  the  amount  intended  therefor  shall  be  proportionately  dis- 
tributed in  augmentation  of  such  as  may  be  accepted." 

The  State  refused  to  accept  the  trust.  The  trustees  then  applied 
to  the  Probate  Court  to  appoint  a  trustee  in  place  of  the  State.  The 
Probate  Court  made  an  order  appointing  a  trustee.  Yale  College 
and  the  other  legatees  appealed  therefrom  to  the  Superior  Court  of 
New  Haven  county  and  that  court  reserved  the  case  for  the  consid- 
eration of  the  Supreme  Court. 

HamerslEy,  J.^  The  testator  has  named  a  trustee  competent  to  ac- 
cept the  trust.  The  State  has  power  to  accept  a  gift  in  trust  to  apply 
the  income  thereof  towards  the  maintenance  of  some  institution  for 
the  care  and  relief  of  idiots.  The  maintenance  of  such  an  institution, 
either  directly  under  immediate  State  supervision,  or  indirectly 
through  annual  aid  given  to  an  existing  institution,  is  a  lawful  exer- 
cise of  governmental  power  and  duty.  *  *  *  A  gift  to  the  State 
in  trust  to  apply  the  same  in  executing  a  lawful  governmental  func- 
tion, is  a  valid  gift.  Whatever  may  be  thought  of  the  policy  of  accept- 
ing such  gifts,  there  can  be  no  doubt  of  the  power  of  the  State  to  ac- 
cept or  refuse.  The  State  has  refused  to  accept  the  trust  in  question ; 
and  the  plain  language,  as  well  as  the  clear  intent  of  the  will,  rcfjuire 
the  trustees  to  distribute  the  amount  intended  for  such  non-accepted 
.trust  proportionately  in  augmentation  of  the  trusts  that  have  been 
(accepted.  There  is  nothing  equivocal  in  the  language :  nothing 
doubtful  as  to  the  intent.     There  is  no  occasion  for  construction. 

[The  court  advised  the  Superior  Court  to  render  judgment  revers- 
hv^  the  order  of  the  Probate  Court.] - 

1  Part  of  the  opinion  is  omitted. 

2  Had  the  state  been  incompetent  to  act  as  trustee,  the  order  appealed  from 
would  have  been  proper.  Dalley  v.  City  of  New  Haven,  60  Conn.  314,  22  Atl. 
94.U,  14  L.  R.  A.  69  (1891). 

Compare  Shoemaker  v.  Board  of  Commissioners  of  Grant  County,  36  Ind. 


Sec.  7)  THE    TRUSTEE.  91 

ATTORNEY  GENERAL  v.  LAUNDEREIELD. 

(In  Chancery,  before  Lord  Chancellor  Ilardwicke,  1743.    3  Swanston,  41 G.) 

Note,  in  this  case  the  Attorney-General  argued,  that  as  corpora- 
tions could  not  be  seized  to  an  use  at  law,  no  more  could  they  be 
trustees,  but  should  have  the  lands  to  their  own  use,  divested  and 
freed  from  the  trust.     1  Co.  122a.     Chudleigh's  Case. 

But  the  Chancellor  would  not  let  him  go  on;    nothing  being  clear-  j 
er  than  that  corporations  can  be  trustees.^ 


OWNES  V.  OWNES  and  Others.  ^' 

(Court  of  Chancery  of  New  Jersey,  1872.     23  N.  J.  Eq.  60.) 

The  Chancellor  [Abraham  O.  Zabriskie].^  This  suit  is  by  the 
complainant,  against  the  widow  and  heirs  of  her  deceased  son,  James 
H.  Ownes,  for  the  conveyance  of  certain  lands  in  the  city  of  New 
Brunswick,  held  by  her  son  in  trust  for  her,  as  she  alleges.  These 
lands  were  conveyed  by  her  to  her  son  by  deed  dated  May  21st,  1855, 
and  by  a  declaration  of  trust,  bearing  date  on  the  same  day,  executed 
by  James  H.  Ownes,  under  his  hand  and  seal,  attested  by  a  subscrib- 
ing witness,  were  declared  to  be  held  in  trust  for  the  complainant, 

175,  184  (1871) ;  Bedford  v.  Bedford,  99  Ky.  273,  290,  35  S.  W.  926  (1896) ;  Pin- 
son  V.  Ivey,  1  Yerger  (Tenn.)  296,  309,  3^4-326  (1830). 

The  statement  that  the  crown  or  a  state  cannot  be  a  trustee  means  no  more 
than  that  the  cestui  cannot  compel  performance  of  the  trust  by  bill  in  equity. 
'•The  king  shall  not  be  seized  to  another's  use,  because  he  is  not  compellable 
to  perform  the  confidence."    Dillon  v.  Fraine,  Popham,  70,  72. 

The  cestui's  proper  course  is  to  sue  by  petition — in  England,  to  the  crown ; 
in  this  country,  to  Congress  or  the  legislature. 

A  grantee  of  the  sovereign  takes  subject  to  the  trust.  Winona  &  St.  Peter 
R.  Co.  V.  St.  Paul  &  Sioux  City  R.  Co.,  26  Minn.  179,  2  N.  W.  489  (1879) ;  Pin- 
son  V.  Ivey,  1  Yerg.  (Tenn.)  296  (1830). 

The  state's  title  to  the  property,  and  consequently  the  cestui's  claim,  will  be 
barred  by  the  statute  of  limitations,  as  if  a  private  individual  had  been  trus- 
tee. Miller  v.  State,  38  Ala.  600  (1863) ;  Molton  v.  Henderson,  62  Ala.  426, 
434  (1878). 

1  In  Dillon  v.  Fraine,  Popham,  70.  72,  the  reason  why  a  corporation  could 
not  be  seised  to  a  use  was  stated  to  be  "because  it  is  a  dead  body,  although  it 
consist  of  natural  persons ;  and  in  this  dead  body  a  confidence  cannot  be  put, 
but  in  bodies  natural." 

In  Webb  v.  Neal,  5  Allen  (Mass.)  575  (1863),  the  court  appointed  the  city 
of  Salem,  Mass.,  a  testamentary  trustee  in  place  of  persons  declining  to  act. 

It  was  held,  in  In  re  Franklin's  Estate,  150  Pa.  437,  24  Atl.  626,  30  Am.  St. 
Rep.  817  (1892),  that  the  city  of  Philadelphia  could  not  be  a  trustee  of  a  purely 
private  trust.  In  Gloucester  v.  Osborn,  1  H.  L.  Cas.  272.  285  (1847),  Lord 
Lvndhurst  expressed  the  opinion  that  a  municipal  corporation  might  take 
property  in  trust  for  the  benefit  of  individuals  and  for  purposes  altogether 
private.  See  remarks  of  Sharswood,  J.,  on  this  statement  in  Philadelphia  v. 
Fox  64  Pa.  169  (1870).  Compare  Iligginson  v.  Turner,  171  Mass.  586.  51  N.  E. 
172  (1898),  and  city  of  Boston  v.  Doyle,  184  Mass.  373,  68  N.  E.  851  (1903). 

2  Part  of  the  opinion  is  omitted. 


L'-e  — 


02  .  THE   NATUKIO   AND    REQUISITES   OF   TRUSTS.  (Ch.  1 

and  on  the  agreement  to  convey  the  same  to  her  or  any  person  whom 
she  should  appoint.  It  conchided  with  these  words:  "It  being  clear- 
ly understood  by  me  that  I  merely  hold  the  said  property  in  trust  for 
said  purpose,  and  that  I  have  no  property  or  interest  therein,  except 
as  such  trustee."     *     *     ''' 

The  declaration  if  valid  vested  the  beneficial  title  to  the  land  in 
the  complainant  as  cestui  que  trust,  and  left  the  bare  legal  estate  in 
James  as  trustee,  and  upon  his  dying  intestate,  the  legal  estate  vest- 
ed in  his  heirs  or  heir-at-law.  The  suit  is  against  his  widow  and  his 
tiiree  children — two  daughters  and  one  son,  all  infants — for  a  con- 
veyance of  the  property  to  the  complainant  as  the  cestui  que  trust. 
*     *     * 

But  James,  at  the  time  of  this  conveyance  and  declaration  of  trust, 
was  an  infant,  only  nineteen  years  of  age.  The  conveyance  or  de^ 
claration  of  trust  by  an  infant,  by  a  deed  actually  delivered,  is  void- 
able, but  not  void.  This  was  so  held  by  Lord  Mansfield,  in  Zouch 
V.  Parsons,  3  Burr.  1?9 4.  He  held  a  deed  of  bargain  and  sale  de- 
livered by  an  infant  voidable,  and  not  void.     *     *     * 

An  infant,  after  coming  of  age,  may  by  his  acts,  confirm  a  voidable 
deed.  Manv  acts  of  James,  after  his  majority,  recognizing  the  fact 
that  he^  held  this  property  in  trust  for  his  mother,  are  shown.  He 
took  her  directions  about  fencing  and  repairing  it.  He  collected  the 
rents  and  paid  them  to  her.  He  mortgaged  the  property  for  her 
i  benefit,  and  acknowledged,  repeatedly  that  he  held  it  in  trust  for 
I  her.  I  think  the  evidence  is  amply  sufficient  to  show  that  he  con- 
firmed this  deed  by  his  act  for  years  after  he  came  of  age.  *  *  * 
\  The  trust  being  thus  established,  the  complainant  is  entitled  to  a 
decree  that  the  defendants,  the  widow  and  children  of  James,  con- 
vey to  her  the  legal  estate.^ 


BROOK  V.  BROOK. 

(In  Chanforv,  before  the  Master  of  the  Rolls,  Lord  Langdale,  1839.    1  Beavan, 

531.) 

In  this  case  new  trustees  were  to  be  appointed. 

Mr.    Stinton   asked   that    Miss   B.   might  be   at  liberty  to   propose 
herself  as  trustee  before  the  Master. 

,     The  Master  of  the  Rolls  declined,  saying  that  it  was  not  the 
[usual  practice,  and  it  might  lead  to  inconvenience  in  case  of  her  mar- 
riage, when  her  husband  would  have  the  power  of  interfering  with 
the  trust. ^ 

2  See  Jevon  v.  Bush,  1  Vern.  .342  (1G85). 

3  An  unmarried  woman  was  appointed  trustee  in  In  re  Campbell's  Trust,  31 
Beav.  17G  (18G2).  and  In  re  Barkley,  L.  R.  0  Ch.  App.  Cas.  720  (1874).     In  In 

re  Diclvinson's  Trusts,   Wlily.   Notes  (1802).   in   appointing  an  unmarried 

woman  a  trustee,  Farwell,  J.,  said  that  the  position  of  women  had  consider- 


Sec.  7)  THE   TRUSTEE.  93 


In  re  PARROTT. 

(In  Chancorv.  before  Vice  Cbaucellor,   Sir  Cliarles  Hall,  1S.S1.     Wldy.   Notes 

[1881]  158.) 

This  was  a  petition  for  the  appointment  of  new  trustees  of  a  will, 
on  the  hearing  of  which,  a  short  time  since  the  Court  had  d  dined  to 
appoint  one  of  the  proposed  new  trustees  upon  the  ground  that  he  was 
the  husband  of  a  feme  covert,  who  was  entitled  under  the  will  to  prop- 
erty for  her  separate  use  during  her  life.  All  the  beneficiaries 
under  the  will  who  were  in  existence,  except  one,  who  was  out  of 
the  jurisdiction  (service  upon  whom  had  been  dispensed  with)  were 
co-petitioners,  and  the  husband  of  the  feme  covert  was  a  respondent. 

Gayer,  for  the  petitioners  now  mentioned  the  petition  again,  and 
produced  evidence  that  all  endeavors  to  procure  another  trustee  in- 
stead of  the  husband  had  been  unsuccessful,  and  that  it  was  the 
desire  of  the  wife  that  the  husband  should  be  appointed,  and  stated 
that  the  husband  would  give  an  undertaking  that  in  case  he  at  any 
time  became  a  sole  trustee  he  would  appoint  another  trustee  to  act 
with  him. 

Latham,  for  the  respondents,  did  not  oppose. 

The  Vice  Chancellor  made  an  order  appointing  the  husband  a 
trustee  as  prayed,  directing  that  in  the  case  he  should  become  sole 
trustee  a  new  trustee  should  forthwith  be  appointed,  and  that  if  nec- 
essary an  application  in  chambers  must  be  made  for  that  purpose.^ 


CURRAN  V.  GREEN  and  Wife. 
(Suprerae  Court  of  Rliode  Island,  1893.    18  R.  I.  329,  27  Atl.  596.) 

Bill  in  equity  for  the  removal  of  a  trustee  and  an  injunction. 

John  Curran  by  his  will  directed  his  executor  to  sell  his  real  es- 
tate and  such  of  his  personal  property  as  his  wife  might  not  choose 
to  keep,  and,  after  paying  all  his  debts  and  expenses,  to  transfer  the 
residue  to  his  daughter,  Sarah  Green,  in  trust  to  pay  certain  an- 
nuities and  in  a  certain  event  he  gave  the  rest  and  residue  of  his  es- 
tate to  her  subject  to  certain  payments. 

Per  Curiam.  While  the  court  would  be  reluctant  to  appoint  a 
married  woman  or  a  cestui  que  trust  as  a  trustee,  it  is  a  very  ditifer- 

ably  altered  since  Brook  v.  Brook  was  decided.  He  bad  frequently  appointed 
unmarried  women  in  cbambers.  See  Gibson's  Case,  1  Bland,  Cb.  138,  17  Am. 
Dec.  257  (1827). 

1  In  re  Hattat,  IS  W.  R.  416  (1870) ;  In  re  Davis'  Trusts,  L.  R.  12  Eq.  Cas. 
214  (1871) ;  Milbank  v.  Crane,  25  How.  Prac.  193  (1803). 

It  was  formerly  tbe  rule  in  Soutb  Carolina  not  to  appoint  tbe  busband  of  a 
cestui  que  trust  a  trustee,  eitber  alone  or  witb  otbers.  Ex  parte  Hunter.  Rice, 
Eq.  (S.  C.)  293  (1839)  ;  Dean  v.  Lanford,  9  Ricb.  Eq.  (S.  C.)  423.  427  (1857). 

An  appointment  by  a  cestui  que  trust  of  her  busband  as  trustee  under  a 
power  of  appointment  bas  been  beld  valid.  Tweedy  v.  Urqubart.  30  Ga.  446 
(1860) ;  Steams  v.  Fraleigb,  39  Fla.  603,  23  South.  18,  39  L.  R.  A.  705  (1897). 


94  THE   NATURE   AND   REQUISITES  OF  TRUSTS.  (Ch.  1 

ent  matter  to  remove  a  trustee  from  office  on  account  of  these  dis- 
qualifications which  do  not  absokitely  render  a  person  incapable  of 
acting  as  a  trustee.  The  respondent,  Mrs.  Green,  was  appointed.^ 
trustee  under  the  will  of  her  father,  John  Curran,  by  the  testator! 
himself,  because  of  the  confidence  he  felt  in  her  capacity  and  honesty.' 
So  far  as  appears  she  has  done  nothing  to  show  that  she  is  not  com- 
petent to  perform  the  duties  of  the  trust  or  that  the  trust  estate 
will  not  be  safe  in  her  hands.  There  is,  therefore,  no  sufficient 
ground  to  warrant  her  removal  from  the  trust,  especially  as  she 
offers  to  furnish  a  satisfactory  bond  to  secure  the  faithful  perform- 
ance of  the  trust.^ 


KING  V.  BOYS  and  Another. 

(In  the  Court  of  Queon's  Bench,  I.jGO.     3  Dyer.  283h.) 

"^  One  T,  King  enfeoffed  one  Joseph  Boys,  an  alien   and   Forcet  of 

Gray's  Inn,  to  the  use  of  himself  and  his  wife  in  tail,  remainder  to 
his  right  heirs.  Whether  the  Queen  be  entitled  to  a  moiety  of  the 
land  immediately,  or  not,  was  the  question.  And  it  seems  that  if  an 
office  be  found  of  it,  the  Queen  shall  have  the  moiety  by  her  pre- 
rogative to  her  own  use,  and  the  other  use  in  this  moiety  is  gone 
forever.^ 

1  In  Milbank  v.  Crane.  2r>  IIow.  Prac.  193  (18G3),  a  married  woman  was 
appointed  trustee  by  the  court. 

A  married  woman  may  be  a  trustee  for  her  own  husband.  Resulting  trusts: 
Milner  v.  Freeman.  40  Arlc.  G2  (1882);  Pool  v.  Phillips,  167  111.  432,  47  N.  E. 
758  (1S07);  Barrier  v.  Darrier.  .58  Mo.  222  (1874);  Persons  v.  Persons,  25  N. 
J.  Eq.  2.50  (1874).     Expr(>ss  trust:     Moore  v.  Cottingham,  90  Ind.  2.39  (1883). 

At  common  law  a  married  woman,  who  was  a  trustee,  was  imder  the  same 
disabilities  in  conveying  title  to  the  trust  projverty  as  in  conveying  title  to 
property  held  in  her  own  right.  Co.  Lit.  112a,  Ilargrave's  note  6 ;  1  Fonbl.  Eq. 
92 ;  Dundas  v.  P.iddle,  2  Barr  (Pa.)  IGO  (1845). 

The  husband  had  to  be  joined  as  plaintiff  in  suits  by  her  and  as  defendant 
in  suits  against  her.  Still  and  Wife  v.  linby.  35  Pa.  373  (18G0) ;  People  v. 
Webster.  10  Wend.  (N.  Y.)  555  (18;j3)  ;  Kingsman  v.  Kingsman,  L.  K.  G  Q.  B. 
D.  122.  128  (1880). 

The  husband  was  liable  for  breaches  of  the  trust  committed  by  his  wife 
during  coverture.  Phillips  v.  Richardson,  4  J.  J.  Marsh.  (Kv.)  212  (1830);  U. 
S.  Trust  Co.  v.  Sedgwick.  97  U.  S.  3(>4.  309,  24  L.  Ed.  9.54  (1877). 

In  England  and  generally  in  the  United  States  the  disabilities  of  married 
•Jr"  women  have  been  removetl  by  legislation,  and  they  can  now  act  as  freely  as_ 

unmarried  women,  and  their  Inisbands  are  no  longer  liable  for  their  breaches 
jof  trust.     See  Clausson  v.  La  Franz,  1  Iowa.  22G  (1855). 
r'     2  This  was  a  trust  of  realty.     The  alien  trustee's  title  to  realty  was  good 
/against  all  except  the  sovereign,  and  he  could  convey  a  title  good  as  to  all 
'     except  the  sovereign.     Ferguson  v.  Fraidvlins,  G  Munf.   (Va.)  305  (1819).     His 
transferee's  title  would  be  no  better  against  the  sovereign  than  his  own.    Fish 
v.  Klein.  2  Mer.  431  (1817). 

In  England  and  most  jurisdictions  in  tlje  United  States  the  disability  of 
aliens  to  hold  real  estate  has  been  removed.  In  In  re  Hill,  W.  N.  (1874)  228, 
aliens  were  appointed  trustcK's  of  real  estate  situated  in  England. 

An  alien  is  capable  of  taking  and  holding  personal  propertv  in  trust.  Lewin, 
Trusts  r8th  Ed.)  40 ;  Perry,  Trusts  (5th  Ed.)  §  5G ;  Kerr  v.  White,  52  Ga.  3G2, 
3G9  (1874). 


Sec.  7)  THE    TRUSTEE.  95 

WOODRUFF  V.  WOODRUFF  and  Others.     ' 

(Court  of  Chancery  of  New  Jersey,  1888.    44  N.  J.  Eq.  340,  10  Atl.  4,  1  L.  R 

A.  380.) 

Patrick  Woodruff  died  in  December,  1886,  leaving  a  daughter, 
Louisa  C.  Woodruff,  his  only  child,  him  surviving.  By  his  will  he 
devised  to  Charles  P.  Stratton  a  farm  called  "Oaklands"  in  trust 
for  the  use  and  benefit  of  his  said  daughter  and  her  issue.  Stratton 
died  in  the  testator's  lifetime. 

The  Chancellor  [Alexander  T.  McGill].  As_]\Ir.  Stratton,  to]  U^^^m^  oL 
whom  the  lands_were  devisedjn  trust,  died  before  the  Jestator,  the  -^d,^.-^^  II. 
title  to  the  farm  descended  to  Louisa  C.  Woodruff  as  heir  at  law 
of  her  father,  Patrick,  but  charged  with  the  trust  established  by  the 
will..  Lewin  on  Trusts  (8th  Ed.)  833;  Perry  on  Trusts.  §  38.  From 
the  character  of  that  trust,  it  seems  to  me  that  a  trustee  should  now 
be  appointed  in  the  place  of  Mr  Stratton.  I  will  order  a  reference 
to  a  Master,  to  ascertain  who  will  be  a  fit  and  proper  person  to  re-  | 
ceive  the  appointment,  and  what  security  the  person  selected  should  ' 
be  required  to  give. 


VARNER'S   Appeal. 

(Supreme  Court  of  Peunsylvania,  187.5.     80  Ta.  140.) 

Appeal  from  the  Orphans'  Court  of  Allegheny  county. 

Appeal  from  the  decree  of  distribution  of  the  estate  of  Thomas 
McClurg,  deceased. 

By  his  will,  dated  March  13,  1873,  the  deceased  gave,  devised  and 
bequeathed  one  third  part  of  the  residue  of  his  estate  to  his  sister, 
Matilda  C.  Varner,  wjfe  of  Melchor  Varner,  for  her  sole  and  sep- 
arate use,  and  so  that  her  said  husband  shall  _not^ha\-e  any  control 
over  or  use ^f_the_^ame^er  heirs  and  assigns  forever.  He  named  his 
sister,  Mary  Ann  McClurg,  sole  executrix. 

Upon  the  settlement  of  the  account  of  the  executrix  she  had,  as 
residuary  estate,  $19,335.24  for  distribution.  Mj;§,_jyarn^_xlaijped 
that  she  was  entitled  to  recerye^her  share  without  the  intervention 
of  a  trustee. 

The  Orphans'  Court  ordered  her  share  paid  to  a  trustee  to  be 
thereafter  appointed.     Mrs.  Varner  appealed  to  the  Supreme  Court. 

Per  Curiam.  It  is  very  clear  that  the  will  of  Thomas  McClurg 
gives  to  Mrs.  Varner  an  estate  for  her  sole  and  separate  use,  in  the 
residuary  estate,  free  from  any  control  over  or  use  of  the  same  by  her 
husband.  Her  husband  being  alive,  this  created  a  trust  in  equity  to 
preserve  the  estate  for  her  separate  use,  so  that  its  control  could 
not  be  exercised  by  her  husband.  Though  no  Jtrustee,  was  named,i 
equity  will  raise  one,  jn  order  to  eft'ectuate  the  intention  of  the  tes- 


96  THK   NATURE   AND   REQUISITES   OF   TRUSTS.  (Cll.  1 

tator.    Hence,  it  was  the  duty  of  the  Orphans'  Court,  which  proceeds 
according  to  the  principles  of  equity,  to  preserve  the  use  by  provid- 
ing that  the  estate  should  not  be  paid  into  her  own  hands,  and  there- 
by enable  her  to  dispose  of  it  contrary  to  the  trust. 
Decree  affirmed. 


LORING  and  Another  v.  HILDRETH  and  Others. 

(Supreme  Judicial  Court  of  Massiuhusetts,  1898.    170  Mass.  328,  40  N.  E.  652, 
40  L.  R.  A.  127,  04  Am.  St.  Rep.  301.) 

Bill  in  equity  to  remove  a  cloud  upon  the  title  to  certain  land  in 
Salem. 

Hearing  before  Holmes,  J.,  who,  at  the  request  of  the  parties,  re- 
ported the  case  for  the  consideration  of  the  full  court. 

Allen,  J.^  This  is  aibill  in  equity  to  remove  a  cloud  upon  the  title 
to  land  in  the  possession  of  the  plaintiifs'who  claim  to  be  the  owners 
thereof.  The  cloud  consists  in  the  record  of  a  deed^of  trust  from  the 
late  George  B.  Loring  to  the  late  John  A.  Loringjin  trust,  "during 
the  life  of  Anna  S.  Loring,  wife  of  said  George  Tj.  Loring,  and  of 
Sally  P.  Loring,  the  daughter  of  said  George  B.  Loring,  to  pay  over 
to  them  one  half  part  to  each  of  the  net  rents  and  profits  thereof; 
and  at  the  death  of  either  of  them,  the  said  x\nna  S.  or  Sally  P.  Lor- 
ing, to  convey  her  one  half  share  in  the  said  estate  to  her  heirs  at 
law,  or  to  make  such  disposition  of  it  as  she  shall  direct  by  will." 
There  were  further  provisions,  not  now  material.  This  deed  was 
signed  and  put  on  record  by  said  George  B.  Loring,  and  it  was  also 
signed  by  said  Anna  S.  Loring,  to  release  dower  and  homestead, 
but  it  was  never  accepted  by  the  grantee,  and,  upon  the  facts  found 
at  the  hearing,  it  was  never  delivered.     *     '''     * 

It  is  also  contended  by  the  defendants,  that,  although  the  deed  of 
trust  was  never  delivered,  still  the  execution  and  recording  of  it  by 
Air.  Loring  amounted  to  a  sufficient  declaration  of  trust.  It  is  con- 
ceded that,  under  the  late  English  cases,  there  was  no  sufficient 
declaration  of  trust  to  be  enforced  against  Mr.  Loring,  or  persons 
deriving  title  from  him.  Milroy  v.  Lord,  4  De  G.  F.  &  J.  2G4. 
Richards  v.  Delbridge,  L.  R.  18  Eq.  11.  Moore  v.  Moore,  L.  R.  18 
Eq.  474.  In  re  Breton's  Estate,  17  Ch.  D.  416.  Re  Shield,  53  L. 
T.  (N.  S.)  5.  Bottle  v.  Knocker,  40  L.  J.  Ch.  159.  Ex  parte  Todd, 
19  O.  B.  D.  786.  But  it  is  contended  that  these  decisions  proceed 
upon  too  narrow  a  ground,  and  that,  although  the  trust  deed  of  Mr. 
Loring  shows  no  intention  to  make  himself  a  trustee,  and  although" 
there  was  no  valuable  consideration,  yet  that  he  intended  to  affect 
the  property  with  a  trust,  and  that  this  intention  ought  to  be  carried 
out.     The  answer  to  this  view  is,  that  the  deed  shows  no  intention 

1  Part  of  tlie  opinion  is  omitted. 


Sec.  8)  NOTICE   TO    THE    CESTUI   QUE   TRUST.  97 

to  create  a  trust,  except  in  the  manner  provided.  If  his  intention 
could  not  be  carried  out  modo  et  forma,  then  so  far  as  appears,  there 
was  no  intention.  The  trust  failed,  because  there  was  no  intention] 
to  create  one,  which  can  be  carried  out.  It  often  happens  that  chari-' 
table  trusts  fail  because  they  cannot  be  carried  out  in  the  mode  in- 
tended, if  there  was  no  intention  that  they  should  be  carried  out  in 
any  other  mode.  See  Teele  v.  Bishop  of  Derry,  1G8  Mass.  341,  4? 
N.  E.  422,  38  L.  R.  A.  629,  60  Am.  St.  Rep.  401,  and  cases  there 
cited.  So  here.  (The  deed  shows  no  intention  outside  of  the  mode 
and  form  adopted  by  the  deed;  and  this  fails,  because  the  deed  itself 
was  never  delivered.)  In  Adams  v.  Adams,  21  Wall.  185,  22  L.  Ed. 
504,  the  court  resorted  to  testimony  outside  of  the  deed  itself  to 
ascertain  the  grantor's  intention,  and  there  found  an  intention  to 
create  a  trust.  If  resort  were  had  in  the  present  case  to  outside  cir- 
cumstances, no  support  is  found  for  the  view  that  the  grantor  intend- 
ed to  create  a  trust  independently  of  the  deed.  Numerous  decisions 
from  other  States  are  cited  for  the  plaintiff,  which  confirm  us  in  the 
view,  that  we  should  not  undertake  to  complete  and  carry  out  the 
trust,  which  the  donor  himself  clearly  abandoned. 
Decree  for  the  plaintiffs. - 


SECTION  8.— NOTICE  TO  THE  CESTUI  QUE  TRUST. 


BATH  SAVINGS  INSTITUTION  v.  HATHORN,  Administrator, 

and  Another. 

(Supreme  Judicial  Court  of  Maine,  1895.    8S  Me.  122,  33  Atl.  83G,  32  L.  R.  A. 
377,  -jl  Am.  St.  Rep.  3S2.) 

This  was  a  bill  of  interpleader  brought  by  the  Bath  Savings  In- 
stitution against  the  defendant  Hathorn,  as  administrator  of  the  es- 
tate of  Henry  Walker,  deceased,  and  Alice  B.  Files,  to  determine  the 
title  to  a  certain  deposit  in  that  institution. 

Henry  Walker  died  October  2,  1891.  On  July  1,  1882,  he  de- 
posited $700  in  the  Bath  Savings  Institution  in  his  own  name,  but 
"in  trust  for  Alice  B.  Files"  and  took  out  a  depositor's  book  in  that 
form.  He  retained  possession  of  the  bank  book  till  his  death,  never 
drew  any  part  of  the  principal  or  interest,  but  took  the  book  to  the 
bank  occasionally  to  have  the  accrued  dividends  added.  He  never  in- 
formed Alice  B.  Files  of  the  deposit;   but  informed  at  least  two  other 

2  See  Adams  v.  Adams,  21  Wall.  185,  22  L.  Ed.  504  (1874),  and  King  v.  Don- 
nelly, 5  Paige  (N.  Y.)  4G  (1835). 

Ken.Tb.— 7 


98  THE   NATURE   AND    REQUISITES   OF   TRUSTS.  (Cll.  1 

persons  of  the  deposit,  one  of  wliom  informed  Alice  B.  Files  of  the 
same. 

Haskell,  J.'  Ray  v.  Simmons,  11  R.  I.  2GG,  23  Am.  Rep.  447,  is 
in  point.  One  Bosworth  deposited  money  in  a  savings  bank  in  his 
own  name  as  trustee  for  a  step-daughter.  He  did  not  tell  her  what 
he  had  done,  nor  show  her  the  pass  book.  He  kept  that  himself.  Aft- 
er his  death  the  court  held  that  the  step-daughter  was  entitled  to  the 
money — that  the  transaction  constituted  a  trust  in  her  favor. 

So  is  Martin  v.  Funk,  75  N.  Y.  134,  31  Am.  Rep.  44(5.  Susan 
Boone  deposited  $500  in  a  savings  bank  "in  trust  for  Lillie  Willard." 
Susan  kept  the  pass  book  and  Lillie  had  no  knowledge  of  it  until 
after  Susan's  death.  Want  of  notice  to  Lillie  and  the  retention  of 
the  pass  book  by  Susan  were  urged  in  defense ;  but  the  court  held  a 
gift  in  trust  complete.  This  is  an  exhaustive  case,  and  contains  a  re- 
view of  authorities  by  Chief  Justice  Church  prior  to  1878. 

So  is  Minor  v.  Rogers,  40  Conn.  512,  16  Am.  Rep.  69.  A  widow 
deposited  $250  in  her  own  name  "as  trustee  of  William  A.  Minor," 
the  child  of  a  neighbor.  The  child  knew  nothing  of  the  deposit  until 
after  the  depositor's  death,  and  meantime  did  not  have  possession  of 
the  pass  book,  and  the  court  held  the  trust  complete,  and  allowed  a 
recovery  of  the  money  from  the  depositor's  executor. 

So  is  Re  Gafifney's  Estate,  146  Pa.  49,  23  Atl.  163.  It  appeared 
that  Hugh  Gaffney  deposited  $560  in  his  own  name  as  trustee  for 
Polly  Kim,  and  the  court  held  the  entry  itself  prima  facie  evidence 
of  the  trust,  and,  unexplained  sufficient  to  uphold  it. 

In  Gerrish  v.  New  Bedford  Institution,  supra  [128  Mass.  159,  35 
Am.  Rep.  365],  the  court  says:  "No  particular  form  of  words  is  re- 
quired to  create  a  trust  in  another,  or  to  make  the  party  himself 
a  trustee  for  the  benefit  of  another ;  that  it  is  enough  for  the  latter 
purpose  if  it  be  unequivocally  declared  in  writing — or  orally  if  the 
property  be  personal — that  it  is  held  in  trust  for  the  person  named ; 
that  when  the  trust  is  thus  created  it  is  effectual  to  transfer  the  bene- 
ficial interest  and  operates  as  a  gift  perfected  by  delivery." 

The  same  case  holds  that  notice  to  the  beneficiary  is  unnecessary 
where  the  transaction  is  clear,  but  when  ambiguous,  or  susceptible  of 
dififerent  interpretations,  it  removes  the  doubt  and  is  decisive  of  the 
purpose  of  the  donor.  Some  of  the  earlier  Massachusetts  cases 
seem  to  hold  notice  to  the  beneficiary  essential  to  the  validity  of  a 
trust,  but  when  considered  in  the  light  of  this  case,  rather  consider 
the  notice  a  controlling  than  an  essential  element  in  the  creation  of 
a  voluntary  trust.  The  prevailing  doctrine  now  is  that  notice  is  un- 
necessary, but  when  shown  has  controlling  effect. 

In  this  case  the  entry,  "in  trust  for,"  is  of  clear  and  unmistakable 
import  and  sufficient  to  create  a  prima  facie  trust.  It  might  have 
been  controlled  by  evidence  that  would  have  shown  a  contrary  inten- 

1  Part  of  the  opinion  is  omitted. 


Sec.  9)  THE    STATUTE   OF    FRAUDS.  99 

tion,  but  such  evidence  is  wholly  wanting.     Moreover,  all  the  decla-' 
rations,  acts  and  conduct  of  the  donor  are  consistent  with  the  pre- 
sumption  arising    from   the   entry   itself,   and   show   it   expresses   the 
true  import  of  the  transaction  and  creates  a  completed  trust  in  favor 
of  the  donee. 

Decree  accordingly. 


SECTION  9.— THE   STATUTE  OF  FRAUDS. 


STATUTE   29   CHARLES   H,   CHAPTER   3,   SECTIONS    7,   8, 

AND  9,  1676.  ,    £^'[ 

8  Statutes  at  Large,  40G. 

VII.  And  be  it  further  enacted  by  the  authority  aforesaid,  That 
from  and  after  the  said  four  and  twentieth  day  of  June  all  declara- 
tions or  creations  of  trusts  or  confidences  of  any  lands,  tenements  or 
hereditaments,  shall  be  manifested  and  proved  by  some  writing,  sign- 
ed by  the  party  who  is  by  law  enabled  to  declare  such  trust,  or  by 
his  last  will  in  writing,  or  else  they  shall  be  utterly  void  and  of  none 
effect. 

VIII.  Provided  always,  That  where  any  conveyance  shall  be  made 
of  any  lands  or  tenements  by  which  a  trust  or  confidence  shall  or 
may  arise  or  result  by  the  implication  or  construction  of  law,  or  be 
transferred  or'extinguished  by  an  act  or  operation  of  law,  then  and 
in  every  such  case  such  trust  or  confidence  shall  be  of  the  like  force 
and  effect  as  the  same  would  have  been  if  this  statute  had  not  been 
made;  anything  hereinbefore  contained  to  the  contrary  notwithstand- 
ing. 

IX.  And  be  it  further  enacted.  That  all  grants  and  assignments  of 
any  trust  or  confidence  shall  likewise  be  in  writing,  signed  by  the  par- 
ty granting  or  assigning  the  same,  or  by  such  last  will  or  devise, 
or  else  shall  likewise  be  wholly  void  and  of  none  effect.^ 

1  American  Statutes. — The  seventh  section  of  the  English  statute  has 
either  been  declared  in  force  or  in  substance  enacted  in  the  following  juris- 
dictions: 

Arlvansas.— Kirby's  Digest  of  Statutes  (1904)  §  30<3G. 

District  of  Columbia. — Same  as  Maryland,  of  which  it  was  once  part. 

Florida.— General  Statutes  (1906)  §  24r.2. 

Illinois.— Kurd's  Revised  Statutes  (100(5)  c.  .59.  §  9. 

Maryland.— Alexander's  British  Statutes  (1870)  p.  546. 

Missouri.— Revised  Statutes  (1899)  §  3410  (Ann.  St.  1900,  p.  1949). 

New  Jersey.— General  Statutes  (1709-189.5)  vol.  2,  p.  1003,  §  3. 

New  York.— Laws  1S90.  p.  ."i92.  c.  547.  §  207. 

Pennsylvania. — Stewart's  I'urdon's  Digest  (1905)  pp.  1757,  1758,  §  3. 

Rhode  Island. — The  English  statute  of  frauds  was  declared  in  force  in 
Rhode  Island  by  an  act  of  1749.     See  16  R.  I.  584,  586.     See,  also.  General 


100  TIIK   NATURE   AND    IIEQUISITES   OF   TRUSTS.  (Cll.  1 

A  question  of  fraud,  that  is,  whether  the  trust  was  really  created 
at  the  time  of  the  execution  of  the  instrument,  or  deed,  to  which  the 
manifestation  of  the  trust  refers,  is  always  an  open  question.  Sup- 
Laws  of  K.  I.  (ISDO)  0.  202.  g  2,  doclarins;  certain  declarations  of  trust  of  land 
void  as  to  certain  persons  unless  acknowledged  and  recorded. 

South  Carolina.— Civil  Code  (]!)02)  p.  0!)0.  §  2r.S8. 

In  the  following  jurisdictions  trusts  of  hind  must  be  "created  or  declared" 
in  writing: 
^California.— Civil  Code  (inOG)  §  852. 

Georgia.— Civil  Code  (ISl)."))  §  3153. 

Maine.— Revised  Statutes  (1903)  c.  75.  §  14. 

Massachusetts.— Revised  Laws  (1902)  c.  147,  §  1. 

Montana.— Civil  Code  (1S95)  §  1311. 

.\ew  Hampshire.— Rublic  Statutes  (1901)  c.  137,  §  13. 

South  Dakota.— Civil  Code  (1903)  §  302. 

Vermont.— Public  Statutes  (1900)  c.  121,  §  2583. 

In  the  following  jurisdictions  trusts  must  be  "created  or  declared  by  deed 
or  conveyance  in  writing": 

Colorado.— :Mills'  Annotated  Statutes  (1891)  §  2019. 

IMichigan.— Compiled  Laws  (1S97)  p.  2902,  §  0. 

Minnesota.— Revised  Laws  (19<)5)  c.  G8,  §  3487. 

Nebraska.— Cobbev's  Annotated  Statutes  (1907)  vol.  2,  §  6022. 

Nevada.— Cutting's  Compiled  Laws  (1900)  §  2G94. 

New  York.— Law^s  1S9G,  j).  592,  c.  547,  §  207. 

Utah.— Compiled  Laws  (1907)  tit.  77,  §  2401. 

Wisconsin.— Sanborn  &  Rerryman's  Annotated  Statutes  (1898)  c.  104,  §  2302. 

In  the  following  jurisdictions  trusts  nmst  be  "created  or  declared  by  a 
conveyance  or  other  instrument  in  writing": 

Alaska. — Carter's  Annotated  Alaska  Codes.  Code  of  Civil  Procedure,  §  1046. 
..California.— Codo  of  Civil  Procedure  (1906)  §  1971. 

Idaho.- Civil  Code  (1901)  §  2400. 

In  the  following  jurisdictions  trusts  must  be  ''created"  or  "created  and  de- 
clared" in  writing: 

Alabama.— Code  (1907)  §  3412. 

Indiana.— Horner's  Annotated  Statutes  (1901)  §  2969. 

Kansas.— Dassler's  General  Statutes  (1901)  §  7875;  General  Statutes  (1905) 
§  8612. 

Orogon.— Bellinger  &  Cotton's  Annotated  Codes  &  Statutes  (1902)  vol.  1, 
c.  9,  §  793. 

In  one  ^'urisdiction  "declarations  or  creations  of  trusts  *  *  *  nuist  be 
executed  in  the  same  manner  as  deeds  of  conveyance": 

Iowa.— Annotated  Code  (1897)  §  2918. 

In  one  jurisdiction  declarations  or  creations  of  trusts  must  be  made  and 
manifested  by  writing,  and  the  writing  must  be  acknowledged  or  proved  as 
other  writings,  and  must  be  lodged  for  record  with  the  clerk  of  the  chancery 
court  of  the  proper  county,  to  be  recorded  and  to  take  effect  only  from  the 
time  of  being  lodged  for  record: 

Mississipi)!.- Code  (1906)  S  4780. 

In  the  ff)llowing  jurisdictions  there  is  no  statute  making  a  writing  essential 
to  the  validity  of  a  trust  of  land: 

Arizona  Oklahoma 

Connecticut  Tenn(>ssee 

Delaware  Texas 

K<Mitucky  Virginia 

New  Mexico  "West  Virginia 

North  Carolina  Wyoming 

Ohio 

In  these  jurisdictions  trusts  of  land,  it  would  seem,  may  be  both  created  and 
manifested  and  proved  orally.     This  view  pi-evails  in  most  of  them. 

The  decisions  to  the  contrary  in  Connecticut  and  Kentucky  are  indefensible. 
Dean  v.  Dean,  6  Conn.  285  (182()) ;  Chiles  v.  Woodson,  2  15ibb  (Ky.)  71  (1810). 

In  North  Carolina  a  trust  created  after  the  analogy  of  a  feoffment  to  uses 


Sec.  9)  THE    STATUTE    OF   FRAUDS.  101 

pose  a  judgment,  or  some  other  lien,  had  attached  to  the  property 
in  the  interval  between  the  execution  of  the  deed  and  the  declaration 
of  trust,  it  would  have  been  necessary  in  order  to  defeat  such  lien, 
to  show  that  the  trust  was  bona  fide  created  at  the  time  of  the  execu- 
tion of  the  deed.  This,  however,  might  be  done  by  parol ;  because 
the  statute  does  not  require  that  the  trust  should  be  created,  but  only 
manifested  in  writing.  *  *  *  j^  ^^^5  this  principle — that  a  decla- 
ration of  trust  might  have  a  retroactive  effect,  and  refer  back  to  the 
time  when  the  trust  was  created — that  was  decided  by  Lord  Cowper, 

may  be  both  created  and  manifested  and  proved  orally.  Shelton  v.  Shelton.  ."» 
Jones,  Eq.  (N.  C.)  21)2  (1S.">!))  But  a  trust  created  after  the  analogy  of  a  bar- 
gain and  sale,  or  a  covenant  to  stand  seised,  must  be  created  by  deed.  Pitt- 
man  V    Pittman,  107  N.  C.  mO.  12  S.  E.  Gl.  11  L.  R.  A.  450  (18W). 

In  West  Virj^inia  a  trust  in  favor  of  a  liiird  person  may  be  both  created 
and  manifested  and  proved  orally ;  but  if  created  In  favor  of  a  grantor  it 
must  be  manifested  and  proved  by  writing.  Troll  v.  Carter,  1,5  W.  Va.  507 
(1870). 

When  a  trust  of  land  need  not  be  created,  but  only  "manifested  and  proved," 
by  writing,  it  may  be  established  by  a  subsequent  admission  of  the  trust 
contained  in  any  writing  signed  by  the  party  to  be  charged.  Forster  v.  Hale, 
3  Ves.  Jr.  090,  707  (1798).  This  case  is  followed  wherever  the  seventh  section 
of  the  English  statute  or  its  equivalent  is  in  force. 

Statutes  requiring  a  trust  of  land  to  be  "created  or  declared"  in  writing 
have  received  a  like  interpretation.    McClellan  v.  McClellan,  05  Me.  500  (1870). 

So,  when  a  trust  of  land  must  be  "created  or  declared  by  a  deed  or  con- 
veyance in  writing,"  the  deed  or  conveyance  may  be  made  subsequent  to  the 
creation  of  the  oral  trust.    AVright  v.  Douglass.  7  N.  Y.  504  (18.53). 

When  a  trust  of  land  must  be  "created"  or  "created  and  declared"  in  writ- 
ing, a  subsequent  admission  in  writing  would  seem  insufficient.  In  Ricliard- 
son  V.  AVoodbury,  43  Me.  200,  212  (1857),  the  court  so  decided,  interpreting  the 
statute  of  that  state  then  in  force.  Tlie  contrary  was  decided  in  Gaylord 
v.  Lafayette,  115  Ind.  423.  428,  17  N.  E.  899  (1888).  The  question  was  left 
undecided  in  Patton  v.  Beecher,  62  Ala.  579,  587  (1878).  See  Bibb  v.  Hunter, 
79  Ala.  351,  356  (1885);  Wiggs  v.  Winn,  127  Ala.  621,  29  South.  90  (1900). 

As  the  subsequent  writing  operates  by  way  of  admission,  it  makes  no  dif- 
ference with  what  intention  it  is  made.  Bates  v.  Hurd,  05  Me.  180  (1876) ; 
McClellan  v.  jNIcClellan,  65  Me.  500  (1876).  Arguhig  by  analogy  from  the  in- 
terpretation placed  upon  the  seventeenth  section  of  the  statute  of  frauds  in 
Bailey  v.  Sweeting,  9  C.  B.  (N.  S.)  843  (1872),  Wilkinson  v.  E\-ans,  L.  R.  1 
C.  P.  407  (1860),  and  Buxton  v.  Rust,  L.  R.  7  Ex.  279  (1872),  we  should  con- 
clude that  the  subsequent  writing  would  be  sufficient  if  it  admits  the  trust, 
though  it  disclaims  all  liability.  But  if  the  defendant  in  a  bill  in  equity  to 
enforce  an  oral  trust  in  his  answer  admits  the  oral  trust,  still  he  may  set  up 
the  statute  as  a  bar  to  the  recovery.  Whiting  v.  Gould,  2  Wis.  552,  593 
(1853) ;  Dean  v.  Dean,  9  N.  J.  Eq.  425,  427  (1853) ;  Tynan  v.  Warren,  53  N.  J 
Eq.  313,  315,  31  Atl.  590  (1895) ;  Warren  v.  Tynan,  54  N.  J.  Eq.  402,  404,  34 
Atl.  1005  (1890).  If  the  defendant  admits  in  his  answer  the  oral  trust,  but 
does  not  set  up  the  statute  as  a  defense,  plaintiff  will  be  entitled  to  have  the 
trust  executed.  McLaurie  v.  Parllow,  .53  111.  340.  345  (1870);  Patton  v. 
Chamberlain.  44  :Mirh.  5,  5  X.  W.  1037  (1880) ;  Woods  v.  Dille,  11  Ohio,  455 
(1842)  ;  Whiting  v.  (iould.  2  Wis.  5.52,  .593  (18.5:;>. 

The  writing  must  cnntaiu  all  the  terms  of  the  trust.  Smith  v.  Matthews,  3 
De  G.,  F.  &  J.  139  (1800). 

The  terms  of  the  trust  need  not  be  contained  in  one  document,  but  may  be 
gathered  from  several  papers,  if  connected  physically  or  by  reference  of  one 
to  another,  or  if  on  their  face  referring  to  the  same  ti'ansaction.  Loring  v. 
Palmer.  118  U.  S.  321,  0  Sup.  Ct.  1073,  30  L.  ImI.  211  (1886);  McClellan  v. 
McClellan,  65  Me.  500  (1870). 

It  is  sufhcieut  that  the  writing  be  aiijin-d,  unless  expressly  requirtxi  to  be 
suhscrihcd. 


102  THE   NATURE   AND    REQUISITES   OF   TRUSTS.  (Ch.  1 

in  Ambrose  v.  Ambrose  (1  P.  Wms.  321)  and  prevented  the  custom 
of  London  from  interposing,  and  giving  to  the  widow  the  interest 
of  the  trust  fund  as  personal  estate.— Chancellor  Williamson  in  Smith 
V.  Howell,  3  Stockton  (N.  J.)  349,  358-359.^ 


TIERNEY  V.  WOOD. 

(In  Chaiirory.  boforo  the  Master  of  tho  Rolls,   Sir  .John   Romilly,   18."4.     19 

l{(>:ivan.  3:30.) 

In  January,  1836,  Alexander  Wood  purchased  a  house,  a  close  of 
land  and  premises,  situate  at  Little  Hampton,  in  Sussex,  for  the  sum 
of  i-190.  They  were  conveyed  to  the  plaintiff  Tierney  in  fee,  who 
admitted  he  held  them  in  trust  for  Wood. 

About  the  same  time,  Wood  transferred  a  sum  of  stock  into  the 
plaintiff's  name,  but  by  his  direction  the  plaintiff  afterwards  sold  it 
out,  and  delivered  the  proceeds  of  the  sale  to  Wood. 

Soon  after  the  purchase  of  the  house,  land,  and  premise?,  Wood 
delivered  to  the  plaintiff  a  paper  writing,  signed  by  him,  and  dated 
January,  1837,  in  these  words : 

"I  hereby  desire  that,  after  my  death,  the  stock  now  in  the  Bank 
of  England,  with  the  house  and  land  now  belonging  to  me  at  Little 
Hampton,  shall  be  held  by  you,  as  you  at  present  hold  it,  for  the 
benefit  of  my  wife,  Elizabeth  Wood,  during  her  life,  and  that  after 
her  death  the  same  shall  continue  to  be  held  by  you  as  aforesaid,  for 
the  sole  benefit  of  my  daughter  Mary  Wood,  in  such  sort,  that  it 
shall  be  wholly  and  entirely  free  from  all  control  of  any  person  with 
whom  she  may  intermarry.  I  further  desire  that,  in  case  my  said 
(daughter  Mary  should  leave  issue  by  any  marriage  which  she  may 
'contract,  the  whole  of  the  above  property  shall  pass  to  such  issue,  in 
such  manner  as  she  may  direct;  but  that,  in  case  she  should  die  with- 
out issue,  the  whole  of  the  above  property  shall  be  equally  divided 
among  the  lawful  issue  of  my  son  Alexander  Wood,  born  after  1834, 
he  to  have  the  interest  and  profits  arising  from  the  property  during 
his  life.  If  my  son  should  die  without  issue,  I  desire  that  all  the 
property  may  be  sold,  and  the  money  be  equally  divided  among  my 

1  If  Ji  trustee  holcliiic;  land  on  an  oral  trust,  thouj;h  he  cannot  be  forced  to 
execute  it,  voluntarily  executes  it,  his  creditors,  at  least  provided  they  have 
obtained  no  lien  thereon,  cannot  object ;  that  is,  the  trust,  though  created 
orally,  is  valid,  although  it  cannot  be  enforced  for  want  of  the  necessary  evi- 
dence. Footo  V.  TU-yant,  47  N.  Y.  .■")44  (1872) ;  Bork  v.  Martin,  132  N.  Y.  280,  30 
N.  E.  584,  28  Am.  St.  Rep.  070  (lSt>2). 

In  some  jurisdictions  a  conveyance  would  be  allowed  to  stand,  though  made 
after  judgment  creditors  had  obtained  a  lieu  upon  the  land.  Finney  v.  Fel- 
lows, 1.5  Vt.  525  (1843). 

There  are  authorities  contra.  Connor  v.  Follansbee,  59  N.  H.  124  (1879)^ 
Skinner  v.  James,  G9  Wis.  60.5,  35  N.  W.  37  (1887). 


7 


Sec.  9)  THE    STATUTE    OF    FRAUDS.  103 

late  brother's  children  now  Hving-  at  Old  Craig,"  &c.  "After  the 
death  of  my  wife,  I  wish  my  son  x\lexander  to  be  paid  ilOO.  in  money, 
or  to  be  paid  ib.  a  year  during  his  life.  If  my  son  Alexander  and  my 
daughter  Mary  have  both  issue,  let  the  property  be  equally  divided 
among  them;  if  they  have  no  issue,  give  £100.  to  such  charity  as  Mr. 
Jones'  at  St.  Leonards.  Let  my  son  have  my  books  on  gardening, 
my  shirts,  or  any  of  my  clothes  that  may  be  of  use  to  him,  if  he  de- 
sire to  have  them.  Alexander  Wood. 

"January,  1837. 
"To  the  Rev.  M.  A.  Tierney." 

Alexander  Wood,  the  elder,  died  in  1844,  intestate,  and  the  plain- 
tiff allowed  Mrs.  Wood,  his  widow,  to  receive  the  rents  of  the  prem- 
ises, till  her  death  in  June,  1853. 

Alexander  Wood,  the  son  and  heir  at  law  of  Alexander  Wood  the 
elder,  and  Mary  Wood,  the  daughter,  were  living;  but  the  latter 
has  never  been  married,  and  questions  having  arisen  as  to  the  rights 
of  the  parties  interested  in  the  property  of  Alexander  Wood  the 
elder,  and  as  to  the  effect  of  the  paper  writing,  the  plaintiff  instituted 
the  suit  to  obtain  the  opinion  of  the  court  thereon. 

The  Master  of  the  Rolls  was  of  opinion  that  Mary  Wood  took  an 
estate  tail,  but  reserved  his  judgment  as  to  the  validity  of  the  decla- 
ration of  trust. 

The  Master  of  the  Rolls.  The  question  is,  whether  the  docu- 
ment dated  in  January,  1837,  created  a  good  declaration  of  trust 
within  the  seventh  section  of  the  Statute  of  Frauds.  That  clause 
is  in  these  words,  or  to  this  effect :  That  after  the  24th  of  June, 
1677,  all  declarations  or  creations  of  trusts  or  confidences  of  any 
lands,  tenements  or  hereditaments,  shall  be  manifested  and  proved 
by  some  writing,  signed  by  the  party  who  is  by  law  enabled  to  de- 
clare such  trust,  or  by  his  last  will  in  writing,  or  else  they  shall  be 
utterly  void  and  of  none  effect. 

The  first  question  raised  is,  whether  Alexander  Wood  is  the  per- 
son who  is,  by  law,  enabled  to  declare  the  trusts  of  these  lands. 

The  second  question  is,  whether  if  he  be,  this  is  a  declaration  of 
trust,  and  such  a  one  as  can  be  acted  upon. 

There  is  no  question  but  that  on  the  purchase  of  this  property  by 
Alexander  Wood,  and  the  conveyance  thereof  to  the  Rev.  M.  A. 
Tierney,  a  resulting  trust  arose  in  favor  of  Alexander  Wood,  which, 
as  it  is  expressly  excepted  by  the  eighth  section  of  the  Statute  of 
Frauds,  does  not  require  to  be  evidenced  by  any  writing.  In  the 
year  1836,  therefore  and  previous  to  the  signing  of  this  document, 
the  property  in  question  was  vested  in  M.  A.  Tierney,  in  fee.  in  trust 
for  Alexander  Wood,  in  fee  simple.  Alexander  Wood,  therefore, 
was  the  beneficial  owner  of  this  property,  and  Mr.  Tierney  had  the 
mere  naked  legal  interest  in  it.  A  distinction  may  be  raised  be- 
tween the  person  who  is  by  law  enabled  to  declare,  and  the  person 


104  TIIK   NATUHE   AND   REQUISITES   OF  TRUSTS.  (Ch.  1 

who  is  by  law  entitled  to  create  the  trust.  I  consider,  in  the  first 
place,  who  was  by  law  entitled  to  create  a  trust  in  this  property; 
and,  first,  I  examine  what,  in  such  a  state  of  things,  would  have  been 
the  effect  of  this  document,  so  far  as  it  relates  to  the  stock,  which 
had  been  transferred  into  the  name  of  ]\I.  A.  Tierney,  if  this  had  not 
been  sold  out  afterwards  by  the  direction  of  Alexander  Wood,  and 
the  direction  to  pay  the  dividends  had  been  complied  with  by  Tier- 
ney. The  result  would  have  been  that  the  relation  of  trustee  and 
cestui  que  trust  between  Tierney  and  the  person  mentioned  in  the 
instrument  would  have  been  completed,  so  far  as  that  stock  was 
concerned,  and  the  fact  that  the  document  had  been  a  voluntary  act 
on  the  part  of  Wood  would  not  have  prevented  this  court  from  acting 
upon  it.  The  case  of  Ex  parte  Pye  and  Dubost  [18  Ves.  Jr.  140], 
and  the  authorities  referred  to  in  Bridge  v.  Bridge  [16  Beavan,  315], 
decided  by  myself,  establish  this  proposition.  Those  authorities  show 
that  the  proper  person  to  create  the  trust  in  personal  property  is 
the  person  in  whom  the  beneficial  interest  of  the  property  is  vested; 
and  the  trust  being  created  by  the  beneficial  owner,  the  trustee  is 
bound,  and,  if  disposed  to  refuse,  may  be  compelled,  to  obey  it. 

I  am  at  a  loss  to  find  any  reason  which  should  cause  this  docu- 
ment to  be  effectual  as  a  declaration  of  trust,  so  far  as  the  stock  is 
concerned,  and  not  so,  so  far  as  the  land  is  concerned.  It  is  obvious 
that  in  both  cases  the  person  enabled  by  law  to  declare  the  trusts  is 
the  same.  In  the  case  before  me,  there  can  be  no  doubt  that,  if  Mr. 
Tierney  had,  in  pursuance  of  this  paper,  signed  a  document  to  the 
same  effect,  stating  that  he  held  the  property  on  the  trusts  therein 
mentioned,  the  trusts  would,  apart  from  any  question  on  the  con- 
struction of  the  document,  have  been  fully  and  completely  declared; 
and  it  is  also  clear,  that  if  the  trustee  had  declared  that  he  held  the 
property  on  any  trusts  not  recognized  or  sanctioned  by  Alexander 
Wood,  the  beneficial  owner,  such  declaration  of  trust  would  have 
been  insufficient  and  unavailing,  and  would  have  given  no  inter- 
est to  the  supposed  cestui  que  trust.  A  declaration  of  trust  in 
writing  by  Tierney  following  that  of  Wood  would  therefore  have 
been  merely  formal,  and  would  have  been  valid  only  so  far  as  it 
followed  his  instructions,  and  would  have  been  void  to  the  extent,  it 
anv.  that  it  departed  from  his  directions.  I  think  that  the  fair  con- 
clusion to  be  drawn  from  these  considerations  is,  that  the  person  to 
create  the  trust,  and  the  person  who  is  by  law  enabled  to  declare  the 
trust,  are  one  and  the  same;  and  that,  consequently,  the  beneficial 
owner  is  the  person  by  law  enabled  to  declare  the  trust. 

This  is  confirmed  by  the  expression  in  the  clause  in  the  statute 
which  relates  to  "the  last  will  in  writing."  which  can  only  apply  to 
the  beneficial  owner.  It  may  also  be  observed,  that  if  the  statute  had 
intended  that  no  trust  should  be  valid,  unless  evidenced  by  a  writing 
signed   by   the   trustees,  the   simple   and   obvious   course   would   have 


Sec.  9)  THE    STATUTE    OF    FRAUDS.  105 

been  to  have  so  stated  it ;  but  the  expression  used  is  not  "the  trustee," 
but  "the  person  by  law  enabled  to  declare  the  trust."  That  person  is, 
I  think,  the  beneficial  owner;  and  I  am  of  opinion  that,  apart  from 
any  question  of  the  construction  of  the  document,  the  fact  of  its  hav- 
ing been  signed  by  Wood,  the  beneficial  owner,  transmitted  by  him  to 
Tierney,  the  legal  owner,  and  by  him  acted  upon,  constitutes  it  a 
sufficient  declaration  of  trust  within  the  seventh  clause  of  the  statute, 
so  far  as  that  clause  requires  it  to  be  signed  "by  the  party  who  is 
by  law  enabled  to  declare  such  trust." 

^  The  next  question  is,  whether  the  document  itself,  apart  from 
the  signature,  is  or  purports  to  be  a  declaration  of  trust  at  all.  It  is 
contended  that,  if  anything,  it  is  a  will  imperfectly  executed,  that  it 
contains  no  direction  as  to  the  present  application  of  the  rents,  and 
that  the  rest  of  its  contents  savor  of  the  directions  contained  in  a 
will  rather  than  of  a  direction  how  to  apply  the  rents  of  the  property ; 
for  that  it  is  not  to  take  effect  till  after  the  death  of  Alexander  Wood, 
and  that  it  contains  directions  for  sale  and  the  like,  inconsistent  with 
the  nature  and  duties  of  the  trust  which  M.  A.  Tierney  had  accepted. 
There  is,  undoubtedly,  some  force  in  these  observations;  but,  on  the 
whole,  I  think  that  this  may  be  treated  as  a  valid  declaration  of  trust. 
Although  it  does  not  declare  the  whole  trust,  it  declares  the  trust  of 
a  part,  and  it  leaves  the  resulting  trust  untouched,  except  where  it 
expressly  interferes  therewith.  If  this  document  had  directed  Mr. 
Tierney  to  pay  the  rent  to  Mr.  Wood  during  his  life,  and  had  then 
proceeded  as  it  does,  this  objection  could  not,  in  my  opinion,  have 
been  sustained;  but  this  omission  is  not  sufficient  to  destroy  the 
character  of  the  rest  of  the  interest,  which  unless  where  it  otherwise 
disposes  of  the  beneficial  interest  in  the  property,  leaves  it  untouched, 
under  the  resulting  trust  vested  in  Mr.  Wood.  I  am  of  opinion, 
therefore,  that  a  good  trust  was  evidenced  by  this  writing  within  the 
Statute  of  Frauds. 

The  only  remaining  question  is  the  interest  which  Mary  Wood 
takes  in  the  land  so  held  in  trust  for  her,  and  my  opinion  is  that  she 
takes  an  estate  tail.^ 


TYNAN  V.  WARREN  and  Wife.  e\C\^\2>  , 

(Court  of  Chancery  of  New  Jersey,  1895.     53  N.  J.  Eq.  313.  31  Atl.  590.) 

Green,  V.  C.^     This  bill  is  to  establish  a  trust.     *     *     * 
The  answer  of  defendant  admits  that  the  property  was  sold  by  the 
sheriff  to  Tynan  and   Warren;    that  each  advanced  one-half  of  the 

1  See  Rycroft  v.  Christy,  3  Beav.  238  (18401 ;  Bentley  v.  Muckay,  15  Beav. 
12  (1851) ;  Kronheim  v.  Johnson,  L.  R.  7  Ch.  Div.  60  (1877). 

2  Part  of  the  opinion  is  omitted. 


106  THE   NATURE   AND   REQUISITES   OF   TRUSTS.  (Ch.  1 

amount  paid  on  the  sale;  that  it  was  arranged  between  complahiant 
and  defendant  that  they  should  procure  a  loan  of  $3,500  from  the 
Paterson  Savini,^s  Institution  on  the  property  to  pay  the  balance  of 
the  purchase  money  and  other  expenses ;  that  the  deed  was  made  out 
in  defendant's  name  at  the  suggestion  of  the  complainant,  and  it  was 
agreed  that  he,  the  defendant,  "should  hold  the  title  to  said  land  in 
trust  for  the  equal  benefit  of  himself  and  complainant,  subject  to  the 
said  mortgage  of  $3,500  *  *  *  until  a  purchaser  could  be  found 
for  it." 

The  defendant  thus  does  not  deny  the  allegation  of  the  bill  that  the 
title  was  put  in  his  name,  to  be  held  by  him  in  trust  for  himself  and 
complainant,  but  expressly  admits  that  he  did  agree  to  take  the  title 
to  hold  the  same  in  trust  for  the  equal  benefit  of  himself  and  com- 
plainant, until  a  purchaser  could  be  found  for  it. 
)/■  This  is  an  express  trust.  It  is  not  one  raised  by  law  from  the 
'circumstances  of  the  case,  but  created,  and  its  terms  and  conditions 
fixed,  by  the  express  agreement  of  the  parties.     *     *     * 

The  (iefendant  claims  by  his  answer  that  the  trust  is  no  longer  sub- 
sisting because  the  complainant  relinquished  his  interest  in  the  prop- 
erty in  consideration  of  defendant's  assumption  of  certain  claims. 
These  allegations  of  the  answer  are  put  in  issue  by  the  general  repli- 
cation, and  the  parties  as  witnesses  tell  different  stories.  It  is,  how- 
ever, admitted  that  the  agreement,  whatever  it  was,  was  a  verbal 
one — could  it,  if  it  was  even  as  stated  in  the  answer,  have  the  etTect 
defendant  claims  for  it?  It  being  admitted  that  the  defendant  took 
the  title  to  the  whole  property  on  an  agreement  to  hold  it  for  the 
joint  benefit  of  himself  and  complainant,  he  was  the  legal  owner, 
subject  as  to  an  undivided  one-half  to  a  trust  in  favor  of  the  com- 
plainant. As  to  this  one-half,  there  was  a  legal  estate  in  the  defend- 
ant and  an  equitable  estate  in  the  complainant.  The  latter  might  not 
be  able  to  enforce  it,  as  has  been  shown,  and  this  was  probably  what 
Mr.  Williams  meant  by  saying  no  papers  were  necessary.  But  de- 
fendant could  not  acquire  complainant's  equitable  interest  as  he 
claims  to  have  done  by  his  answer  through  a  parol  agreement.  This 
would  be  a  transfer  of  a  trust  estate,  and  section  4  of  the  Statute 
of  Frauds  provides  that  "all  grants  and  assignments  of  any  trust  or 
confidence  shall  be  in  writing  signed  by  the  party  granting  or  assign- 
ing the  same,  or  by  his  or  her  last  will  in  writing,  or  else  shall  be 
utterly  void  and  of  no  efifect."  This  is  substantially  section  9  of  the 
English  Act.  Chief  Justice  Marshall  in  Hughes  v.  Moore,  7  Cranch, 
176,  at  page  191  [3  L.  lul.  307],  says:  "The  court  can  perceive  no 
"distinction  between  the  sale  of  land  to  which  a  man  has  only  an  equi- 
table title,  and  the  sale  of  land  to  which  he  has  a  legal  title ;  they 
are  equally  within  the  statute."     *     *     =<= 

It    is   unnecessary,    therefore,    to   ascertain    wliich    version    of   this 


Sec.  10)  THE    STATUTE    OF    WILLS.  107 

parol  agreement  is  correct,  as  it,  whatever  it  was,  was  inoperative  to      ^_ 
transfer  complainant's  equitable  title  to  defendant. 
Decree  for  complainant.^ 


SECTION  10.— THE  STATUTE  OF  WILLS. 


SCHULTZ'S  APPEAL. 

(Snprome  Court  of  Pennsylvania,  1876.     SO  Ta.  .100.) 

Appeal  from  the  Orphans'  Court  of  Montgomery  County.  In  the 
distribution  of  estate  of  Frederick  Schultz,  deceased. 

Decedent  died  September  13,  1872  having  made  a  will  dated  Sep- 
tember 6,  1873,  in  which  he  appointed  Jonathan  Krause  executor. 

After  directing  the  payment  of  his  debts,  etc.,  the  only  other  pro- 
vision was:  "As  touching  all  the  rest,  residue  and  remainder  of  my 
estate,  real,  personal  and  mixed,  I  give,  devise  and  bequeath  the  same 
unto  Reuben  Yeakle,  now  of  Cleveland,  Ohio,  and  his  heirs  and  as- 
signs forever." 

August  11,  1874,  the  executor  settled  an  account  of  his  adminis- 
tration showing  in  his  hands  a  balance  of  $10,043.57.  Charles  T. 
Miller,  Esq.,  was  appointed  auditor  to  distribute  the  balance.  He 
awarded  the  fund  to  Reuben  Yeakle.  The  next  of  kin  filed  excep- 
tions to  the  report.  The  court  overruled  the  exceptions,  confirmed 
the  report  and  decreed  distribution  as  reported  by  the  auditor. 

George  Schultz  and  others,  the  next  of  kin  of  Frederick  Schultz, 
appealed  to  the  Supreme  Court. 

Mr.  Justice  Sharswood  delivered  the  opinion  of  the  court,  Janu- 
ary 31,  1876. 

The  very  able  and  exhaustive  opinions,  as  well  of  the  auditor  as 
of  the  learned  court  below,  have  relieved  us  from  an  examination  of 
the  English  decisions  upon  the  Mortmain  Act  of  that  country.  They 
undoubtedly  throw  a  clear  and  strong  light  upon  the  question  pre- 
sented upon  this  record.  They  establish  two  positions:  1.  That  if 
an  absolute  estate  is  devised,  but  upon  a  secret  trust  assented  to  by 
the  devisee,  either  expressly  or  impliedly,  by  knowledge  and  silence 
before  the  death  of  the  testator,  a  court  of  equity  will  fasten  a  trust 

2  This  case  was  reversed,  54  N.  J.  Eq.  402,  34  Atl.  106.5,  but  upon  grounds 
not  affecting  the  foregoing  reasoning. 

Chattels  real  are  within  the  statute.  Skett  v.  Whitmore,  Freem.  Ch.  280 
illOo). 

Chattels  personal  are  not  within  the  statute.  The  statute  deals  with  lands, 
tenements,  and  hereditaments.  A  trust  of  a  chattel  personal  can  therefore 
be  both  created  and  manifested  and  proved  orally.  The  authorities  to  this, 
effect  are  legion. 


108  THE   NATURE   AND   REQUISITES   OF   TRUSTS.  (Ch.  1 

on  him  on  the  ground  of  fraud,  and  consequently  the  Statute  of 
Mortmain  will  avoid  the  devise  if  the  trust  is  in  favor  of  a  charity. 
;  But  2.  If  the  devisee  have  no  part  in  the  devise,  and  no  knowledge  of 
^it  until  after  the  death  of  the  testator,  there  is  no  ground  upon  which 
lequity  can  fasten  such  a  trust  on  him,  even  though,  after  it  comes 
^^to  his  knowledge,  he  should  express  an  intention  of  conforming  to' 
'  the  wishes  of  the  testator.  The  latter  proposition  applies  directly  to 
the  case  now  before  us.  Reuben  Yeakle,  the  legatee  named  in  the" 
will,  was  not  present  when  the  instrument  was  executed.  He  had 
no  communication  with  the  testator,  directly  or  indirectly,  upon  the 
subject.  The  testator  had  long  intended  to  leave  his  estate  for  chari- 
table purposes.  On  his  death-bed  he  sent  for  a  scrivener,  and  express- 
ed to  him  his  wish  to  have  his  property  so  disposed  of  after  his 
death.  He  was  informed  that  if  he  should  die  within  thirty  days, 
such  a  disposition  would  be  inefifectual,  but  that  he  might  make  an 
absolute  bequest  to  some  individual,  upon  the  confidence  and  belief 
that  when  he  should  be  informed  of  his  wishes,  he  would,  of  his  own 
accord,  carry  them  out.  This  plan  was  adopted,  and  upon  the  sug- 
gestion of  one  of  the  bystanders,  Reuben  Yeakle,  the  bishop  of  the 
church  to  w^hich  the  decedent  belonged,  was  chosen  by  him.  It  is 
clear,  not  only  from  the  evidence,  but  from  the  verdict  of  the  jury  in 
the  issue  of  devisavit  vel  non,  that  no  undue  influence  was  exercised 
to  procure  the  will.  It  was  the  testator's  own  free  and  voluntary  act, 
and  he  was  told  "that  he  could  dispose  of  his  property  to  a  particular 
person  unconditionally,  and  if  that  man  would  do  it,  then  he  could 
put  it  to  those  places  where  he  wanted  it;  but  that  would  be  entire- 
ly at  his  option ;  he  could  do  it  or  not."  Reuben  Yeakle  was  not  in- 
formed of  the  will  until  some  time  after  the  death  of  the  testator. 
When  informed  of  it  he  declared  his  intention  to  appropriate  the 
money  as  the  testator  wished  it  to  be.  He  said,  when  examined  as  a 
witness  before  the  auditor:  "I  have  not  seen  the  will,  but  if  it  gives 
me  the  absolute  right  to  the  property  without  condition,  I  should  con- 
sider that  I  had  the  legal  right  to  do  with  the  property  as  I  pleased. 
I  draw  a  distinction  in  this  between  the  legal  and  moral  right." 

We  are  unshackled  by  authority  upon  this  question.  The  English 
precedents  upon  the  construction  of  their  Statute  of  Mortmain  are 
not  binding  upon  this  court  and  with  us  the  question  is  an  entirely 
new  one.  By  the  eleventh  section  of  the  Act  of  Assemblv  of  April 
26,  1855  (P.  L.  332),  it  is  provided,  "that  no  estate,  real  or  personal, 
shall  hereafter  be  bequeathed,  devised  or  conveyed  to  any  body  politic, 
or  to  any  person,  in  trust  for  religious  or  charitable  uses  except  the 
same  be  done  by  deed  or  will,  attested  by  two  credible  and  at  the  same 
time  disinterested  witnesses,  at  least  one  calendar  month  before  the 
death  of  the  testator  or  alienor,  and  all  dispositions  of  property  con- 
trary hereto  shall  be  void,  and  go  to  the  residuary  legatee  or  devisee 
next  of  kin  or  heirs  according  to  law." 


Sec.  10)  THE    STATUTE    OF   WILLS,  100 

It  seems  very  clear  that  the  bequest  in  the  will  of  Frederick  Schultz 
to  Reuben  Yeakle  is  not  within  the  words  of  the  statute.  There  is 
nothing  in  the  circumstances  to  fasten  a  trust  upon  him.  The  statute' 
out  of  the  way,  the  charities  intended  to  be  benefited  would  have  had 
no  claim,  legal  or  equitable,  to  enforce  payment  by  him  to  them,.  He 
would,  in  the  eye  of  the  law,  be  guilty  of  no  fraud,  legal  or  equitable, 
either  against  them  or  the  testator,  if  he  should,  even  at  this  day, 
change  his  intention  and  apply  the  money  to  some  other  use.  Being 
the  absolute  owner,  under  the  will,  the  declaration  of  his  intention, 
would  not  be  binding  upon  him.  It  is  not,  therefore,  in  the  words  of 
the  statute,  a  bequest  "to  a  body  politic  or  to  any  person  in  trust  for 
religious  or  charitable  uses."  Had  Reuben  Yeakle  been  present 
when  the  will  was  executed,  or  the  objects  of  the  bequest  been  com- 
municated to  him  before  the  testator's  death,  and  he  had  held  his 
peace,  there  would  have  been  some  ground  for  fastening  a  trust  up- 
on him  ex  maleficio,  as  in  Hoge  v.  Hoge,  1  Watts,  163,  26  Am.  Dec. 
52.     But  nothing  of  that  kind  can  be  pretended  here. 

It  has  been  contended,  however  very  strenuously,  that  as  Edward 
Schultz  proposed  Reuben  Yeakle  to  the  testator  as  the  man,  the 
acceptance  of  Reuben  Yeakle  of  the  bequest  recognized  Edward 
Schultz  as  his  attorney,  and  ratified  whatever  he  had  said  and  done, 
'i'hey  urge  the  maxim,  onmis  ratihabitio  retrotrahitur  et  mandate 
jequiparatur.  It  is  a  very  ingenious  contention,  but  unfortunately  for 
the  appellants,  there  is  nothing  in  the  evidence  upon  which  it  can  be 
built.  Edward  Schultz  did  not  undertake  for  Reuben  Yeakle;  he 
gave  the  testator  no  assurance  that  he  would  accept  and  carry  out 
his  intentions  when  made  known  to  him.  He  says:  "I  proposed 
Reuben  Yeakle,  so  far  as  I  remember,  for  the  man.  Frederick  then 
agreed  to  Reuben  Yeakle.  Reuben  Yeakle  was  considered  to  be  an 
honest  man,  and  it  was  for  this  reason  he  was  taken,  and  because  he 
was  acquainted  with  these  societies  mentioned."  "As  far  as  I  can  rec- 
ollect, I  said,  that  through  Yeakle  his  desire  could  be  carried  out  in 
the  distribution  of  his  property."  "The  object  was  to  carry  out  the  wish 
of  Frederick  in  that  way.  There  was  a  chance  to  carry  it  out  in  that 
way  if  the  legatee  was  willing,  and  Reuben  Yeakle  was  selected  be- 
cause it  was  thought  he  would  agree  to  it."  There  is  nothing  in  all 
this  which  indicates  any  promise  or  assurance  by  Edward  Schultz  to 
the  testator  that  Reuben  Yeakle  would  accept  the  bequest  in  trust  for 
the  charities.  There  was  the  mere  expression  of  an  opinion,  concur- 
red in  by  the  testator,  that  when  the  legatee  came  to  understand  the 
object  and  purpose  of  the  bequest  to  him,  as  an  honest  man  he  would 
carry  out  the  intention  of  the  testator. 

It  is  urged,  however,  that  the  whole  plan  is  nothing  but  a  contriv- 
ance to  evade  the  statute.  No  doubt  such  was  the  intention  of  the 
testator.  It  is  said  that  it  is  a  fraud  upon  the  law,  and  that  the 
bequest  ought  therefore  to  be  declared  void.  But  that  overlooks  the 
fact  that  the  absolute  property  in  the  subject  of  this  bequest  has  vested 


110  THE   NATURE   AND   REQUISITES   OP   TRUSTS.  (Ch.  1 

in  the  legatee,  and  that  he  is  entirely  innocent  of  any  complicity  in  the 
fraud  of  the  testator.  If  the  statute  is  practically  repealed  by  this 
construction  it  is  evident  that  it  must  be  for  the  Legislature  to  devise 
and  apply  a  remedy,  not  the  judiciary,  whose  province  is  not  jus  dare 
but  jus  diccre.     Decree  affirmed. 


SECTION   11.— REVOCABILITY  OF  TRUSTS. 


BILL  V.  CURETON. 

(In  Chancery,  before  the  Master  of  the  Rolls,  Sir  C.  C.  Pepys,  1835.    2  Mylne 

&  Keen,  503.) 

The  Master  of  the  Rolls. ^  The  bill  in  this  case  is  filed  by  the  par- 
ty who  made  a  voluntary  settlement  of  stock  in  1837,  the  trusts  ot 
which  I  shall  presently  state,  *  *  *  J^J^J  ^\^q  object  of  the  bill  is, 
to  obtain  the  trust  fund  from  the  trustee,  or,  in  other  words,  to  de- 
stroy the  voluntary  settlement.  By  the  settlement  of  1827,  the  stock 
was  transferred  to  trustees,  and  the  trusts  of  it  were  declared  to  be 
for  the  settlor  till  she  should  marry ;  and  upon  her  marriage,  for 
her  separate  use  for  life;  and  after  her  death,  for  her  children,  to  be 
equally  divided  among  them;  and  in  default  of  children,  for  her  next 
of  kin.     *     *     * 

That  a  voluntary  settlement,  where  the  trust  is  actually  created,  is 
binding  upon  the  settlor,  has  been  so  long,  and  is  so  fully  established, 
that  no  attempt  U  raise  the  question  would  probably  have  been  now 
made,  were  it  not  that  the  modern  cases  of  Wallwyn  v.  Coutts  [3  Mer. 
707]  and  Garrard  v.  Lauderdale  [3  Sim.  1]  have  been  supposed  to  be 
inconsistent  with  that  doctrine.     *     *     * 

The  grounds,  upon  which  the  Judges  who  decided  those  cases  pro- 
fessed to  proceed,  are  sufficient  to  prevent  their  decisions  from  being 
considered  as  authorities  against  the  well  established  doctrine.    *    *    * 

The  result  is,  that  the  author  of  this  settlement  is  bound  by  it,  and 
is  not  entitled  to  the  assistance  of  this  court  to  relieve  herself  from 
it.2 

1  Part  of  the  opinion  is  omitted. 

2  The  ereator  of  a  trust  created  after  the  analogy  of  a  feoffment  to  uses 
may  retain  the  power  to  revoke  the  trust.  Stone  v.  Haekett,  12  Gray  (Mass.) 
227,  232  (1858) ;  Van  Cott  v.  Prentice,  104  N.  Y.  45,  10  N.  E.  257  (1887). 


Sec.  1)        CLAIM  FUKELY  EQUITABLE  WUILE  RELATION  EXISTS.  Ill 

CHAPTER  II. 
THE  NATURE  OF  THE  CESTUI  QUE  TRUST'S   INTEREST. 


SECTION    1.— HIS    CLAIM    IS    PURELY    EQUITABLE,    SO 

LONG  AS  THE  RELATION  OF  TRUSTEE  AND 

CESTUI  QUE  TRUST  EXISTS. 


MEGOD'S  CASE. 

(Court  of  Queen's  Bench,  1585.     4  Leonard.  225.) 

A  enfeoffed  B  to  the  intent  that  B  should  convey  the  land  to  such  o  ^  ■  i/'o 
person  as  A  should  sell  it.  A  sold  it  to  C,  to  whom  B  refused  to  I  Tc  a, 
convey  the  land;  and  thereupon  he  brought  an  action  upon  the  case 
against  B.  And  by  Wray,  Chief  Justice,  and  Gawdy,  Justice,  here 
is  a  good  consideration,  for  here  is  a  trust,  and  that  which  is  a  good 
consideration  in  the  chancery  is  in  this  case  sufficient.  Shute,  Jus- 
tice, was  of  a  contrary  opinion.  And  afterwards  judgment  was  given 
for  the  plaintiff.^ 


MILLER  v.  LERCH. 


(Circuit  Court  of  United   States,  Eastern  District  of  Pennsylvania,  1848.     1 
Wall.  Jr.  210,  Fed.  Cas.  No.  9,579.) 

Peter  Miller  of  Easton,  devised  an  estate  of  about  !5300,000  to  two 
church  corporations  of  that  town,  upon  certain  trusts  which  his  heir 
at  law,  the  present  plaintiff,  contended  were  void,  but  which  the  cor- 
porations asserted  were  charitable  uses,  and  as  such  entitled  to  the 
protection  given  to  that  class  of  gifts.  A  large  part  of  the  devise  was 
real  estate,  which  the  present  action — one  of  ejectment — was  brought 
to  recover.  The  question  was.  whether  admitting  the  trust  to  be  void, 
the  plaintiff  had  such  a  legal  title  as  would  enable   him  to  recover 

1  Dicta  to  the  same  effect  are  found.  Butler  v.  Butler,  2  Sid.  21  (10.57) ; 
Jevon  V.  Bush,  1  Vern.  342  (1G85)  ;  Smith  v.  Jameson.  5  T.  R.  GOl.  G03  (1794). 

The  doctrine  of  the  principal  case  and  these  dicta  was  long  since  exploded. 
Forde  v.  Hoskins.  1  Rolle.  125  (1G15) ;  Tunier  v.  Sterling.  Freeman.  15  0^~1) : 
Barnadiston  v.  Soame,  G  How.  St.  Trials,  1063,  1008,  1107,  1108  (1G97) ;  Sturt 
\.  Mellish,  2  Atk.  610,  612  (1743);  Holland  v,  Holland,  4  Cli.  App.  Cas.  449, 
451  (1869). 


112  THE    NATURE    OF   THE    CESTUI   QUE   TKUST'S   INTEREST.       (Cll.  2 

here  in  ejectment.  In  other  words,  whether  the  legal  title  was  not  hi 
the  corporations,  and  whether  the  remedy  of  the  heir  was  not  by  bill 
in  equity  on  the  other  side  of  this  court.  Both  corporations  were 
created  under  an  act  of  Legislature,  which,  with  a  supplement,  em- 
powered them  to  "take,  receive  and  hold  all  and  all  manner  of  land, 
etc.  to  be  employed  and  disposed  of  according  to  the  objects,  arti- 
cles, and  conditions"  of  their  charters,  "provided  that  the  clear  yearly 
value  or  income  of  the  messuages,  etc."  did  not  exceed  $2,000. 

The  charters  gave  no  express  power  to  hold  lands  in  trust  for  pur- 
poses not  within  the  scope  of  their  objects. 

Mr.  J.  M.  Porter  and  Mr.  M.  H.  Jones  in  support  of  the  action. 
The  statutes  of  Mortmain  apply  to  Pennsylvania  corporations,  what- 
ever counsel  may  have  said  arguendo. 

Grier,  J.^  In  England,  under  the  statute  of  9  Geo.  II,  c.  36,  when 
lands  are  devised  to  a  charity,  the  trust  not  only  is  itself  void,  but  it 
vitiates  the  devise  of  the  legal  estate  on  which  it  was  engrafted.  And, 
therefore,  in  such  cases  the  heir  may  recover  asl  law,  except  where 
there  are  other  trusts  not  charitable,  which,  of  course,  would  entitle 
the  trustees  to  retain  the  estate,  and  oblige  the  heir  to  prosecute  his 
claim  in  equity.  But  this  statute,  which  is  usually,  though  rather  in- 
accurately, called  "The  statute  of  Mortmain"  was  never  adopted  in 
Pennsylvania,  nor  is  there  to  be  found  any  similar  provision  in  our 
own  legislation.  It  is,  however,  by  virtue  of  this  statute  alone,  and 
not  by  any  principle  of  the  common  law  or  provision  of  earlier  stat- 
utes, that  courts  of  law  in  England  treat  the  devise  or  gift  as  void, 
and  permit  the  heir  to  recover  in  them.     *     *     * 

I  fully  concur  with  those  who  refuse  to  admit  that  any  of  the  Eng- 
lish statutes  of  mortmain  have,  or  ever  had,  any  operation  in  Penn- 
sylvania.    *     *     * 

It  is  enough  for  the  purposes  of  the  present  case  that  these  statutes 
would  not  make  void  a  conveyance  in  mortmain,  but  only  expose  the 
land  to  forfeiture  by  the  entry  of  the  Commonwealth.     It  is  there- 
fore a  doctrine  well  settled  in  Pennsylvania,  that  a  corporation  has 
a  right  to  purchase,  hold  and  convey  lands  in  this  state  without  a  li- 
cense, until  some  act  is  done  by  the  government,  according  to  its  own 
laws,  to  vest  the  estate  in  itself.    The  fact,  therefore,  that  the  license 
contained  in  the  acts  of  incorporation  limits  the  income  of  these  cor- 
porations to  $2,000,  cannot  affect  the  present  question,  and  it  does 
not  avoid  the  devise  in  consequence  of  its  being  beyond  the  limits  of 
tlie  license.     The  legal  estate  passes  by  the  gift  or  devise  to  tlie;_^cor- 
poration,  and  is  defeasible  by  the  commonwealth  nlone/i';.'^';^^^^'^'^.^ 
The  remedy  therefore  of  the  plaintiff  should  be  by  ljJLll_in_:eciuitY,  ^ 
and  not  by  ejectment.     If,  on  the  hearing  of  the  case  in  equity,  the  -' 
court  should  be  of  opinion  that  the  trusts  limited  on  this  devise  are 

1  Fart  of  the  opinion  is  ouiittecL 


Sec.  1)      CLAIM    PURELY    EQUITABLE    WHILE    RELATION    EXISTS.  113 

such  as  a  chancellor  would  not  execute,  it  will  treat  the  devisees  as 
trustees  for  the  heirs  at  law  or  next  of  kin,  and  decree  a  conveyance 
of  the  legal  estate  to  them.     Judgment  accordingly. - 


CEARNES  V.  IRVING  and  STRATHERS. 
(Supreme  Court  of  Vermont,  18.39.     31  Vt.  604.) 

Account.  The  declaration  set  forth  that  the  plaintiff  and  the  de- 
fendants were  jointly  interested  in  certain  lands  to  the  amount  of 
twenty  thousand  acres  lying  in  McKeon  county,  Pennsylvania,  the  " 
legal  title  to  which  was  in  the  defendant  Irving,  but  who  held  it  in 
trust,  for  the  joint  benefit  of  the  plaintiff  and  the  defendants,  and 
that  the  plaintiff  and  the  defendants  were  jointly  interested  in  the 
profits  arising  from  the  sale  of  such  lands ;  that  on  or  about  the  1st 
day  of  February,  1855,  the  defendants  sold  said  land  for  the  joint 
profit  and  benefit  of  the  plaintiff  and  defendants,  for  $25,000  in  money 
and  $50,000  in  the  capital  stock  of  the  Rutland  and  Washington  Rail- 
road Company;  and  tliat  the  defendants  thereby  received  from  the 
profits  of  said  sale  $10,000  in  money  and  $20,000  worth  of  said  stock 
above  their  just  share  thereof,  etc.  etc.,  setting  forth  their  refusal  to 
account  therefor  to  the  plaintiff.  To  this  declaration  the  defendants 
demurred  generally.  The  demurrer  was  sustained  and  judgment  ren- 
dered for  the  defendants  to  which  the  plaintiff  excepted. 

RpDFiELD,  Ch.  J.     The  difficulty  is  that  the  plaintiff  shows  no  legal 
title  to  the  property  out  of  which  the  account  arises.     The  very  decla- 
ration^shows  that  his_onLy  claim  of  title  is  an  equitable  one.     And  in 
such  cases  we  regard  it  as  perfectly  well  settled  that  the  only  proper  i  ,■ 
remedy  is  in  a  court  of  equity,  where  all  mere  trusts  are  of  right  cog-  | 
nizable.     1  Story's  Eq.  Jur.  §§  453,  454. 

It  is  perfectly  well  settled  that  at  law  the  plaintiff  could  not  have 
recovered  his  proportion  of  the  land.     And  if  he  had  been  in  posses- 
sion,   the    defendant    Irving    might    have    recovered    the    whole    land  ~ 
against  the  plaintiff.     Beach  v.  Beach,  14  Vt.  28,  39  Am.  Dec.  204.--: 
And  we  are  tuiable   to  perceive  any  better  reason  why  the  plaintiff  _,: 
should  maintain  an  action  of  account   for  the  avails  of  the  sale  of 
the  land,  than  for  his  maintaining  ejectment  for  the  land. 

Judgment  affirmed.^  .^z._ 

f-'- 

2  A  cestui  cannot  maintain  detinue  asrainst  his  trustee  for  the  trust  re?. 
Redwood  v.  Kiddiclv,  4  Munf.  (Va.)  222  (1814). 

3  A  cestui  cannot  maintain  trover  against  his  trustee  for  a  conversion  of 
the  trust  res.  Jasper  v.  Hazen,  1  N.  D.  7-").  44  N.  W.  1018  (1800) ;  Howard  v. 
Menifee,  rj  Ark.  608  (1843) ;  I^uisville  Trust  Co.  v.  Stockton.  7.1  F.  R.  02  (1S!)0). 

The  trustee  can  maintain  an  action  of  trover  against  liis  cestui  for  the  con- 
version of  the  trust  res.  Guphill  v.  Isl)ell,  8  Rich.  Law  (S.  C.)  40:5  (18;J2). 
This,  of  course,  only  in  jurisdictions  not  allowing  equitable  pleas. 

Ken.Tb.— 8 


-^ 


114  THE   NATURE   OP  THE   CESTUI   QUE  TRUSt's  INTEREST.        (Cll.  2 

BEACH  V.  BEACH. 

(Supreme  Court  of  Vt'i-inoiit,  1842.     14  Vt.  28.  39  Am.  Dec.  204.) 

Ejectment  by  trustee  against  cestui  que  trust.  Plaintiff  proved  le- 
gal title  in  himself.  The  court  excluded  evidence  offered  to  show 
plaintiff  held  the  legal  title  in  trust  for  defendant. 

Williams,  Ch.  J.  This  is  an  action  of  ejectment  in  which  the  title 
is  to  be  decided,  the  judgment  in  which  is  conclusive  against  both  the 
plaintiff  and  defendant  and  their  heirs.  The  question  presented  is, 
whether,  at  law,  the  title  of  the  cestui  que  trust  shall  prevail  against 
that  of  the  trustee. 

In  the  action  of  ejectment,  in  England,  when  the  right  of  posses- 
sion, only,  is  determined,  the  plaintiff  must  be  vested  with  the  legal 
title  in  order  to  maintain  it,  and  no  equitable  title  will  answer.  The 
trustee  may  maintain  this  action  against  his  cestui  que  trust.  Read 
V.  Read,  8  Term,  118.  In  some  of  the  states,  where  they  have  no 
court  of  chancery,  a  cestui  que  trust  has  been  permitted  to  recover 
when  chancery  would  direct  a  conveyance.  But  if  it  were  so  in  this 
state,  it  would  not  help  the  defendant.  There  is  nothing  in  the  facts 
offered  to  be  proved,  which  warrants  the  inference  that  a  court  of 
chancery  would  direct  a  conveyance,  though  they  might  prevent  the 
plaintiff  from  disturbing  the  defendant's  possession,  unless  it  was  to 
accomplish  the  purposes  of  the  trust.  There  are  no  dicta  in  the  deci- 
sions of  any  of  the  states,  that  the  cestui  que  trust  can,  as  against  his 
trustee,  either  maintain  or  defend  an  action  of  ejectment. 

The  evidence  offered  did  not  present  a  case  where  the  jury  would 
have  been  directed  to  presume  a  conveyance.  The  plaintiff  was  under 
no  obligation  to  convey  to  the  defendant ;  but,  on  the  contrary,  the 
grantor  did  not  intend  that  the  legal  estate  should  vest  in  him,  and 
the  plaintiff  would  have  violated  the  trust  had  he  made  such  a  con- 
veyance. 

The  principle  is  not  different,  if  this  was  a  resulting  trust,  except 
that  such  trust  might  be  proved  by  parol.  If  a  trust  resulted  from 
the  fact  that  the  purchase  money  was  paid,  six-sevenths  by  the  father, 
and  one-seventh  by  the  defendant,  the  very  object  of  a  suit  might 
have  been  to  secure  the  portion  due  to  the  father.  The  trust,  if  any 
existed  in  this  case,  could  only  be  enforced  in  chancery.  The  judg- 
ment of  the  Countv  court  is  affirmed.^ 


"But  it  is  further  objected  that,  if  Brown  is  the  trustee,  the  action 
of  ejectment  will  not  lie,  because  a  cestui  que  trust  cannot  compel  an 
execution  of  the  trust  in  a  court  of  law. 

1  A  trustee  can  maintain  detinue  against  liis  cestui  for  the  trust  res.  Gunn, 
Trustee  v.  Barrow,  17  Ala.  743  (1850);  Newman  v.  Montgomery,  6  Miss.  742 
(1841) ;  except,  of  course,  in  jurisdictions  allowing  equitable  pleas. 


Sec.  1)       CLAIM    PURELY    KQUITABLE    WHILE    RELATION    EXISTS.  115 

"That  such  is  the  general  rule  at  this  day  cannot  be  denied,  not- 
withstanding what  was  ruled  in  Lade  v.  Hal  ford,  B.  N.  P.  110,  and 
in  Armstrong  v.  Pierce,  3  I'.urr.  lUUl,  and  a  few  other  early  cases, 
to  the  effect  that  a  cestui  que  trust,  in  ejectment,  could  not  be  non- 
suited by  a  term  outstanding  in  his  trustee,  and  that  a  trustee,  a  plain- 
tiff in  ejectment,  could  not  recover  against  his  own  cestui  que  trust. 

"The  rule  before  those  decisions  was,  and  since  then  has  been 
fully  re-established,  that  a  cestui  que  trust  cannot  recover  in  eject- 
ment against  his  trustee,  unless  a  surrender  to  him  of  the  legal  es- 
tate can  be  reasonably  presumed.  Doe  v.  Staple,  2  Term  R.  681 ;  Doe 
V.  Sybourn,  7  Term  R.  2;    Goodtitle  v.  Jones,  7  Term    R.  45. 

"The  cestui  que  trust  has  no  alternative  but  to  bring  his  action 
(against  a  stranger)  in  the  name  of  his  trustee.  And  the  trustee, 
as_  tenant  of  the  legal  estate,  may  recover  in  ejectment  from  his  own 
Qestui  que  trust,  who  has  no  defense  at  law,  but  is  only  entitled  to  sue 
out  an  injunction  in  equity.  Annesly  v.  Simeon,  4  ^ladd.  390;  Roe 
V.  Read,  8  Term  R.  122,  123 ;   Shine  and  Gough,  1  Ball  &  Beat.  445. 

"Yet  the  surrender  of  a  trust  or  the  conveyance  of  the  legal  estate 
may  be  presumed  from  circumstances,  and  that  seems  to  have  been 
the  ground  of  the  opinions  in  Lade  v.  Halford  and  Armstrong  v. 
Pierce  and  the  concurring  authorities." — Per  Haines,  J.,  Brown  v. 
Combs,  29  N.  J.  Law,  36,  39,  40  (ISGO).^ 


JACKSON  V.  vSTEA^ENS. 

(Snpromo  .Tndicial  Court  of  Massachusetts,  1871.     108  Mass.  04.1 

Contract  for  money  had  and  received. 

Plaiutiff  borrowed  $L500  of  defendant  and  with  it  paid  for  a 
wood-lot,  the  legal  title  to  which  he  caused  to  be  conveyed  to  the  de- 
fendant as  security  for  the  loan  until  the  same  should  be  repaid,  the 
plaintiff  agreeing  to  pay  defendant  on  the  loan  the  same  rate  of  in- 
terest the  defendant  was  then  receiving  on  his  money  which  was  in- 
vested in  government  bonds  and  also  to  pay  the  defendant  for  his 
time,  trouble  and  risk. 

Five  or  six  months  later  the  plaintiff  found  a  purchaser  for  $2500. 
The  defendant  conveyed  title  to  the  land  to  the  purchaser,  who  paid* 
the  plaintiff  $500  and  the  defendant  $2,000.  Several  days  later  the 
plaintiff  claimed  of  the  defendant  the  balance  of  the  $2,000  after  de- 
ducting the  $1,500  and  interest,  etc.  and  the  defendant  refused  to  pay 
the  balance  or  any  part  of  it.  The  plaintiff  then  began  this  action. 
Verdict  for  the  plaintiff'  and  defendant  alleged  exceptions. 

Wells,  J.     Under  the  instructions  given  to  the  jury,  their  verdict 

■^  To-day  in  most  jurisdictions  the  cestui  que  trust  is  not  reciuired  to  resort, 
to  i"<;uity  to  enjoin  the  action  hrought  against  him  by  his  trustee,  but  may 
set  up  an  e(iuitable  plea  in  tlie  law  action  itself. 


IIG  TIIK    NATUKE   OF   THE   CESTUI    QUE   TUUST's   INTEUEST.         (Ch.  3 

must  be  taken  to  have  established  three  facts:  1.  That  the  land  was 
purchased  by  or  for  the  plaintitT.  2.  That  the  purchase  money  paid 
for  it  was  the  money  of  the  plaintiff;  having  been  borrowed  by  him 
for  that  purpose  from  the  defendant.  3.  That  the  deed  was  taken  to 
the  defendant  as  security  for  that  loan.  These  facts  constitute  a  re- 
sulting trust. 

So  long  as  the  trust  remained  unexecuted,  it  could  be  enforced 
only  in  equity.  But  it  has  been  executed  by  a  sale  and  conveyance  of 
the  land.  The  debt  to  the  defendant  and  his  expenses  having  been 
satisfied  from  the  proceeds,  there  remains  a  balance  of  money  in  his 
hands  which  in  equity  and  good  conscience  belongs  to  the  plaintiff. 
This  he  may  recover  in  an  action  at  law  as  for  money  had  and  re- 
ceived. 


SECTION    2.— CESTUI   QUE    TRUST   IS    A   CLAIMANT 

AGAINST    THE    TRUSTEE    PERSONALLY, 

NOT  AGAINST   THE   TRUST   RES. 

L  His  Claim   is  ENFoucrcAiujc  Wherever  the  Trustee  may  be. 
Without  Respect  to  the  Situs  of  the  Trust  Res. 


MASSIE  V.  WATTS. 

(Supremo  Court  of  the  United  States.  1810.     G  Cranch.  148,  3  L.  Ed.  181.) 

^      trt.  This  w^as  an  appeal  from  the  decree  of  the  Circuit  Court  of  the 

r        United    States,    for    the    District   of    Kentucky,    in    a    suit    in    equity 

brought  by  Watts,  a  citizen  of  Virginia,  against  Massie,  a  citizen  of 

^  -  . .  c      Kentucky,  to  compel  the  latter  to  convey  to  the   former  1000  acres 

of  land  in  the  state  of  Ohio,  the  defendant  having  obtained  the  legal 

ic  ,^cc...-:,     ytitle  with   notice   of  the   plaintiff's   equitable    title.      Plaintiff   claimed 

as  assignee  of  one  Oneal. 

Marshall,  Ch.  J.,  delivered  the  opinion  of  the  court,  as  follows:  ^ 
This  suit  having  been  originally  instituted,  in  the  Court  of  Ken- 
tucky, for  the  purpose  of  obtaining  a  conveyance  for  lands  lying  in 
the  state  of  Ohio,  an  objection  was  made  by  the  plaintiff  in  error, 
who  was  the  defendant  below,  to  the  jurisdiction  of  the  court  by 
which  the  decree  was  rendered.     *     *     * 

Was  this  cause  to  be  considered  as  involving  a  naked  question  of 
title ;  was  it,  for  example,  a  contest  between  Watts  and  Powell,  the 
jurisdiction  of  the  Circuit  Court  of  Kentucky  would  not  be  sus- 
tained. But  where  the  question  changes  its  character,  where  the  de- 
fendant in  the  original  action  is  liable  to  the  plaintiff',  either  in  con- 

1  I'art  of  the  upiniuu  is  oniilted. 


Sec.  2)        CLAIM  AGAINST  TRL'STEE,  NOT  AGAINST  RES.  117 

sequence  of  contract,  or  as  trustee,  or  as  the  holder  of  a  legal  title 
acquired  by  any  species  of  mala  fides  practiced  on  the  plaintiff,  the 
principles  of  equity  give  a  court  jurisdiction  wherever  the  person  may 
be  found,  and  the  circumstance,  that  a  question  of  title  may  be  in- 
volved in  the  inquiry,  and  may  even  constitute  the  essential  point  on 
which  the  case  depends,  does  not  seem  sufficient  to  arrest  that  juris- 
diction. 

In  the  celebrated  case  of  Penn  v.  Lord  Baltimore  [1  Ves.  444], 
the  Chancellor  of  England  decreed  a  specific  performance  of  a  con- 
tract respecting  lands  lying  in  North  America.  The  objection  to  the 
jurisdiction  of  the  court,  in  that  case,  as  reported  by  Vesey,  was 
not  that  the  lands  lay  without  the  jurisdiction  of  the  court,  but  that, 
in  cases  relating  to  boundaries  between  provinces,  the  jurisdiction 
was  exclusively  in  the  king  and  council.  It  is  in  reference  to  this 
objection,  not  to  an  objection  that  the  lands  were  without  his  juris- 
diction, that  the  Chancellor  says,  "This  court,  therefore,  has  no 
original  jurisdiction  on  the  direct  question  of  the  original  right  of 
boundaries."  The  reason  why  it  had  no  original  jurisdiction  on 
this  direct  question  was,  that  the  decision  on  the  extent  of  those 
grants,  including  dominion  and  political  power,  as  well  as  proper- 
ty, was  exclusively  reserved  to  the  king  and  council. 

In  a  subsequent  part  of  the  opinion,  where  he  treats  of  the  objec- 
tion to  the  jurisdiction  of  the  court,  arising  from  its  inability  to  en- 
force its  decree  in  rem,  he  allows  no  weight  to  that  argument.  Tjie  ^, 
strict  primary  decree  of  a  court  of  equity  is,  he  says,  in.  personam,  ---- 
and  may  be  enforced  in  all  cases  where  the  person  is  within  its  juris- 
diction. In  confirmation  of  this  position  he  cites  the  practice  of  the 
courts  to  decree  respecting  lands  lying  in  Ireland  and  in  the  colonies, 
if  the  person,  against  whom  the  decree  was  prayed,  be  found  in 
England. 

In  the  case  of  Arglasse  v.  Muschamp,  1  \^ernon,  7-"^,  the  defendant, 
residing  in  England,  having  fraudulently  obtained  a  rent  charge  on 
lands  lying  in  Ireland,  a  bill  was  brought  in  England  to  set  it  aside. 
To  an  objection  made  to  the  jurisdiction  of  the  court  the  Chancellor 
replied,  "This  is  surely  only  a  jest  put  upon  the  jurisdiction  of  this 
court  by  the  common  lawyers;  for  when  you  go  about  to  bind  the 
land  and  grant  a  sequestration  to  execute  a  decree,  then  they  readily 
tell  you  that  the  authority  of  this  court  is  only  to  regulate  a  man's 
conscience,  and  ought  not  to  affect  the  estate,  but  that  this  court 
must  agere  in  personam  only;  and  when,  as  in  this  case,  you  prose- 
cute the  person  for  a  fraud,  they  tell  you  that  you  must  not  inter- 
meddle here,  because  the  fraud,  though  committed  here,  concerned 
lands  that  lie  in  Ireland,  which  makes  the  jurisdiction  local,  and  so 
wholly  elude  the  jurisdiction  of  this  court."  The  Chancellor,  in  that 
case,  sustained  his  jurisdiction  on  principle,  and  on  the  authority  of 
Archer  and  Preston,  in  which  case  a  contract  made  respecting  lands 
in  Ireland,  the  title  to  which  depended  on  the  act  of  settlement,  was 


^-L 


118  THE   NATURE   OF  THE   CESTUI   QUE   TKUSt's   INTEREST.         (Cll.  2 

enforced  in  England,  although  the  defendant  was  a  resident  of  Ire- 
land, and  had  only  made  a  casual  visit  to  England.  On  a  rehear- 
ing before  Lord  Keeper  North  this  decree  was  affirmed. 

In  the  case  of  The  Earl  of  Kildare  v.  Sir  I^Iorrice  Eustace  and 
Fitzgerald,  1  Vern.  419.  it  was  determined  that  if  the  trustee  live  in 
England,  the  Chancellor  may  enforce  the  trust,  although  the  lands 
lie  in  Ireland. 

In  the  case  of  Toller  v.  Carteret,  2  Vern.  494,  a  bill  was  sustained 
for  the  foreclosure  of  a  mortgage  of  lands  lying  out  of  the  jurisdic- 
tion of  the  court,  the  person  of  the  mortgagor  being  within  it. 

Subsequent  to  these  decisions  was  the  case  of  Penn  against  Lord 
Baltimore,  1  Ves.  444,  in  which  the  specific  performance  of  a  contract 
for  lands  lying  in  North  America  was  decreed  in  England. 

Upon  the  authority  of  these  cases,  and  of  others  which  are  to  be 
found  in  the  books,  as  well  as  upon  general  principles,  this  cour^js 
of  opinion  that,  in  a  case  of  fraud,  of  trust,  or  of  contract,  the  juris- 
diction of  a  court  of  chancery  is  sustainable  wherever  the  person  be 
found,  although  lands  not  within  the  jurisdiction  of  that  court  may 
be  afifected  by  the  decree. 

The  inquiry,  therefore,  will  be.  whether  this  be  an  unmixed  ques- 
tion of  title,  or  a  case  of  fraud,  trust  or  contract.^ 

2  The  court  held  (6  Cranch,  170.  3  L.  Ed.  189)  that  Massie  was  a  trustee 
for  plaintiff  as  assignee  of  Oueal  and  affirmed  the  decree  of  the  Circuit  Court. 

See  Arjilasse  v.  iMuschamp,  1  Vern.  7o  (1GS2) ;  The  Earl  of  Kildare  v.  Sir 
Morrice  Eustace,  1  Vern.  405,  419  (ICSO). 

In  some  jurisdiction.s,  where  a  trustee  refuses  or  neglects  to  transfer  to  the 
cestui  que  trust  pursuant  to  the  decree  of  the  court  land  held  in  trust,  the 
court  is  by  statute  empowered  to  apiwint  some  officer  to  make  the  transfer  m 
place  of  the  trustee.  If  the  land  is  out  of  the  jurisdiction  of  the  court,  a 
conveyance  by  such  an  officer  is  ineffectual  to  pass  the  title.  Burnley  v. 
►Stevenson,  24  Ohio  St.  474,  15  Am.  Rep.  G21  (187o);  Watkins  v.  Holmau,  16 
Pet.  25,  10  L.  Ed.  87:^  (1.842). 

"A  coxu-t  of  chancery,  acting  in  personam,  may  well  decree  the  conveyance 
of  land  in  anv  other  state,  and  may  enforce  their  decree  by  process  against 
the  defendant.  But  neither  the  decree  itself,  nor  any  conveyance  under  it, 
except  by  the  person  in  whom  the  title  is  vested,  can  operate  beyond  the 
jurisdiction  of  the  court."— Per  Justice  McLean,  Watkins  v.  Holman,  16  Pet. 
25,  57,  10  L.  Ed.  873.  .         .       u 

If  the  trust  res  is  within  the  jurisdiction  of  the  court,  a  transfer  by  such 
an  officer  pursuant  to  decree  of  the  court  is  valid  and  operative.  Felch  v. 
Hooper,  119  Mass.  52  (1875). 

Irrespective  of  statute,  a  court  of  equity  cannot  divest  a  person  of  title  to 
pr<i)erty  and  vest  it  in  some  one  else.  So  if  a  court  of  equity  removes  a 
trustee  "and  appoints  a  successor  the  only  way  by  which  the  new  trustee  can 
arquire  title  to  the  property  held  in  trust  is  by  a  conveyance  to  him  by  the 
old  trustee.  ,    .     ,  .     ^     ., 

Sp(^aking  of  the  jurisdiction  of  the  Chancellor,  Dean  Langdell  m  his  Biuity 
Pleading  (2d  Ed.  §  4.3)  says:  "Indeed,  as  a  rule,  the  Chancellor,  like  the 
ecclesiastical  courts,  had  no  jurisdiction  in  rem.  and  hence  could  only  en- 
force his  orders  or  decrees  by  lu-o'css  in  personam." 

In  note  4  to  the  same  section  he  add^<:  "This  power  of  creating  and  ex- 
tinguishing titles  the  Chancellor  never  had,  nor  claimed  to  have,  except  when 
it  was  given  by  statute.  It  is  true  that  he  frequently  directed  the  sale  of 
proiK'rty,  but  it  was  by  his  control  over  the  person  of  the  owner,  that  he 
made  the  sale  effective — i.  e.,  when  the  sale  had  been  made  he  compelled  the 


Sec.  2)  CLAIM  AGAINST  ^fRUSTEE,  NOT  AGAINST   RES.  119 

II.  CiiSTui  QUE  Trust  has  No  Rkmkdies,  Legal  or  Equitable,  Di- 
rectly Agaixst  A  Stranger. 

YEAR  BOOK  15  HEN.  VII,  fol.  12,  pi.  23. 

(In  tho  Coiniiioii  Pleas,  1479.)    ^ 

Note  by  the  whole  court.  The  feoffor  upon  confidence  cannot 
justify  in  his  own  name  the  taking  of  beasts  damage  feasant  in  lands 
which  his  feoffees  have  to  his  use,  nor  make  avowry  for  damage 
feasant  in  his  own  name,  but  in  the  name  of  his  feoffees ;  otherwise 
the  trespasser  would  be  twice  punished.  For  by  the  common  law  the 
feoffees  upon  confidence  have  an  action  against  the  feoffor  as  against 
other  strangers,  if  he  enters  upon  the  land  without  being  enfeoffed 
thereof.  For  by  the  common  law  the  feoffor  is  but  a  trespasser^  upon 
the  feoffee  by  his  occupancy.  And  consequently  the  feoffor  who  is  but 
a  trespasser  cannot  justify  the  taking  of  the  beast  of  a  stranger  dam- 
age feasant  upon  the  land,  as  he  cannot  have  the  damages  for  the 
trespass,  but  the  feoffee.  And  the  statute  of  R.  Ill  was  not  made 
for  advantage  of  the  feoffors,  but  for  the  profit  of  others  who  pur- 
chase from  them.  And  so  the  power  of  the  feoffor  is  not  enlarged 
by  that  statute  except  to  enter  and  forthwith  make  feoffment.  But 
the  judges  agreed  that  a  commoner  can  justify  the  taking  of  the 
beasts  of  a  stranger  damage  feasant  upon  the  land  by  reason  of  the 
legal  interest  he  has.  The  feoffor  cannot  have  an  action  against  a 
stranger  for  his  trespass  done  upon  the  land  because  he  is  but  a  tres- 
passer and  is  not  like  a  disseizor  for  the  feoffor  shall  not  be  called  a 
disseizor,  unless  he  occupy  against  the  will  of  the  feoffee. - 

owner  to  execnte  a  deed  pnrsnant  to  the  sale;  and  hence,  when  the  owner 
was  out  of  the  .inrisdic-tion.  or  labored  under  any  incapacity,  e.  g.,  that  of  in- 
fancy, the  chancellor  was  powerless.  He  could  not  even  make  the  appoint- 
ment of  a  new  trustee  effective,  except  by  compelling  the  old  trustee  or  his 
heir,  or  whoever  held  the  legal  title,  to  convoy  to  the  new  trustee.  ♦  *  * 
Indeed  it  mnv  be  stated  broadly  that  a  decree  in  chancery  has  not  in  itself 
(i.  e.,  independently  of  what  may  be  done  imder  it)  any  legal  operation  what- 
ever." 

See  Davant,  Trustee  v.  Guerard,  1  Spears  (S.  C.)  242  (1S4.S) :  also  language 
of  Field,  J.,  in  McCann  v.  Randall,  147  Mass.  SI,  08.  90,  17  N.  E.  75,  9  Am.  St. 
Rep.  66G  (ISSS).  ^  .       .      ,. 

Of  course  to-dav  in  many  .lurisdictions  the  apitointment  of  a  new  trustee  by 
a  court  having  jurisdiction  vests  the  title  to  the  trust  property  in  the  new 
trustee  without  further  action.  Yet  the  operation  of  the  court's  decree  is 
limited  to  the  trust  property  within  the  jurisdiction  of  the  court.  Contee  v. 
Lyons,  19  D.  C.  207  (1800). 

1  Y.  B.  4  Edw.  IV,  fol.  7,  pi.  9,  ace. 

2  At  the  present  day,  however,  any  person  in  possession,  and  therefore  a 
cestui  que  trust,  may 'maintain  trespass  (piare  clausum  fregit  for  a  wrongful 
entry.  Cox  v.  ^Yalker,  20  Me.  504  (1847) ;  Stearns  v.  Palmer,  10  Mete.  (Mass.) 
32  (1845). 


^ 


C-CJ!^ 


120  THE   NATURE   OF   THE   CESTUI   QUE   TRUSt's   INTEREST.         (Ch.  2 

DOE,  on  the  Demise  of  BRTSTOW,  v.  PEGGE. 
,    (3 0  (^j^^,^jty^i.<    (King's  Bemli,  1787.     1  T«'nn  Kop.  75S,  note  "a.") 

Ejectment  was  brought  for  a  moiety  of  the  manor  of  \Vink1)urne, 
&c.,  under  the  will  of  D.  Burnell,  as  one  of  his  co-heirs.  By  llie  tes- 
tator's marriage  settlement  in  1748  two  terms  in  trust  were  created: 
one  for  ninety-nine  years,  to  secure  an  annuity  of  i"-iOO.  to  his  mother ; 
the  other  for  one  thousand  years,  for  raising  £3,000.  for  his  wife,  in 
case  she  should  have  no  issue;  the  money  to  be  raised  out  of  the 
rents  and  profits,  or  by  sale  or  mortgage.  The  testator  died  in  1T74, 
having  no  issue,  and  devised  all  his  estates  to  trustees  and  their  heirs, 
to  the  use  of  them  and  their  heirs  in  trust,  after  the  death  of  his 
widow,  who  was  entitled  to  a  life-estate  under  the  marriage  settle- 
ment, for  such  person  or  persons  as  according  to  the  laws  of  descent 
should  be  his  heirs-at-law,  and  the  heirs  of  their  bodies,  to  take  as 
tenants  in  common,  &c.,  if  more  than  one.  The  defendant  filed  a 
])ill  in  chancery  in  177(5  against  all  persons  who  were  supposed  to 
have  any  claim  as  heirs-at-law,  and  against  the  trustees,  and  an  is- 
sue was  directed  under  which  he  was  found  heir-at-law  by  descent 
from  a  daughter  of  a  common  ancestor.  The  lessor  of  the  plaintiff 
also  had  filed  a  bill  in  1783.  his  claim  having  never  been  known  be- 
fore; but  upon  the  death  of  the  widow  he  brought  this  ejectment, 
and  proved  his  pedigree  from  another  daughter  of  the  same  com- 
mon ancestor.  At  the  trial  the  defendant  set  up  these  terms;  the  tes- 
tator's mother  being  still  living,  and  her  annuity  regularly  paid  by  the 
receiver  appointed  by  the  Court  of  Chancery;  the  i3,000.  having 
likewise  been  raised  for  his  widow,  and  the  term  assigned  in  mort- 
gage. 

Mr.  Justice  Heath,  who  tried  the  cause  at  the  last  assizes  at  Not- 
tingham, nonsuited  the  plaintiff,  with  leave  to  move  to  set  aside  the 
nonsuit,  and  enter  a  verdict  for  the  plaintiff,  if  the  court  should  be 
of  opinion  that  he  was  entitled  to  recover. 

Upon  the  motion,  it  was  stated  that  the  receiver  had  been  appointed 
by  the  Court  of  Chancery  during  the  life  of  the  widow,  and  for  such 
premises  only  as  her  life-estate  did  not  extend  to;  and  that  the  les- 
sor of  the  plaintiff  did  not  desire  to  disturb  the  terms,  but  was  ready 
to  partake  of  the  charge. 

Lord  M.\NSFiELD,  C.  J.  An  ejectment  is  a  fictitious  remedy  to  try 
the  title  to  the  possession  of  lands;  it  is  of  infinite  consequence  that 
it  should  be  adapted  to  attain  the  ends  of  justice,  and  not  entangled  in 
the  nets  of  form.  Great  difffculties  have  arisen  as  to  the  legal  form 
of  passing  land,  from  the  modes  of  conveyancing  in  England  since 
the  Statute  of  Uses.  Trusts  are  a  mode  of  conveyance  peculiar  to 
this    country.      In    all    other   countries,    the    person    entitled    has    the 


Sec.  2)  CLAIM   AGAINST   TKL'STEE,  NOT   AGAINST   RES.  121 

right  and  possession  in  himself.  But  in  England  estates  are  vested 
in  trustees,  on  whose  death  it  becomes  difficult  to  find  out  their  rep- 
resentatives; and  the  owner  cannot  get  a  complete  title.  If  it  were  =-., 
necessary  to  take  assignments  of  satisfied  terms,  terrible  inconven- 
iences would  ensue  from  the  representatives  of  the  trustees  not 
being  to  be  found.  Sir  E.  Northey's  clerk  was  trustee  of  near  half 
of  the  great  estates  in  the  kingdom;  on  his  death  it  was  not  known 
who  was  his  heir  or  representative.  So  that  where  a  trust  term  is 
a  mere  matter  of  form,  and  the  deeds  were  muniments  of  another's 
estate,  it  shall  not  be  set  up  against  the  real  owner.  It  is  therefore 
settled  that  a  satisfied  trust  shall  be  taken  to  be  a  trust  for  the  bene- 
fit of  the  heir-at-law.  A  trust  shall  never  be  set  up  against  him  for 
whom  the  trust  was  intended.  It  is  a  mere  form  of  conveyance. 
And  it  is  admitted  that,  where  the  term  is  in  trust  for  the  benefit 
of  the  lessor  of  the  plaintiflf,  the  defendant  shall  not  set  it  up  in  eject- 
ment as  a  bar  to  his  recovery. 

To  go  a  step  further:  third  persons  may  have  titles,  and  therefore 
the  court  say,  that  where  there  is  a  tenant  in  possession  under  a  lease, 
which  is  a  bar  to  the  recovery  of  the  lessor,  he  being  to  recover  by 
the  strength  of  his  own  title,  yet  to  prevent  this  from  being  turned 
improperly  against  the  person  entitled  to  the  inheritance,  whose  right 
is  not  disputed  by  the  tenant,  if  the  lessor  dispute  the  property  only 
against  another,  and  give  notice  to  the  tenant  that  he  does  not  mean 
to  disturb  his  tenancy,  the  court  will  never  suffer  the  tenant  to  set 
up  the  lease  as  a  bar  to  the  recovery. 

There  is  another  distinction  to  be  taken,  whether,  supposing  a  title 
superior  to  that  of  the  lessor  of  the  plaintiff  exists  in  a  third  person, 
who  might  recover  the  possession  against  him,  it  lies  in  the  mouth 
of  a  defendant  to  say  so  in  answer  to  an  ejectment  brought  against       q^   ^    y. 
himself  by  a  party  having  a  better  title  than  his  own.     I   found  this  f-    ^^    eJio*. 
point  settled  before  I  came  into  this  court,  that  the  court  never  suf-     ^ 
fers  a  mortgagor  to   set  up  the  title  of  a  third  person   against  his '  T     "'^  ."^ 
mortgagee.     For  he  made  the  mortgage,  and  it  does  not  lie  injiis  ^-   ' 

mouth  to  say  so,  though  such  third  person  might  have  a  right  to 
recover  possession.  Nor  shall  a  tenant  who  has  paid  rent,  and  acted  ^7  ^, 
as  such,  ever  set  up  a  superior  title  of  a  third  person  against  his  les-  ^  . 
sor,  in  bar  of  an  ejectment  brought  by  him;  for  the  tenant  derives 
his  title  from  him.  Laying  down  these  principles,  let  us  now  see  the 
application  of  them  to  this  case.  There  are  disputes  between  the 
plaintiff  and  the  defendant,  who  are  co-heirs;  as  such,  the  plaintiff" 
claims  half  of  the  property,  and  wishes  to  be  admitted  into  posses- 
sion of  the  premises  with  the  defendant.  He  proves  his  descent. 
Then  what  is  the  defence  set  up?  A  trust  for  a  third  person,  an 
annuity,  is  set  up.  The  plaintiff'  admits  the  charge,  and  says  that  he 
only  claims  subject  to  the  incumbrances.  The  trustees  do  not  as- 
sert their  title.     Then   shall  others  be  admitted  to  set  it  up?     It   is 


122  THE   NATURE   OF  THE   CESTUI   QUE  TRUSt's   INTEREST.        (Cll.  2 

clear  that  the  other  co-heirs  shall  not  he  permitted  to  dispute  the 
title  with  him.  He  and  the  defendant  have  an  equitahle  title  as 
tenants  in  common,  and  the  plaintiff  must  recover  a  moiety.^ 


DA\^IS  and  Others  v.  CHARLES  RIVER  BRANCH  RAILROAD 

COMPANY. 
(Suproino  .Tiuliclal  Court  of  Massachusetts,   18.">o.     11  Cusli.  r,m.) 

Hearing-  before  a  sheriff's  jury  empanelled  to  assess  damages  to  the 
i.^-^,  L  petitioners  by  the  location  of  the  respondent  railroad.  The  evidence 
showed  that  the  legal  title  to  the  land  taken  by  the  respondent  for  its 
road  was  in  one  John  Robinson  as  trustee  for  petitioners  and  not  in 
the  petitioners.  The  respondent  objected  that  it  did  not  appear  that 
the  title  to  the  premises  was  in  the  petitioners  and  requested  the 
sheriff  so  to  instruct  the  jury,  but  he  instructed  them  that  they  were 
to  render  their  verdict  for  the  damag-es  to  the  whole  land,  irrespective 
of  title ;  that  nothing  was  settled  in  this  hearing  as  to  the  title.  The 
'-(\(j^j.^-\,  respondent  excepted  to  this  ruling  and  in  the  court  of  common  pleas, 
where  the  verdict  for  the  petitioners  was  returned,  moved  to  set  it 
aside  for  alleged  errors  of  the  sheriff  in  point  of  law.  This  motion 
was   granted   and   petitioners   appealed. 

TiioM.\s,  J.-  *  *  "^^  3.  The  legal  title  to  the  estate  was  in 
John  Robinson,  the  trustee.  He  should  have  been  the  petitioner,  and 
would  have  recovered  the  damages,  to  be  disposed  of  under  his  trust. 
The  petitioners  have  not  a  title  upon  which  the  verdict  can  rest.^ 

1  I'he  othor  justices.  Willos,  Ashurst,  and  Duller,  concurrefl.  Tlio  concurring 
opinions  of  the  last  two  are  omitted. 

Lord  Mansfield  was  a  distinjjuished  equity  lawyer  before  he  became  Chief 
.Tustice  of  the  King's  Rench.  His  predilections  for  equity  were  such  as  readily 
to  lead  him  to  confuse  the  boundaries  of  law  and  (Hiuity.  It  remained  for 
his  successor.  Lord  Chief  Justice  Keuyon,  to  set  the  court  right  and  t)uco  more 
clearly  to  mark  the  boundary  betw'een  the  two.  Ilodsen  v.  Staple.  2  T.  K.  (184 
(1788) ;  Goodtitle  v.  Jones.  7  T.  R.  4.3  (1706)  ;  Roe  v.  Roade,  8  T.  R.  118  (1790). 
The  views  of  Lord  Kenyon  have  generally  prevailed. 

Speaking  of  Lord  Mansfield's  view.  Mr.  Lewin  quotes  the  language  used  by 
Lord  Redesdale  in  Shannon  v.  Bradstreet,  1  Sch.  &  Lef.  GG:  "Lord  :\Iansfield 
had  on  his  mind  prejudices  derived  from  his  familiarity  with  the  Scotch  law, 
where  law  and  equity  are  administered  in  the  same  court."  Lewin,  Trusts 
(8th  Ed.)  G77. 

In  i'eunsylvania  a  cestui  que  trust  may  maintain  an  action  of  ejectment 
against  a  person  other  than  his  trustee.  Kennedy  v.  Fury,  1  Dall.  (Pa.)  72, 
1  L.  Iikl.  42  (1783).  This  decision,  made  at  a  time  when  the  courts  of  Pennsyl- 
vania had  no  equity  jurisdiction,  has  continued  the  law  of  that  state  ever 
since.  The  trustee,  however,  may  also  maintain  an  ejectment  against  any  one 
but  his  cestui  que  trust  or  one  claiming  under  the  cestui  cpie  trust.  Brolaskey 
V.  McClain.  Gl  Pa.  14G,  1G4,  IG.j  (18G0). 

2  Part  of  the  opinion  is  omitted. 

3  Packard  v.  Old  Colony  Railroad  Co.,  IGS  Mass.  92,  40  N.  E.  433  (Ib'Jl)  ace. 


Sec.  2)  CLAIM   AGAINST  TKUSTEi:,  NOT  AGAINST   RES.  12''i 

In  re  URUGUAY  CENTRz\L  AND  HYGUERITAS  RAILWAY 
COMPANY  OF  MONTE  VIDEO. 

(irii^li  Court  of  JusticL',  ClKiiiccry  Division,  ISTlJ.     L.  It.   11  Cb.  Div.  'M2.) 

I'ctition. 

The  Uruguay  Central  and  Hygueritas  Railway  Company  of  Monte 
Video,  Limited  was  incorporated  in  1873.  One  of  its  objects  was 
to  enter  into  and  carry  into  effect  a  certain  trust  deed.  ilOO.  bonds 
to  the  aggregate  amount  of  £143,000.  were  issued  by  it  and  the  peti- 
tioner held  six  of  them.  Each  bond  contained  this  provision:  "The 
Uruguay  Central  and  Hyguerilas  Railway  Company  of  Monte  Video, 
Limited,  in  consideration  of  the  sum  of  £100.  owing  by  them  on  the 
cf>cMritv  of  this  bond,  hereby  covenant  with  the  said  George  Wilken- 
son  Drabble,  Lord  Henry  Gordon  Lennox,  and  Loftus  Fitzwygram, 
their  executors  and  administrators,  that  the  company  will,  by  the 
operation  of  such  cumulative  sinking  fund  as  mentioned  below,  pay 
to  the  bearer  hereof  the  sum  of  £100.  on  the  31st  day  of  December, 
1015,  *  *  *  and  interest  on  the  said  sum  of  £100.,  so  owing  as 
aforesaid,  at  the  rate  of  £7.  per  cent,  per  annum  from  the  30th  of  June, 
1874,  until  payment  of  the  said  principal  sum." 

The  company  made  default  in  payment  of  the  interest  on  their 
bond  debt;  and  a  sum  of  £93.  being  due  to  the  petitioner  for  ar- 
rears of  interest  on  his  six  bonds,  he,  after  having  served  the  usual 
statutory  demand,  presented  this  petition  to  wind  up  the  company, 
alleging  that  it  was  insolvent. 

Jessel,  M.  R.^  I  am  not  satisfied  that  the  plaintiff  is  a  creditor. 
*  *  *  In  the  absence  of  any  authority  I  am  not  prepared  to  hold 
that  this  form  of  document,  this  bond,  makes  the  person  who  holds 
the  bond,  or  who  holds  the  coupon,  a  creditor  either  at  law  or  in 
equity.     *     *     * 

It  is  a  very  peculiar  document  indeed,  but  that  it  was  not  intended 
to  make  the  company  liable  to  be  sued,  I  think  is  very  plain.     *     *     * 

I  cannot  imagine  that  this  document  can  give  either  the  bearer  of 
the  coupons  as  regards  interest,  or  the  bearer  of  the  bond  as  regards 
principal,  an  immediate  right  of  action  for  monc}-  lent  or  money  due. 
It  is  not  the  meaning  of  the  transaction.  The  whole  transaction 
means  this,  that  both  the  share  and  the  bond  are  issued  as  a  mode  of 
securing  to  the  person  advancing  the  money  for  making  the  line 
certain  benefits  and  he  takes  the  benefits  as  they  are  given  to  him. 
That  does  not  appear  to  me,  as  I  said  before,  to  create  any  direct  debt 
from  the  company.  In  fact  it  is  hardly  possible  it  can  be  so,  because 
the  company  is  liable  to  pay  the  trustees  under  the  deed,  and  they 
cannot  be  sued  twice  over.  Are  they  to  have  two  actions  brought, 
one  by  the  trustees,  and  the  other  by  the  holder  of  the  coupon ;    and 

1  Part  of  the  statoniont  of  the  cnso,  as  also  of  the  opiniou,  is  omittod. 


V2i  TDE   NATURE   OF   THE   CESTUI   QUE   TRUSt's   INTEREST.         (Ch.  3 

are  they  to  be  liable  to  every  person  who  cuts  a  coupon  off  a  bond 
to  an  action,  simply  because  he  is  the  holder  of  a  coupon?  It  does 
not  appear  to  me  that  it  was  the  intention  of  the  parties,  which,  after 
all,  is  the  g-overning:  rule  in  deciding-  questions  of  equitable  debt,  to 
create  a  debt  for  which  the  holder  of  the  coupon  could  sue  directly. 
I  think,  therefore,  that  the  holder  of  the  coupon,  who  claims  now  for 
interest  unpaid  is  not  a  creditor  either  at  law  or  in  equity  within  the 
meaning   of   the    Companies'   Acts.      Petition   dismissed   with   costs,^ 


KING  &  CO.  V.  HILL. 

(Pupromo  Cdurt  of  Alabiinia,  isr.2.     20  Ala.  133.) 

Error  to  the  Circuit  Court  of  Aladison. 

X^^^^..^^  An   execution    in    favor   of   the   plaintiffs   in    error   was    levied   on 

certain  slaves  as  the  property  of  James  W.  Hill,  the  defendant  in 
execution.  A  claim  was  interposed  by  the  said  James  W.  Hill  in  the 
name  of  his  infant  daughter,  Mary  Hill,  and  as  her  next  friend,  and 
bond  given  to  try  the  right  of  property  agreeably  to  the  statute.  On 
the  trial  of  the  claim  suit  the  claimant  introduced  two  deeds  as  evi- 
dence, each  of  which  conveyed  a  part  of  the  negroes  in  controversy 
to  the  said  James  W.  Hill,  as  trustee,  for  the  sole  and  separate  use 
and  benefit  of  his  said  infant  daughter,  Mary  Hill.  The  plaintiffs  ob- 
jected to  the  admission  of  these  deeds,  but  their  objection  was  over- 
ruled, and  they  excepted.  The  plaintiffs  asked  the  court  to  charge 
the  jury  "that  said  deeds,  if  valid,  conveyed  the  legal  title  to  the 
slaves  in  controversy  to  the  said  James  W.  Hill,  in  whose  name  alone 
the  claim  to  said  slaves  could  be  made  or  sustained ;  and  that  upon 
said  evidence  the  jury  could  not  find  the  issue  for  the  claimant." 
This  charge  was  refused  and  the   jury   told   "that  the   beneficial   in- 

'X^-'  ,         terest  being  in  Mary  Hill,  they  might  find  for  the  claimant,"  to  which 
plaintiffs  excepted. 

Dargan,  C.  J.^     The  sole  question  presented  by  the  bill  of  excep- 
tions is  this:    can  the  cestui  que  trust  of  personal  property  interpose 
"j^,  ,  a  claim  under  our  statute  to  try  the  right  of  property?     Lam.  fully 

satisfied  that  he  can  not.  A  court  of  law  can  look  alone  to  the  legal 
title.  It  cannot  take  cognizance  of  a  trust:  and  looking  alone  to  the 
legal  title  in  the  case  before  us,  we  find  it  in  James  W.  Hill — not  in 
the  claimant ;  therefore  her  claim  cannot  prevail.  *  *  *  Judg- 
ment reversed  and  cause  remanded. 

2  ^Yh(•l•e  the  hoUU-r  of  income  bonds  of  a  railroad  payable  to  bearer  secured 
by  a  trust  mortKage,  sued  the  railroad  to  recover  interest  without  joining  tlie 
trustee,  it  was  held  on  denuuTer  that  the  trustee  need  not  be  a  party  to  the 
suit.  Spies  v.  Chicago  &  Eastern  Illinois  Railroad  Co.,  24  Blatchf.  2S0,  30 
Fed.  397  (1887). 

8  Part  of  the  opinion  is  omitted. 


Sec.  2)  CLAIM  AGAINST   TIIUSTKE,  NOT   AGAINST   UES.  125 

NIMS,  Administrator,  v.  FORD  and  Trustee. 
(Supreme  Judicial  Court  of  Massathusotts,  1803.     l."50  Mass.  7,",,  S.")  N.  E.  100.) 

Lathkop,  J.  The  Berkshire  Life  Insurance  Company,  summoned 
as  trustee  of  the  principal  defendant,  in  1861,  in  consideration  of  a 
premium  of  forty  dollars  paid  to  it  by  Julia  O.  Ford,  and  of  an  an- 
nual premium  of  a  like  sum  to  be  paid  to  it  on  or  before  a  certain 
day  in  every  year  during  the  continuance  of  the  policy,  assured  the  ^ 
life  of  said  Julia,  in  the  amount  of  one  thousand  dollars,  for  the 
term  of  life,  "for  the  benefit  of  her  husband,"  who  is  the  principal 
defendant  in  this  case.  The  policy  contains  the  following  clause : 
"And  the  said  company  do  hereby  promise  and  agree  well  and  truly 
to  pay  or  cause  to  be  paid,  at  their  office,  the  said  sum  insured  to 
the  above  named  party  to  whose  benefit  this  insurance  shall  inure 
whenever  the  same  becomes  due,  his  executors,  administrators  or  as- 
signs. 

It  appears  from  the  answer  of  the  trustee  that  Mrs.  Ford  died  in 
1891,  and  that  the  company  has  in  its  possession  the  proceeds  of  the 
policv.  The  justice  of  the  Superior  Court  who  heard  the  case,  has 
found  that  Mrs.  Ford  paid  all  the  premiums  due  upon  the  policy  from 
her  separate  funds;  and  that  the  trustee  never  promised  to  pay  thej^^-*- 
principal  defendant  the  sum  due  or  to  become  due  under  the  policy, 
unless  such  promise  is  contained  in  the  policy  itself.  The  justice 
ordered  the  trustee  to  be  discharged,  and  the  case  is  before  us  on  an 
appeal  from  this  order. 

To  charge  the  insurance  company  as  a  trustee,  it  is  necessary  for 
the  plaintiff  to  show  that  the  principal  defendant  has  a  legal  cause 
of  action  against  it  growing  out  of  the  policy,  as  the  company  has  no 
personal  chattels  in  its  possession  belonging  to  the  principal  capable 
of  being  seized  and  sold  upon  execution.  Maine  Ins.  Co.  v.  Weeks,  7 
Mass.  438.     Field  v.  Crawford,  G  Gray,  116. 

A  merely  equitable  right  is  not  attachable  by  the  trustee  process. 
Massachusetts  National  Bank  v.  Bullock,   120  Mass.  86.     See,  also,  I 
Folsom  v..  Haskell,  11  Cush.  470. 

In  this  case  we  fail  to  find  any  privity  of  contract  between  the 
principal  defendant  and  the  insurance  company,  or  anything  which 
would  entitle  the  husband  to  maintain  an  action  at  law  against  the 
company  on  the  policy.  i\lrs.  Ford  and  the  company  were  the  con- 
tracting parties.  The  promise  to  pay  to  the  husband  was,  by  intend- 
ment of  law,  made  with  her  and  not  with  him.  His  interest  was  a 
purely  equitable  interest  which,  as  we  have  seen,  is  not  enough  to 
cause  the  trustee  to  be  charged.  Campbell  v.  New  England  Insurance 
Co.,  98   Mass.  381,  400.     North  America  Co.  v.  Wilson,   111   Mass. 


126  THE   NATUHE   OF   THE   CESTUI   QUE   TRUSt's   INTEREST.         (Ch.  2 

542.  Bailey  v.  New  England  Ins.  Co.,  114  Mass.  177,  10  Am.  Rep. 
329.  Flvnn  v.  Massachusetts  Benefit  Assotnation,  lo2  .Mass.  288, 
25  N.  E.'716.^ 


WESTERN    RAILROAD    COMl'ANY    v.    NOLAN    and    Others, 
Board  of  Assessors  of  the  City  of  Albany. 

(Coninii.ssion  of  Appeals  of  New  Yoi'k,  1872.    48  N.  Y.  513.) 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme  Court 
in  the  third  judicial  district,  affirming  a  judgment  dismissing  plain- 
tiff's complaint. 

The  action  was  brought  to  restrain  the  defendants,  as  assessors  of 
the  city  of  Albany,  from  assessing  the  sum  of  $500,000,  for  personal 
property,  against  Joseph  C.  Y.  Paige  and  Thomas  W.  Olcott,  trustees, 
for  the  purpose  of  taxation.  The  said  sum  was  held  by  Paige  and 
Olcott  as  trustees,  under  certain  tri  partite  contracts,  dated  in  1840, 
1841  and  1849,  between  the  city  of  Albany  of  the  first  part,  the  Al- 
bany and  West  Stockbridge  Railroad  Company,  (a  corporation  of 
v"  the  State  of  New  York),  of  the  second  part,  and  the  plaintiff  (a  cor- 
poration of  the  State  of  Massachusetts),  of  the  third  part.  Under 
these  contracts  the  city  of  Albany  issued  its  bonds  to  the  plaintiff  for 
$1,000,000.  payable  one-fourth  in  twenty-five  years,  one-half  in  thir- 
ty years,  and  the  remaining  one-fourth  in  thirty-five  years  from  June, 
1840,  with  interest  coupons  at  six  per  cent,  per  annum,  payable 
semi-annually;  the  plaintiff  agreeing  to  apply  one-tenth  of  the  pro- 
ceeds of  the  bonds  to  the  creation  of  a  sinking  fund,  to  be  held,  man- 
aged and  controlled  by  two  trustees,  one  of  whom  should  be  the 
chamberlain  for  the  time  being  of  the  city  of  Albany,  and  the  other 
to  be  nominated  by  the  plaintiff,  who  was  required  to  keep  the  fund 
invested,  together  with  an  additional  one  per  centum  on  the  amount 
of  the  said  bonds,  to  be  contributed  annually  to  the  said  fund  by 
the  plaintiff,  and  accumulate  the  said  fund  for  the  purpose  of  retir- 
ing the  said  bonds  at  maturity,  paying  the  surplus  to  the  said  plain- 
tiff'. The  residue  of  the  proceeds  of  the  said  bonds  the  plaintiff 
agreed  to  apply  to  the  construction  of  the  Albany  and  West  Stock- 
bridge  Railroad,  which  completed  a  through  line  of  railroad  communi- 
cation from  the  eastern  terminus  of  the  plaintiff's  railroad  in  Massa- 
chusetts to  the  city  of  Albany.  The  city  of  Albany  also  agreed  to 
subscribe  for  $1,000,000  in  the  stock  of  the  Albany  and  West  Stock- 
bridge  Railroad  Company,  to  be  held  by  said  city  in  consideration  of 
the  issue  of  said  city  bonds,  of  which  stock  the  plaintiff  was  to  become 

1  All  uiidisclnscd  priiK-ipa]  is  iicniiittcd  to  sn(>  in  ins  own  niinic  and  at  law 
to  enforce  a  contract  made  with  his  a},'<'nt.  Dean  Ames  thinks  that  the  un- 
(lisclosetl  princii>al  is  a  cestni  que  trust  and  the  a^ent  his  trust'ee,  and  that, 
therefore,  on  principle,  only  the  agent  should  be  ailowt'd  to  enforce  the  con- 
tract.   Cases  on  Trusts  (2d  Ed.)  p.  258,  note  1. 


Sec.  2)        CLAIM  AGAINST  TKL'STEE,  NOT  AGAINST  UES.  127 

the  owner  as  fast  as  it  retired  the  said  bonds ;  and  the  agreement 
appears  to  contemplate  that  the  plaintiff  would  become  the  lessee  of 
the  said  West  Stockbridgc  Railroad,  until  the  plaintiff  became  the 
owner  of  said  railroad  by  payment  of  the  said  city  bonds;  and  the 
plaintiff  also  agreed  to  pay  the  interest  on  the  bonds  as  it  became  due, 
as  a  rent  for  the  use  of  the  said  West  Stockbridgc  Railroad.  This 
agreement  was  carried  into  effect ;  the  said  bonds  were  issued,  and 
were  outstanding  at  the  commencement  of  the  action ;  and  the  said 
sinking  fund  amounted,  with  all  the  annual  payments  of  the  plaintiff 
thereto,  and  the  accumulations  thereon  to  $91(j,18y.41.  of  which  the 
said  Paige  and  Olcott  were  then  in  possession  and  the  actual  trustees. 
This  fund  was  invested  by  the  trustees  in  the  name  of  the  plaintiff  and 
the  city  of  Albany,  on  bond  and  mortgage  to  the  amount  $323,529, 
and  the  residue  in  the  stocks  of  the  State  and  general  government, 
and  in  the  bonds  of  the  city  and  county  of  Albany,  cash  on  hand,  and 
bonds  of  the  New  York  Central  Railroad  Company.  The  judge,  be- 
fore whom  the  action  was  tried  without  a,  jury,  found  that  the  de- 
fendants were  assessors  of  the  city  of  Albany ;  that,  as  such,  they 
had  determined  that  the  said  fimd  was  liable  to  taxation,  and  in  pur- 
suance of  their  determination,  had  entered  in  the  assessment  roll  of 
the  said  city  the  amount  of  $500,000  for  personal  property  in  the 
names  of  Thomas  W.  Olcott  and  Joseph  C.  Y.  Paige,  trustees  as 
aforesaid.  That  the  plaintiff  had  no  other  property  in  the  city  and 
county  of  Albany,  except  office  furniture  of  the  value  of  fifty  dollars. 
That  the  plaintiff  had,  in  due  time,  presented  to  the  defendants,  as  as- 
sessors, proof  of  the  said  facts,  and  requested  them  to  strike  the  said 
assessment  from  the  assessment  roll,  and  the  assessors  declined  to  ac- 
cede to  it,  but  determined  to  assess  the  said  fund  for  the  purposes 
of  taxation.  That  the  defendants  were  not  of  sufficient  pecuniary 
responsibility  to  respond  to  the  plaintiff  in  damages  if  it  should  be 
determined  that  the  said  fund  was  not  liable  to  taxation.  That  the 
plaintiff  is  a  foreign  corporation,  created  under  the  laws  of  the  State 
of  ■Massachusetts. 

The  plaintiff  requested  the  judge  to  decide  that  the  said  fund  was 
not  liable  to  be  assessed  for  the  purposes  of  taxation,  and  that  the 
plaintiff  was  entitled  to  an  injunction  restraining  the  defendants,  as 
assessors,  from  assessing  the  said  fund  for  taxation,  and  from  as- 
sessing the  said  trustees  for  the  said  fund;  that  the  said  judge  held, 
and  decided  that  the  plaintiff  was  not  entitled  to  the  relief  demanded, 
and  adjudged  that  the  complaint  be  dismissed  with  costs.  The  plain- 
tiff duly  excepted  to  such  refusal  to  find  as  requested,  and  to  the  de- 
cision so  made  by  the  said  judge. 

The  defendants  thereupon  entered  judgment,  dismissing  the  com- 
plaint, with  costs. 

Leonard.  C.  While  the  plaintiff  has  an  important  interest  in  the 
sinking  fund,  it  is  not  under  its  control  or  management,  nor  is  the 
title  to  it  vested  in  it.     It  has  such  an  interest  as  wduld  enable  it  to 


sfe 


128  THE   NATUUK   OF   THE   CESTUI   QUE   TUUSt's   INTEREST.         (Ch.  2 

compel  an  accountinc:  by  the  trustees,  or  maintain  an  action  ag-ainsf 
them  for  the  correction  of  an  abuse  of  the  fund.  The  plaintitif  has 
agreed  to  indemnify  the  city  of  Albany  from  injury  by  losses  to  the 
fund,  and  is  thereby  indirectly  bound  to  maintain  it,  or  to  pay  the 
bonds,  amounting  to  $1,000,000  with  the  interest;  and  the  plaintiff 
is  also  entitled  to  the  amount  of  the  trust  funds  remainin<j^,  after  the 
said  bonds,  with  the  interest,  have  been  satisfied  or  paid.  Perhaps 
it  might  maintain  an  action  against  third  parties  for  the  protection 
or  defense  of  the  fund,  in  case  the  trustee  should,  on  request,  refuse 
to  institute  the  proper  action  or  proceedings  for  that  i)urpose.  The 
plaintiff  should  be  regarded  as  a  cestui  que  trust,  and  interested  in 
the  said  fund.  The  trustees  are  the  parties  in  whom  the  fund  is 
vested,  and  whose  duty  it  is  to  maintain  and  defend  it  against  wrong- 
ful attack  or  injury  tending  to  impair  its  safety  or  amount.  ThcJitle. 
to  the  fund  being  in  them,  neither  the  cestuis  que  trust  nor  the  bene- 
ficiaries can  maintain  an  action  in  relation  to  it,  as  against  third  par- 
'ties,"except  in  case  the  trustees  refuse  to  perform  their  duty  in  that 
respect,  and  then  the  trustees  should  be  brought  before  the  court  as 
parties  defendant.  There  is  nothing  in  the  case  proving  any  refusal 
o~reluctance  on  the  part  of  the  trustees  to  perform  any  duty  which 
they  ought  to  assume  in  vindicating  the  fund  from  illegal  assessment 
or  taxation.  The  plaintiff  has  not,  for  these  reasons,  made  any  case 
entitling  it  to  bring  this  action. 


:\rORGAN   v.    KANSAS   PACIFIC   RAILWAY   COMPANY   and 

Others. 

(Circuit  Court.  S.  D.  of  New  York,  18S2.     1.5  Fed.  55.) 

r.ill  in  equity  by  the  holder  of  certain  coupons  attached  to  income 

bonds   of   the   Kansas   Pacific  Railway   Company,    for   an   accounting 

and  a  decree  of  payment.     The  plaintiff  sues  "on  behalf  of  himself 

and  all  other  holders  of  income  bonds  who  may  show  themselves  en- 

^    ^      titled  to  relief,  and  who  shall  in  due  time  come  in  and  ask  relief  by 

wy  Jt^y^^^-    and  contribute  to  the  expenses  of  this  suit."    I^ewis,  the  trustee  of  the 

J  jLiy<j^      bonds,  was  named  as  defendant  to  the  bill,  but  was  not  served  with 

process,  and  did  not  appear  in  the  cause.     The  bill  averred  a  request 

upon  Lewis   to   bring  this   suit,  but  no  proof  of  the  averment   was 

offered  at  the  hearing. 

Blatciiford,  Justice.  Benjamin  W.  Lewis  is  named  in  the  bill  as 
a  defendant.  Process  of  subptcna  is  prayed  against  him  in  the  bill. 
The  bill  avers  that  "during  the  several  years  last  past  the  defendant 
Benjamin  W.  Lewis  has  duly  become  sole  trustee  under  said  income 
mortgage,"  and  "has  been  requested  to  bring  an  action  for  the  ac- 
coimting  and  injunction  asked  by  the  plaintiff  herein,  but  he  has  neg- 
lected and   failed  to  bring  such  action  or  comply  with  said  request, 


CAyf  ylAid^'O^'^ 


''  yUii' 


Sec.  2)  CLAIM   AGAINST   TUUSTEE,  NOT   AGAINST    UKS.  120 

and  he  is.  therefore,  made  a  defen(huU  in  this  action."  The  an.svver 
of  the  Kansas  Pacific  Raihvay  Company  admits  that  "duriiif^  several 
years  last  past  Benjamin  W.  Lewis  has  been  the  sole  trustee  vnider  said 
income  mortg'age,  but  it  has  no  knowledge  or  information  sufficient 
to  form  a  belief  as  to  wdietiier  or  not  he  has  been  requested  by  com- 
plainant to  bring  an  action  for  the  accounting  and  injunction  asked 
by  complainant  herein."  This  raises  an  issue  as  to  the  request  to 
Lewis. 

Lewis,  being  the  trustee  under  the  mortgage,  is  the  proper  party 
plaintiff  in  a  suit  of  this  character,  and  some  good  reason  must  ap- 
pear of  record  why  he  does  not  sue  as  plaintiff;  and,  in  such  case,  he 
must  be  made  defendant.  The  bill  recognizes  this  necessity,  and 
hence  makes  the  averments  referred  to.  The  averment  as  to  the  re- 
quest to  Lewis  is  controverted,  but  it  is  not  proved  on  the  i)art  of 
the  plaintiff.  It  would  be  necessary  to  prove  it,  even  though  Lewis 
was  served  with  process  or  appeared.  It  is  not  alleged  in  the  bill  that 
he  is  beyond  the  jurisdiction  of  the  court,  nor  is  that  fact  proved.  The 
bill,  it  is  true,  describes  Lewis  as  "of  the  city  of  St.  Louis,"  and  as 
"a  citizen  of  the  State  of  Missouri."  But  that  is  not  sufficient.  And 
even  if  it  were  showm  that  Lewis  was  not  and  could  not  be  found 
within  this  district,  to  be  served  with  process,  there  is  nothing  in  sec- 
tion 737  of  the  Revised  Statutes  (U.  S.  Comp.  St.  190L  p.  587), 
which  makes  it  proper  for  the  court  to  adjudicate  the  suit  without  the 
presence  of  Lewis,  because  the  issue  as  to  whether  Lewis  refused  to 
sue.  as  stated,  is  one  on  which  Lewis  must  be  heard,  and  under  section 
737  he  cannot  be  concluded  or  prejudiced  by  a  decree  rendered  in  his 
absence.  The  statute  cannot  be  construed  so  as  to  convert  real  parties 
and  necessary  parties  into  no  parties  at  all.  There  is,  in  this  case  no 
suit  to  adjudicate  unless  Lewis  be  plaintiff,  or  unless,  if  he  be  de- 
fendant, he  be  served  or  appear.  Rule  47  in  equity  is  to  the  same 
purport.  It  makes  it  discretionary  with  the  court  to  proceed  as  does 
section  737. 

For  the  foregoing  reason,  and  without  deciding  expressly  or  im- 
pliedly any  other  question  raised  in  the  case,  the  only  disposition  that 
can  now  be  made  of  the  suit  is  to  dismnss  the  bill,  with  costs,  but 
without  prejudice  to  any  other  suit  in  any  court. ^ 

1  See  Ilnrlow  v.  Mister,  04  Miss.  2.").  S  Soutli.  ^CA  (1S80^ :  narvey  v.  Mo- 
Donnell.  113  N.  Y.  .52(1,  21  N.  E.  GO.")  (1880):  Ci'iieral  Electric  Co.  v.  La  Grand 
Electric  Co.,  87  Fed.  590,  31  C.  C.  A.  118  (1S9S). 

Ken.Tb.— 9 


vo^  x-i  t  -^-7 


a£^ 


130  THE   NATURE   OF   THE   CESTUI   QUE   TRUSt's   INTEREST.         (Cll.  )i 

HORSLEY  V.  FAWCETT.  ^o^  ^^-  ^''^'-  ^ 

(In  Chancery,  bofore  the  Miistcr  of  the  Rolls,  Lord  Langdale.  1849.     11  Boa- 
van,   ")().").) 

In  1796,  a  benefit  society,  called  the  "Helpmates  Society"  was  es- 
tablished, for  securing  annuities  to  aged  persons,  which  was  duly 
enrolled  under  St.  33  Geo.  Ill,  c.  54. 

For  the  purpose  of  dissolving  said  society  under  said  act,  a  deed 
of  arrangement,  dated  October  6,  1823,  was  made  between  the  an- 
nuitants of  the  first  part,  the  next  of  kin  and  personal  representatives 
of  the  deceased  annuitants  of  the  second  part,  the  subscribers  of  the 
society  of  the  third  part,  and  the  plaintiff,  Richard  Horsley,  and  six 
other  persons  (since  deceased),  of  the  fourth  part,  whereby  all  the 
funds  of  the  said  society  were  vested  in  the  plaintiff  and  the  other 
parties  thereto  of  the  fourth  part,  upon  trust,  after  payment  of  costs, 
to  divide  the  funds,  as  far  as  the  same  should  extend,  between  the 
parties  of  the  first,  second  and  third  parts  respectively. 

Upon  the  execution  of  this  deed,  it  was  arranged,  that  all  monies 
received  by  the  trustees  should,  for  safe  custody,  be  deposited  in  the 
hands  of  a  banker. 

Accordingly,  another  indenture,  dated  July  23,  1825,  was  made 
between  Richard  Horsley  and  the  other  trustees  of  the  deed  of  Octo- 
ber 6,  1823,  of  the  first  part,  John  Dixon,  banker,  of  the  second  part, 
the  defendants,  Fawcett  and  Williams,  of  the  third  part,  and  James 
Samuel  Dane,  an  accountant,  of  the  fourth  part,  whereby  it  was  ar- 
ranged, that  all  the-  money  received  by  the  trustees  should,  when  re- 
ceived, be  paid  into  the  hands  of  Messrs.  Dixon,  the  bankers;  that 
Dane,  the  accountant,  should  make  a  report  of  the  persons  entitled  to 
receive  any  part  of  the  funds;  and  that  Dixon  &  Co.  shouldL_pay 
all  cheques  to  such  persons,  which  were  to  be  drawn  by  Fawcett  and" 
Williams,  and  countersigned  by  Ernst  and  Reeve  (two  of  the  parties 
thereto  of  the  first  part).  The  trustees  paid  the  funds  amounting  to' 
£19,219.  to  Dixon  &  Co.  and  they  were  placed  to  the  credit  of  an 
account  entitled  "the  Helpmates  Society  Account."  All  but  £700. 
was  paid  out  upon  cheques  drawn  as  required  by  the  deed  of  1825. 

October  14,  1828,  Fawcett  and  Williams,  together  with  Ernst  and 
'Reeve,  invested  this  £?00.  in  their  joint  names  in  the  purchase  of 
£809.  5s.  consols  and  by  investment  of  dividends,  the  sum  increased 
to  £908.  9s.  (>d.  After  the  death  of  Reeve  and  Ernst  and  on  July  18, 
1845,  Fawcett  and  Williams  sold  the  stock  and  applied  the  proceeds, 
£895.  lis.  lid.  to  their  own  use. 

This  bill  was  filed  June  2,  1846,  by  Richard  Horsley,  the  sole  sur- 
viving trustee  against  Fawcett,  Williams  and  the  representatives  of 
Reeve,  Ernst  and  Dixon,  praying  an  account  of  all  the  funds  re- 
ceived by  Dixon  under  the  deed  of  July,  1825,  and  that  Fawcett  and 


Sec.  2)  CLAIM    AGAINST   TltrSTEE,  NOT   AOAINST    KHS.  131 

Williams  might  be  declared  liable  for  all  sums  paid  out  upon  cheques 
improperly  drawn  and  signed,  and  particularly  the  sum  of  £908.  9s. 
6d.  o  per  cents,  and  all  sums  improperly  possessed,  and  that  they  might 
make  good  the  same. 

Fawcett,  by  his  answer,  took  an  objection,  for  want  of  parties,  in 
the  following  form :  "And  this  defendant  says,  that  it  appears  by  the 
complainant's  amended  bill  of  complaint,  that  all  the  members  of  the 
'Helpmates  Society,'  who  were  members  at  the  date  and  execution 
of  the  said  indentures,  and  the  legal  personal  representatives  of  such 
of  them  as  have  since  died,  are  interested  in  the  matters  in  question 
in  this  suit,  and  necessary  parties  thereto.  And  this  defendant  is  ad- 
vised and  submits,  that  the  said  amended  bill  of  complaint  is  defective 
for  want  of  parties  aforesaid." 

The  Master  of  tiik  Rolls.  If  the  object  of  this  bill  were  to  re- 
cover the  fund,  with  a  view  to  its  administration  by  the  Court,  the 
parties  beneficially  interested  must  be  represented.  But  it  merely 
seeks  to  recover  the  trust  monies,  so  as  to  enable  the  trustee  here- 
after to  distribute  them,  conformably  with  the  trusts  declared.  It 
is^therefore,  unnecessary  to  bring  before  the  court  the  parties  bene- 
ficially interested. 

Overrule  the  objection.* 

1  The  doctrine  of  this  ciise  gonorally  prevails.  Bills  to  recover  the  trust 
property  from  a  person  other  than  the  cestui  que  trust:  Clark  v.  Fosdick. 
lis  N.  Y.  7.  22  N.  E.  1111,  G  L.  R.  A.  132.  IG  Am.  St.  Kep.  733  (ISSO)  ;  Stevens 
V.  Bosch.  54  N.  J.  Eq.  59,  33  Atl.  293  (1S9.5).  Bills  to  foreclose:  Holmes  v. 
Boyd,  90  Ind.  332  (1883) :  Kiuker  v.  Bissell,  90  lud.  375  (1SS3) ;  Shaw  v.  Nor- 
foliv  County  Rd.  Co.,  5  Gray  (Mass.)  1G2  (1855).  Bills  to  redeem:  Boyden  v. 
Partridge,  2  Gray  (Mass.)  190  (1854).  Bills  for  specific  performance:  Moalo 
v.  Buchanan,  11  Gill  &  J.  (Md.)  314  (1840);  Potts  v.  Thames  Co..  15  ,Tur.  l<i<)4 
(ia51).  Bills  to  set  aside  a  fraudulent  deed  of  land:  Lewis  v.  Whitten,  112 
Mo.  318,  20  S.  W.  617  (1892).  Bills  to  restrain  a  tort  to  realty:  Smith  v. 
City  of  Portland  (C.  C.)  30  Fed.  Rep.  734  (1887).  Bills  to  establish  title  un- 
der the  burnt  records  act  of  Illinois:  Hardins  v.  Fuller,  141  111.  308,  319,  30 
N.  E.  1053  (1892).  Bills  to  partition  real  estate:  Smith  v.  Gaines,  38  N.  J. 
Eq.  65,  69  (1884). 

A  contrary  doctrine  prevails  in  some  jurisdictions.  Bills  to  recover  a  trust 
fund:  Stillwell  v.  McNeely,  2  N.  J.  Eq.  305  (1S40) ;  Elmer  v.  Loper,  25  X.  J. 
Vjq.  475  (1875).  Bills  to  foreclose:  Chapman  v.  Hunt,  14  N.  J.  Eq.  149  (ISGl) ; 
Jewell  v.  West  Oranse,  3G  N.  J.  Eq.  403  (1883).  If  the  cestuis  are  so  numerous 
as^.to  make  tlieir  joiuder  inconvenient  they  may  be  dispensed  with.  Will  ink 
"v.  Morris  Canal  &  Banking  Co.,  4  N.  J.  Eq.  377  (1843);  Williamson  and  Upton 
v.  New  Jersey  Southern  Railroad  Co.,  25  N.  J.  Eq.  13  (1874). 

"\>Uien  cestui  que  trust  need  not  be  .ioiued  as  defendant  with  trustee. 

Bills  to  deprive  trustee  of  trust  res:  Vetterlein  v.  Barnes,  124  U.  S.  1G9, 
8  Sup.  Ct.  441,  31  L.  Ed.  40O  (1888)  ;  K(>ri-is<)n  v.  Stewart,  93  U.  S.  155,  23  L. 
Ed.  843  (187G)  ;  Wakeman  v.  Grover.  4  l»aige  (N.  Y.)  23  (1832).  Contra,  Arm- 
strong V.  Armstrong,  19  N.  J.  Eq.  357,  3G0  (18GS) ;  Brokaw  v.  Brokaw,  41  N. 
J.  Eq.  215,  4  Atl.  GG  (ISSG).  Bills  for  spccitic  performance:  Van  Doren  v. 
Robinson,  IG  N.  J.  Eq.  256  (18G3).  Bills  to  redeem:  Sweet  v.  Parker,  22  N. 
J.  Eq.  4.53  (1871).  Contra.  Woodward  v.  Wood,  19  Alabama,  213  (1851).  Bills 
to  dissolve  a  partnership:  Taylor  v.  Rockefeller,  Fed.  Cas.  No.  13,802,  IS  A. 
L.  R.  (N.  S.)  298  (1879). 

\  In  a  bill  to  foreclose  a  mortgage  upon  the  trust  res,  it  is  thought  that  the 
cestuis  should  be  joined  with  the  trustee,  so  as  to  raise  the  fund  to  prevent 


.'.a  I 


lo2  Tin:    NATUUE   OF   THE   CESTUI   QUE   TUUST's   INTEREST.         (Ch.  2 

ZIMMERMAN  and  Others,  as  Executors,  v.  KIXKI.E, 
Impleaded,  etc. 

(Court  of  ApixMils  of  Now  York,  1888.     108  N.  Y.  282,  1.1  N.  E.  407.) 

Appeal  from  a  final  jndqincnt  of  the  General  Term  of  the  Supreme 
Court,  in  the  first  judicial  department,  in  favor  of  the  plaintiffs,  enter- 
ed upon  an  order  made  February  16,  1887,  which  reversed  an  order 
of  the  Special  Term,  sustaining-  a  demurrer  by  defendant  Kinkle  to 
the  complaint,  and  overruled  said  demurrer. 
f'^-Jin  This  action  was  in  equity,  for  the  cancellation  of  a  bond  and  the 
restoration  of  $5,000  belonging  to  the  estate  represented  by  the  plain- 
tiffs as  executors,  and  which  money  they  had  placed  in  the  hands  of 
Kinkle,  one  of  the  defendants,  to  indemnify  him  against  liability 
as  surety  upon  the  bond. 

The  complaint  alleged  in  substance  that  the  testator,  William  Zim- 
merman, in  his  lifetime,  Emil  Dieckerhoff,  Louis  Raffioer  and  Adolph 
Erbsloeh  were  co-partners  in  business,  and  that  after  the  death  of 
Zimmerman  a  settlement  of  accounts  relating  to  firm  transactions, 
was  had  between  the  plaintiffs  on  one  side  and  the  defendant  Emil, 
Louis  and  Adolph  on  the  other,  in  which  the  latter  wrongfully  exact- 
ed of  the  plaintiffs,  and  they,  with  the  defendant  George  Kinkle, 
executed  a  bond  in  the  penal  sum  of  $5,000  to  the  said  Emil,  Louis 
and  Adolph,  upon  condition  that  if  the  obligors  should  "keep  in- 
violate and  confidential  all  the  business  transactions  and  dealings  of 
the  late  co-partnership  firm  of  Dieckerhoff,  Raffloer  &  Co.  and  of 
Laron  &  Co.,  the  predecessors  of  said  first  named  firm,  which  may 
ever  at  any  time,  in  any  wise  have  come,  or  which  may  hereafter  come 
to  their  knowledge,  and  shall  also  preserve  and  keep  inviolate  and 
confidential  the  contents  of  correspondence  and  other  writing  relat- 
ing thereto,  and  shall  not  disclose  or  divulge  the  same,  then  the  obli- 
gation to  be  void,  otherwise  to  remain  in  full  force  and  virtue"; 
that  Kinkle  signed  as  surety  and,  as  such,  demanded  and  received 
from  the  plaintiffs  the  sum  of  $5,000,  to  be  repaid  with  interest  so 
soon  as  his  obligation  upon  the  bond  ceased ;  that  the  bond  "was  giv- 
en for  no  consideration,  but  was  wrongfully  extorted  from  the  plain- 
tiffs and  was  signed,  executed  and  delivered  for  an  illegal  and  im- 
moral purpose,  against  public  policy  and  for  the  purpose  of  interfer- 
ing with  the  administration  of  public  justice,  and  to  suppress  evi- 
dence of  illegal,  wrongful  and  unlawful  acts  on  the  part  of  the  ob- 
ligees therein  named,  all  of  which  said  defendant,  George  Kinkle, 
well  knew" ;  that  the  money  so  demanded  by  Kinkle  was  trust-money 
and  was  "received  by  him  from  the  plaintiffs  as  the  executors  and 
trustees  of  William  Zimmerman,  deceased." 

foreclosure.  Francis  v.  Harrison.  L.  R.  4.3  Ch.  Div.  183  (1889).  Contra,  Van 
Vechten  v.  Terry,  2  .Johns.  Ch.  (N.  Y.)  107  (ISIG) ;  Xew  Jersey  Franldinite  Co. 
V.  .Vnios,  12  N.  .7.  E(i.  ."07  (IS.-;)). 


Sec.  2)  CLAIM   AGAINST  TRUSTKR,  NOT   AGAINST   KES.  133 

The  demurrer  stated  several  grounds. 

The  Special  Term  sustained  the  demurrer  upon  the  grounds  (1) 
that  the  consideration  of  the  bond  was  illegal  and  criminal,  and  so 
neither  party  could  have  relief;  (2)  that  although  an  action  might  lie 
against  Kinkle  to  recover  the  money  received  by  him,  with  knowl- 
edge that  it  belonged  to  the  estate,  it  could  not  be  joined  with  an  ac- 
tion against  the  obligees  of  the  bond.  The  General  Term  reversed 
the  order  of  the  Special  Term,  with  leave  to  answer  over.  The  de- 
fendant did  not  accept  that  permission,  and  upon  proof  thereof  final 
judgment  was  entered. 

DanforTii,  J.     There  is  nothing  upon  the  face  of  the  bond  to  im- 
peach  its  validity,   and   whatever   might  be   the   real   transaction   be- 
tween the  parties  it  is  to  be  made  out  by  allegations  and  evidence. 
The  terms  of  the  complaint  show   clearly  enough  that  the   bond   is 
founded   on   a  consideration   condemned  both  by  morals   and   public 
policy,  and,  therefore,  the  defendant  claims  that  a  party  to  it  cannot 
be  relieved,  but  must  be  left  to  the  consequences  of  the   forbidden      ^ 
transaction.     How  this  might  be  if  the  action  were  by  the  plaintiffs 
in  their  individual  capacity,  it  is  not  necessary  to  inquire.    They  come     --.-- 
into  court  as  executors  of  a  deceased  person  and  in  a  representative 
character.     If  in  delicto  at  all,  they  are  not  in  pari  delicto,  and  the 
enforcement  of  the  rule  would  secure  to  the  defendant  the  enjoyment 
of  money  which  never  belonged  to  his  principals,  and  which  did  be- 
long to  the  estate  in  the  honest  management  of  wdiich  the  plaintiffs 
also  owed  a  duty  to  the  testator's  beneficiaries.     Nor  should  the  de- 
fendant be  heard  to  complain  of  this.     He  admits  by  his  demurrer 
that  the  money  was  trust  money  and  that  he   received  it   from  the 
plaintiffs   as   executors   and   trustees.     They   had   no   power   to   part 
with  it  for  the  purpose  for  which  he  received  it,  and  in  seeking  to 
recover  it  back  they  are  merely  performing  a  duty  in  the  execution  of 
wHTch  a  court  of  equity  may  properly  assist.     The  principle  which 
justifies  this  conclusion,  was  applied  in  the  recent  case  of  Wetmore 
V.  Porter   (92  N.  Y.  76),  wdiere  it  was  held,  that  whoever  receives 
property  knowing  it  to  be  the  subject  of  a  trust  and  to  have  been 
transferred  by  the  trustee  in  violation  of  his  duty  or  powder,  takes  it 
subject  to  the  right,  not  only  of  the  cestui  que  trust,  but  also  of  the  ,.^ 
trustee  to  reclaim  possession  or  recover  for  its  conversion.     That  case    Z. 
also  holds  that  in   such  an   action   it  is   not   necessary  to  bring   the      -^     ^ 
plaintiffs    before    the    court    in    their    individual    character,    and    this 
answers  the  objection  that  the  omission  to  do  so  in  this  action  makes 
a  defect  of   parties.     In   another  aspect  also  the   complaint  is   suffi- 
cient.    It  charges   that  the   bond   "was   given    for   no   consideration, 
but   was   extorted   from    the   plaintiffs,"    and   that   the   circumstances 
were  also  known  to  the  defendant.     The  defendant  argues  that  the    n ^^^ 
averment  as  to  the  bond  being  wrongfully  extorted  from  the  plain- 
tiffs, is  a  mere  conclusion,  and  that  no  facts  are  stated.     Against  a  de- 
murrer  the   general    statement    is   sufficient.      It   defines   an   unlawful 


134  THE   NATURE   OF   THE   CESTUI   QUE   TRUSt's   INTEREST.         (Ch.  2 

mctliod  or  process  by  which  an  object  is  accomplished  or  end  attained, 
and  if  not  sufficiently  definite  or  conclusive,  the  defendant's  remedy 
_  was  by  motion.  (Marie  v.  Garrison,  83  N.  Y.  14.) 
•^-  Nor  does  the  complaint  improperly  join  two  causes  of  action.  It 
narrates  a  single  transaction  in  which  all  parties  were  concerned,  and 
while  more  than  one  cause  may  appear  entitling  the  plaintiffs  to  the 
relief  sought,  they  only  represent  acts  by  the  commission  of  which 
the  right  to  relief  is  made  out.  That  some  might  have  been  omitted 
and  a  cause  of  action  remain,  should  not  prejudice  the  plaintiffs. 
Tlie^  object  of  the  suit  is  single — to  have  the  money  restored  to  the 
funds  from  which  it  was  taken.  The  right  to  that  relief  would  follow 
from  the  cancellation  of  the  bond,  but  the  presence  of  Kinkle  as  well 
as  that  of  the  obligees  was  necessary  to  prevent  further  litigation  and 
have  the  various  interests  of  the  parties  determined  in  one  action. 
This  was  the  conclusion  of  the  General  Term. 

The  judgment  appealed  from  should  therefore  be  affirmed. 
Judgment  affirmed. 


III.  A  Cestui  que  Trust  of  an  Oblioation  Cannot  Discharge  the 

Obligor. 

COTTON  V.  COTTON  and  ASHTON. 

(Before  Lord  Coniinissioners  Trevor.  Rawlinson,  aud  Ilutohins.  1693.     2  Ver- 
non, 290.) 

The  plaintiff  being  executor  and  residuary  legatee  to  her  former 
husband,  lends  f  100.  to  A.  and  B.  and  as  security  took  a  bond  from 
A.  and  B.  in  the  name  of  J.  S.  in  trust  for  herself,  and  afterwards 
married  B.  one  of  the  obligors,  who  died.  The  bill  was  to  compel 
payment  of  £100. 

It  was  insisted  by  defendant's  counsel,  that  the  bond  being  a  trust 
for  the  wife,  and  she  marrying  one  of  the  obligors,  the  marriage  was 
a  release  of  the  debt,  and  it  was  extinguished,  as  it  could  have  been 
in  case  the  bond  had  been  in  her  own  name.     Sed  non  allocatur. 


.^>  ^ 


OFFLY  V.  WARDE. 

(Kinji's  I'.eucli,  JOGS.     1  Levinz,  235.) 

Debt  on  a  single  bill  made  to  A.  to  the  use  of  him  and  B.  The 
defendant  pleads  a  release  made  to  him  by  B.  On  which  the  plaintiff 
demurs;  and  without  difficulty,  it  was  adjudged  for  the  plaintiff",  for 
B.  is  no  party  to  the  deed  and,  therefore,  can  neither  sue  nor  release 


Sec.  2)  CLAIM   AGAINST   TRUSTEH,  NOT   AGAINST   RES,  135 

it;  but  it  is  an  equitable  trust  for  him,  and  suable  in  the  chancery,  if 
A.  will  not  let  him  have  part  of  the  money;  and  the  book  of  Edw. 
IV  cited,  that  he  might  release  in  such  a  case,  denied  to  be  law.^ 


■71 


THOMASSEN,  Guardian,   v.  VAN  WYNGAARDEN  and  Others. 
(Suprt'iuo  Court  of  Iowa,  1880.     65  Iowa,  GST,  22  N.  W.  U21.) 

Action  in  cciuity  to  foreclose  two  mortgages.  From  the  decree  the 
plaintiff  appeals. 

Siciv\iCRS,  J.-     The  defendant  Wyngaarden  executed  the  following 
promissory  note: 
"$1,400.  Pella,  Iowa,  November  11,  1878. 

"Six   years   after    date,    for   value   received,    I   promise    to   pay    to 
Jantie  Van  Wyngaarden,  in  trust  for  Gertruda  Geradina  Thomassen, 
Jana   Thomassen,   Wilhemina  Thomassen,   Johannes   Thomassen   and    ^    q  t 
Jan  Thomassen,  heirs  of  Maarke  Thomassen,  deceased,  or  order  the  ^ 

sum  of  fourteen  hundred  dollars,  payable  at  the  First  National  Bank, 
Pella,  Iowa,  with  interest  payable  annually,  at  the  rate  of  six  per 
cent,  per  annum,  from  date  until  paid.  Interest  when  due  to  become 
principal  and  draw  ten  per  cent,  and  an  attorney  fee  of  ten  per  cent 
if  suit  is  commenced  on  this  note." 

The  mortgages  were  given  to  Jantie  Van  Wyngaarden  in  trust  for 
the  beneficiaries  named  in  the  note  and  it  is  provided  in  the  mort- 
gages that  the  mortgagor  "shall  pay  or  cause  to  be  paid  to  the  said 
Jantie  Van  Wyngaarden,  in  trust  for  the  above  named  parties,  her 
executors  and  administrators,  or  assigns,  the  sum  of  $1400  witli  in- 
terest thereon  from  date,  according  to  the  tenor  and  efifect  of  the 
promissory  note  above  stated,"  then  the  mortgage  to  be  void. 

In  March,  1881  Jantie  Van  Wyngaarden  died  and  in  June  follow- 
ing a  portion  of  the  land  described  in  the  mortgage  was  conveyed 
to  J.  S.  Polk,  one  of  the  defendants,  and  who  bound  himself  to  pay 
the  amount  of  the  mortgage,  with  interest  from  January  1,  18S2. 
It  was  pleaded  as  a  defence  that  the  interest  up  to  that  time  had  been 


^   ^ 


1  A  roloaso  of  an  ohlijratioii  by  a  cestui  que  trust  haviuii  the  entire  beneficial 
interest  would  l)e  effectual  in  ocjuity.  ^McRridw  v.  Wrii,'lit,  4(j  Mich.  20"),  9 
N".  ^Y.  27.J  (1S81)  ;  Oalt  v.  Smith,  ]4r>  Pa.  107,  22  Atl.  Tlo  (1891).  So  in  equity 
payment  by  the  ohlijior  to  such  a  cestui  will  bar  an  action  by  the  trustee. 
Pratt  V.  Dow,  ^^(^  Me.  81  (1S(;8)  ;  Smith  v.  Brown,  5  Rich.  Eq.  (S.  C.)  291  (1853). 

A  release  of  an  obligation  by  the  trustee  in  wrong  of  the  cestui  que  trust 
was  a  good  defense  at  common  law.  E<iuit.v  would  set  aside  such  a  release 
where  the  obligor  had  acted  in  bad  faith.  Chicago  &  G.  W.  R.  Land  Co.  v. 
Peck.  112  111.  408.  44.3  (188.5);  Insurance  Co.  v.  Hutchinson,  21  N.  J.  Bi].  107 
(1870).  In  some  jurisdictions  courts  of  law  treat  svich  a  rehnise  as  a  nullity. 
O'Reilly  v.  Miller,  52  Mo.  210  (187;5).  In  other  jurisdic-tions  common-law 
courts  will  strike  out  the  defense  of  such  a  release  on  motion.  Green  v. 
Beatty.  1  N.  J.  Law.  142  (1792). 

2  Part  of  the  opinion  is  omitted. 


136  THE   NATUKK   OF   TIIK   CESTUI   QUE   TRUSt's   INTEREST.         (Ch.  2 

paid.  The  mortgages  provided  that,  in  the  event  the  interest  was 
not  paid  as  therein  provided,  then  the  whole  debt  became  due.  The 
beneficiaries  are  grandchildren  of  Jantie  Van  Wyngaarden,  and  are 
minors,  and  the  plaintiff  is  their  guardian.  This  suit  was  commenced 
in  March,  1882  and  the  court  found  that  there  was  nothing  due  at 
that  time.     *     *     * 

I.  Counsel  for  the  a])])cllant  insist  that  there  is  no  sufficient  evi- 
dence showing  that  the  interest  due  on  the  note  up  to  January,  1883, 
has  been  paid.     *     *     * 

The  defendants  introduced  in  evidence  a  receipt  in  the  following 
words,  and  proved  that  it  was  executed  by  the  trustee : 

'Telia,  Iowa,  December  22,  1880. 

"Received  of  Jan  Van  Wyngaarden  the  sum  of  one  hundred  and 
forty-seven  dollars,  as  interest  on  a  certain  note,  secured  by  mort- 
gage, to  me  given  by  the  said  Jan  Van  Wyngaarden  in  trust  (for 
the  beneficiaries  above  named) ;  this  being  in  full  up  to  January  1, 
1882.  "Jantie  Van  Wyngaarden." 

Counsel  for  the  plaintiflf  insist  that  the  receipt  is  signed  by  the 
trustee  as  an  individual,  and  therefore  the  beneficiaries  are  not  bound 
thereby.  But  we  think  it  fairly  appears  from  the  receipt  itself  that 
the  money  was  received  by  the  trustee  as  such.  It  was  paid  to  and 
received  by  the  person  to  whom  it  was  payable  by  the  terms  of  the 
note,  and  she  will  be  charged  as  having  received  it  in  her  capacity  as 
trustee. 

It  is  further  insisted  that  at  the  time  the  receipt  purports  to  have 
been  executed  but  one  year's  interest,  or  $84,  was  due,  and  that  the 
trustee  w^as  not  authorized  to  receive  the  interest  not  due,  and  that 
the  beneficiaries  are  not  bound  by  said  receipt  to  any  greater  extent 
than  the  interest  then  due.  For  the  reasons  hereafter  stated,  we  do 
not  think  this  position  is  tenable. 

Counsel  further  insist  that  the  amount  received.  $147.  was  less 
than  the  amount  of  interest  due  up  to  January,  1882  and  therefore 
that  the  court  erred  in  finding  that  the  interest  up  to  that  time  had 
been  paid.  It  however  is  expressly  stated  in  the  receipt  that  the 
amount  then  paid  was  in  full  of  such  interest,  and  it  is  immaterial 
whether  such  amount  was  then  paid  or  had  been  received  at  some 
prior  time.  In  the  absence  of  fraud  or  collusion,  for  the  reasons 
hereafter  stated,  we  think  the  trustee,  as  the  legal  owner  of  the  note, 
could  receive  the  interest  due  or  to  become  due  at  such  times  and  in 
such  amounts  as  she  saw  proper;  subject,  however,  to  be  held  ac- 
countable at  the  instance  of  the  beneficiaries  for  the  faithful  per- 
formance of  the  trust. 

II.  Counsel  for  the  appellant  insist  that  the  trust  created  by  the 
execution  of  the  notes  and  mortgages  is  a  simple  or  dry  trust,  and 
that  the  trustee  in  such  a  trust  does  not  have  the  power  to  manage  and 
dispose  of  the  trust  estate,  and  therefore  the  beneficiaries  are  not 
bound  by  what  the  trustee  did.     A  simple  or  dry  trust  is  defined  to 


Sec.  2)  CLAIM   AGAINST  TRUSTEE,  NOT   AGAINST   UES.  137 

be  one  "where  property  is  vested  in  one  person  in  trust  for  another, 
and  the  nature  of  the  trust,  not  l^eing  prescribed  by  the  donor,  is  left 
to  the  construction  of  the  law."  I'crry,  Trusts,  §  520.  "There  can  be 
but  few  of  these  dry  trusts ;  for,  when  there  is  no  control,  and  no  duty 
to  be  performed  by  the  trustee,  it  becomes  a  simple  use,  which  the  stat- 
ute of  uses  executes  in  the  cestui  que  trust,  and  he  thus  unites  both 
the  legal  and  beneficial  estate  in  himself." 

The  trust  under  consideration  is  materially  different;  for  it  is  so 
far  declared  as  to  cast  on  the  trustee  a  duty  for  the  performance  of 
which  she  will  be  held  accountable.  It  is  made  the  duty  of  the  trustee 
to  receive  and  collect  the  interest  and  the  principal  when  it  becomes 
due.  The  legal  title  to  the  note  and  mortgages  is  vested  in  the  trus- 
tee. _  It  is  her  duty  to  preserve  and  protect  the  interest  of  the  bene- 
ficiaries. r>ut,  in  the  absence  of  fraud  or  collusion,  the  trustee  could 
satisfy  the  mortgages  and  acknowledge  satisfaction  of  the  debt, 
which  would  be  binding  on  the  beneficiaries.  It  is  said  that  anyone 
dealing  with  the  trustee  must  see  that  money  paid  in  the  discharge 
of  the  trust  was  properly  appropriated ;  but  we  do  not  think  this  is 
so,  for  the  simple  reason  that  the  trustee  was  the  legal  owner  of 
the  note,  and  authorized  to  receive  payment  of  both  the  principal  and 
interest.  An  administrator  in  one  sense  is  a  trustee  for  the  estate  he 
represents ;  and  yet  he  is  the  legal  owner  of  the  notes  ^nd  mort- 
gages belonging  thereto.  A  person  making  him  a  payment  is  not 
bound  to  see  that  the  money  is  properly  accounted  for. 

The  rule,  it  seems  to  us,  should  be  the  same  in  the  case  under  con- 
sideration. 

The  decree  of  the  Circuit  Court  must  be  affirmed. 


MAYER  V.  MORDECAI  and  Others. 
(Supreme  Court  of  South  Carolina.  1SG9.     1  S.  C.  [N.  S.]  383,  7  Am.  Rop.  20.) 

Before  Carroll,  Ch.,  at  Charleston,  March,  1808. 

Under  proceedings  in  the  Court  of  Equity  for  Charleston  District, 
joneof  the  Masters,  by  deed,  dated  29th  May,  18G0,  assigned  to  the 
defendant,  Benjamin  Mordecai,  five  bonds,  secured  by  mortgages  of 
real  estate,  amounting,  in  the  aggregate,  to  $8000,  and  upwards,  and 
about  $4000  in  cash,  to  be  held  by  him  "in  trust,  to  invest  the  cash 
aforesaid,  and  the  proceeds  of  the  bonds  aforesaid,  as  soon  as  re- 
ceived, in  such  manner  as  the  said  lienjamin  Mordecai  may  think 
proper,  on  consultation  with  the  said  Maurice  Mayer,  and  Rachel.. 
M.,  his  wife,  and  the  same  being  so  invested,  then  in  trust  to  per-  " 
mit  the  said  Maurice  Mayer  and  Rachel  M.,  his  wife,  to  receive 
the  interest  and  income  of  the  said  settled  property"  for  their  use 
"during  their  joint  lives,"  with  limitations  over. 

Thomas  J.  Kerr,  Moses  Goldsmith  and  Alonzo  J.  White,  respective- 


138  THE   NATURE   OF  THE   CESTUI   QUE   TUUSt's   INTEREST.         (Ch.  2 

ly,  were  the  parties  oblii^cd.  in  three  of  the  five  bonds,  and  these  three 
bonds,  amounting  in  the  aggregate  to  aliout  $.")000  were  paid  to  Morde- 
cai,  in  the  years  1862  and  18G3,  in  Confederate  Treasury  notes ;  and 
he  invested  the  proceeds  in  notes  and  bonds  of  the  Confederate  States 
of  America. 

In  the  course  of  the  year  1860,  Mayer  and  wife  removed  their 
residence  to  the  city  of  New  York,  and  there  remained  until  the  close 
of  the  recent  war  between  the  United  States  and  the  late  Confederate 
vStates  of  America.  After  June,  1861,  and  while  the  war  continued, 
all  communication  between  the  belligerent  sections  was  cut  off.  Diu"- 
ing  this  period  the  defendant  Mordecai  collected  three  of  the  bonds 
held  by  him  as  trustee,  amounting  in  the  aggregate  to  more  than 
$5000,  and  accepted  payment  in  Confederate  Treasury  notes.  The 
great  bulk  of  the  moneys  so  collected  he  received  during  the  year 
1863,  and  $1940. ."iS  of  that  amount  as  late  as  the  10th  of  November 
of  that  year.  The  proceeds  of  the  bonds  so  received  by  him  he  in- 
vested in  the  public  securities  of  the  late  Confederate  States,  $3600 
on  the  23d  July,  1863,  in  their  7.30  per  cent.  Treasury  Notes,  and 
$2000  on  the  ioth  November,  1863,  in  their  8  per  cent.  Treasury 
Bonds. 

The  Cliancellor  held  that  the  defendant  Mordecai  had  incurred  no 
personal  liability  either  by  the  collection  of  the  bonds  or  by  the  in- 
vestment of  their  proceeds  in  the  public  securities  of  the  late  Con- 
federate States  of  America. 

The  plaintiff  appealed. 

Moses,  C.  J.^  When  a  trustee  is  not  limited  or  directed  by  the 
instrument  under  which  he  acts,  and  is  left  to  the  discretion  of.  his 
own  judgment,  our  cases  hold  that  his  discretion  must  be  exercised 
with  the  same  diligence  and  care  that  a  prudent  man  would  bestow  on 
his  own  concerns.     *     *     * 

What  will  constitute  the  care,  and  diligence  thus  exacted  will  de- 
pend on  the  attendant  circumstances.  If  the  act,  in  itself,  was  an  in- 
cautious and  imprudent  one,  it  will  not  be  sustained ;  and  no  aid  de- 
rived from  the  fact  that  the  trustee  was  countenanced  in  it  by  the 
participation  of  prudent  men  will  give  it  sanction  or  support. 
*     *     * 

The  collection  of  White's  bond  stands  on  a  different  footing  from 
that  of  Kerr's  and  Goldsmith's.  Payment  of  it  was  tendered  to  him 
in  Confederate  Treasury  notes  and  we  are  to  consider  whether  the 
acceptance  of  it,  in  such  currency,  under  the  circumstances,  is  con- 
sistent with  the  faithful  discharge  of  the  duty  which  he  owed  to  those 
whose  interests  were  confided  to  him  in  a  fiduciary  capacity,  at  a  time 
when  they  were  entirely  incapable  of  contributing,  by  their  presence  or 
their  counsel,  to  the  protection  of  them.  The  bond  was  secured  by  a 
mortgage  of  real  estate.     According  to  the  testimony,  in  IMay,  1862, 

1  I'art  ol"  the  opinion  is  uinitti'd. 


Sec.  2)  CLAIM   AGAINST   TIIUSTKE,  NOT   AGAINST   RES.  130 

when  the  first  payment  in  Confederate  currency  was  accepted,  such 
property  was  worth,  in  that  currency,  about  fifty  per  cent,  more 
than  it  would  have  brought  in  gold  before  the  war;  and,  in  May, 
18(J3,  when  the  second  payment  was  made,  it  was  worth  three  times 
as  much.  It  was  in  evidence  that,  "no  prudent  person  would  have 
sold  property  in  1863  for  the  same  amount,  in  dollars  and  cents,  that 
he  would  have  sold  it  for  before  the  war,  and  receive  payment  in 
Confederate  money,  or  bonds  representing  on  their  face  that  amount." 
With  knowledge  of  all  this,  he  accepted,  in  a  currency  which  was 
not  a  legal  tender,  even  under  the  Constitution  or  laws  of  the  Con- 
federate States,  payment  of  the  bond  at  the  amount  due  on  its  face. 
To  say  nothing  of  the  want  of  all  obligation  to  receive  such  currency, 
can  this  act  be  recognized  as  one  of  ordinary  prudence?  The  bond 
and  mortgage,  as  a  marketable  article,  were  worth  much  more  than 
he  received.  If  he  had  sold  them,  they  would  have  yielded  a  higher 
amount,  and  his  fund  for  investment  in  the  securities  in  which  he 
appeared  to  have  so  much  faith,  although  issued  by  a  Government 
waging  war  against  that  in  the  territory  of  which  his  cestui  que  trusts 
were  domiciled,  would  have  been  still  larger.  Regarded,  even,  as 
a  mere  business  operation,  it  exhibits,  to  no  small  extent,  the  char- 
acteristics of  neglect  and  indifference  to  his  trust.     *     *     * 

What  has  been  said  in  regard  the  bond  of  White,  applies,  with  stili 
more  force,  to  those  of  Kerr  and  Goldsmith.  The  trustee,  under 
the  circumstances  already  referred  to,  invited  or  called  them  in,  with- 
out any  offer  of  payment  from  the  obligors.  It  is  said,  in  the  decree, 
"tliat,  having  a  trust  fund  in  charge  which  he  could  not  dispose  of, 
as  directed  by  the  deed,  he  was  for  the  time,  substantially  in  the  con- 
dition of  a  trustee  with  funds  as  to  the  investment  of  which  the  in- 
strument creating  the  trust  gives  no  directions  at  all." 

Is  it  in  his  power  to  seek  relief  from  such  inability,  when  it  arose, 
in  a  great  measure,  from  his  own  voluntary  act?. 

That  he  sold,  during  the  war,  his  own  residence,  in  Charleston, 
and  invested  largely  in  Confederate  bonds,  while  it  exhibits  his  great 
faith  in  the  ultimate  establishment  of  the  Government  whose  cur- 
rency he  so  much  favored,  may  be  accepted  as  the  evidence  of  a 
patriotism  so  controlling  as  to  al)sorb  every  selfish  and  interested 
motive.  He  could  do  as  he  pleased  with  his  own,  but  he  had  not  the  ^ 
right  to  risk,  to  the  chances  of  the  whirlpool,  the  means  of  others,  - 
entrusted  to  his  care  and  protection. 

Although  the  trustee  is  not  discharged  from  liability  to  account  for 
the  three  bonds,  yet  the  mortgage,  as  against  the  original  debtors  can- 
not be  set  up  as  of  force.  The  legal  title  to  the  bonds  was  in  him, 
and  with  the  investment  of  the  proceeds  they  had  no  concern.  If, 
according  to  the  ruling  in  this  State,  a  vendee  is  not  bound  to  see  to 
the  application  of  the  purchase  money  (Lining  v.  Peyton,  3  Desaus. 
[S.  C]  375;  Laurens  v.  Lucas,  (i  Rich.  Eq.  21T).  or  a  mortgagee  un- 
der  the  order   of   the   Court,   that   the   money   is  appropriated   to   the 


140  THE   NATURE   OF   THE   CESTUI   QUE   TRUST's   INTEREST.         (Ch.  2 

purpose  for  which  the  niortf^age  was  taken  (Spencer  v.  Bank  of  State, 
Bail  Eq.  [S.  C]  468),  much  less  can  a  debtor  who  makes  satisfaction 
to  the  creditor,  in  a  manner  acceptable  and  agreed  to  by  him,  in  the 
form  of  actual  payment,  be  held  to  such  requisition. 

Mr.  Justice  Inglis,  in  Austin  v.  Kinsman,  13  Rich.  lu].  (S.  C.)  265, 
says,  "a  creditor,  though  entitled  to  demand  jiayment  in  lawful  mon- 
ey, may  waive  his  right  and  accept  any  substitute  he  pleases  and  his 
voluntary  acceptance  of  such   substitute,   as  payment,   makes   it   so." 

If  the  satisfaction  of  the  bonds  was  the  result  of  a  fraud  between 
the  debtor  and  the  trustee,  or  induced  by  an  improper  combination,  to 
the  prejudice  of  the  cestuis  que  trust,  or  if  the  debtor  knew  of,  the  in- 
tended misapplication  of  the  proceeds  by  the  trustee,  and  in  any  way 
wrongfully  facilitated  the  accomplishment  of  that  design,  the  instru- 
ments would  be  set  up  as  existing  and  binding.  But  no  such  proof 
has  been  made  in  the  case.  On  the  contrary,  as  to  the  two  principal 
bonds,  the  trustee  required  the  payment.  There  was  no  medium  of 
circulation  but  Confederate  currency.  This  the  trustee  might  have 
rejected,  but,  so  far  from  doing  so,  he  sought  payment  in  it.  There  is 
no  testimony  showing  any  willful  combination  on  the  part  of  White, 
Kerr  or  Goldsmith,  with  the  trustee,  that  would  justify  an  interfer- 
ence to  hold  them  responsible  for  the  act  for  which  alone  he  should 
respond. 

It  is  ordered  and  adjudged,  that  so  much  of  the  decree  as  dismiss- 
es the  bill,  as  to  the  said  White,  Kerr  and  Goldsmith,  and  directs  the 
payment  of  the  costs,  be  affirmed. 

That  the  decree  of  the  Chancellor,  as  to  the  said  Benjamin  Morde- 
cai,  be  set  aside,  and  the  case  remanded  to  the  Circuit  Court,  with 
instructions  for  an  order  directing  him  to  account,  as  trustee  under 
the  said  deed,  on  the  principles  hereinbefore  set  forth,  and  for  all 
proper  orders  necessary  and  requisite  to  carry  out  the  judgment  of 
this  court  in  the  premises. 


IV.  Whkn  Cestui  que  Trust's  Equitable  Interest  may  be  For- 
feited BY  Inaction  or  Laches  of  the  Trustee  Causing 
A  Forfeiture  of  tuf  Trustee's  Legae  Interest. 


MASON  and  MASON  &  DIBBLE,  Plaintiffs  in  Error,  v.  MASON, 

Defendant  in  Error. 

(Suprome  Court  of  Georgia,  1S03.     33  On.  435,  S3  Am.  Doc.  172.) 

Demurrer,  in  Bibb  Superior  Court.  The  bill  was  filed  April  12th, 
1861.     The  court  overruled  the  demurrer  and  the  defendants  except. 

The  complainant,  Sarah  Mason,  formerly  Sarah  Brown,  by  her 
next  friend,  E.  A.  Nisbet,  brought  this  bill  against  her  husband,  An- 


Sec.  2)  CLAIM   AGAINST   TRUSTEK,  NOT   AGAINST   UES.  141 

drew  J.  Mason,  and  the  firm  of  Mason  &  Dibble,  composed  of  Timo- 
thy Mason  and  Wilham  Dibble.  The  bill  stated  that  before  her  mar- 
riage a  marriage  contract  was  made  between  her  and  Andrew  J.  Ma- 
son without  the  intervention  of  a  trustee  by  which  all  the  property 
then  belonging  to  her  and  all  which  she  might  be  entitled  to,  at  and 
by  the  death  of  her  mother,  should  be  her  separate  estate,  and  in  no 
manner  subject  to  her  husband's  debts,  or  disposition,  save  as  provid- 
ed for  in  the  contract;  that  the  contract  gave  the  husband  power, 
with  the  consent  of  complainant,  to  sell  the  property,  the  proceeds  to 
become  a  portion  of  the  trust  estate,  and  be  subject  to  the  provisions 
of  the  contract;  that  on  February  5th,  1850,  her  husband  sold  a 
negro,  a  part  of  the  trust  property,  for  $800  cash,  and  loaned  the 
money  to  Mason  &  Dibble,  taking  their  promissory  note  therefor 
dated  February  5,  1850,  payable  to  himself  as  trustee  for  complainant, 
or  bearer  and  due  one  day  after  date;  that  Mason  &  Dibble  received 
said  money  with  full  knowledge  that  it  was  raised  by  sale  of  the 
negro  and  that  the  negro  was  trust  property;  that  her  husband  had 
been  insolvent  for  years.  The  bill  prayed  that  another  trustee  be  ap- 
pointed and  that  Mason  &  Dibble  account  with  complainant  for  the 
amount  due  on  said  note,  and  pay  the  same  to  the  trustee  appointed, 
to  be  by  him  held  for  the  uses  and  trust  declared  in  the  marriage 
settlement. 

Defendants  demurred  specially  because  the  bill  on  its  face  showed 
that  the  note  was  barred  by  the  Statute  of  Limitations  at  the  time  the 
bill  was  brought. 

Jenkins,  J.i  *  *  *  2.  But  there  is,  in  the  second  ground  of 
demurrer,  a  far  more  serious  obstacle  in  the  way  of  the  com]:)lainant. 
*  *  *  It  was  conceded  in  the  argument  that  as  between  the  trus- 
tee (payee  of  the  note)  and  the  makers,  it  is  so  barred.     *     *     * 

This  is  a  case,  in  which  the  feme  covert  is  seeking  to  enforce  rights, 
under  a  simple  contract,  between  her  trustee  and  a  stranger,  authoriz- 
ed by  the  deed  of  trust,  and  which  contract  is  actually  barred  by 
the  statute  of  limitations,  and  no  special  equity  is  alleged  avoiding  the 
bar.  It  js  not  her  contract.  She  was  incapable  of  contracting  when 
it  was  made.  She  had  a  legal  representative,  appointed  by  herself, 
before  she  became  covert,  and  in  anticipation  of  coverture,  authoriz- 
ed to  make  such  contract.  By  him  the  contract  was  made,  long  subse- 
quent to  her  coverture,  and  against  him  the  statute  commenced  run- 
ning so  soon  as  the  contract  matured.  The  bar  was  complete  before 
she  asserted  her  equity,  and  in  its  assertion,  she  alleges  no  fraud,  no 
special  circumstances  modifying  the  action  of  the  statute  of  limita- 
tions upon  the  legal  contract.     *     *     * 

The  following  points  were  also  presented:  "Cestui  que  trust  can 
follow  the  property  in  the  hands  of  a  purchaser,  with  notice  of.  the 
trust.     If   trustee   fail   to  do   his  duty,   or  violate   his   trust,  and   sell 

1  Pai't  of  the  opinion  is  omitti'd. 


^yJ>.. 


142  THE   NATUKE   OF   THE   CESTUI   QUE   TRUSt's   INTEREST.         (Ch.  2 

the  property,  both  he  and  his  privy  arc  Hable  to  cestui  que  trust. 
Purchasers  with  notice  are  privies  to  the  trustee." 

This  is  all  good  law,  in  its  place,  but  has  no  a])plication  here.  Ma- 
son &  Dibble  had  no  connection  whatever  with  any  sale,  rightful  or 
wrongful,  of  the  negro.  The  trustee  presented  himself  to  them  with 
a  certain  fund  which  he  said  belonged  to  the  trust  estate,  and  which 
complainant  now  says  belonged  to  it.  As  such,  they  borrowed  it, 
giving  a  promissory  note,  payable  to  the  trustee.  We  have  said  that, 
according  to  the  allegations  in  the  bill,  that  was  a  lei^al  transaction, 
in  no  way  violative  of  the  trust.  Upon  that  simple  contract,  then 
rests  their  liability.  If  that  be  barred  by  the  statute,  without  any  er- 
roneous practice  on  their  part,  their  liability  is  at  end.  No  construct^;^ 
ive  trust  is  raised  by  the  bill  between  complainant  and  Alason  &  Dib- 
ble ;    there  is  certainly  no  express  trust. 

The  statute  of  limitations  runs  as  between  cestui  que  trust  and 
trustee  on  the  one  hand  and  strangers  on  the  other.  Hill  on  Trus- 
tees, 736  and  738.  That  is  this  case,  and  on  this  special  demurrer  we 
reverse  the  judgment  of  the  court  below." 


IMORRIS  and  Others  v.  MURPHEY  &  CO^TPANY. 
(Supreme  Court  of  Georsia,  1S95.    95  Ga.  307,  22  S.  E.  G35,  51  Am.  St.  Rep.  81.) 

Petition  for  injunction.  Before  Judge  Hunt.  Upson  County. 
October  20,  189-i. 

Atkinson,  Justice.^     In   1878   a  judgment  was  obtained,  and   in 
1879  an  execution  issued  thereon.     In  1883  another  judgment  by  a  - 
different  plaintifif  was  recovered  against  the  same  defendant.     In  189il-  /  '^/ 
the  execution  issued  on  the  older  judgment  was  levied  on  certain  land 
as  the  property  of  the  defendant  in  execution,  and  he,  between  the      :_,^, 
date  of  the  rendition  of  the  judgment  and  the  date  of  the  levy,  hav- 
ing died,  the  administrator  upon  his  estate  fdcd  an^afYidavit  of  illegali- 
ty to  the  execution,  on  the  ground  that  the  judgment  which  was  the 
basis  of  plaintiff's  execution  was  dormant  and  that  the  same  had  not 
been  revived  within  the  time  allowed  by  law.     Two  other  executions, 
in   all   respects   similar   to   the   one   then   proceeding,   were   issued   in 
favor  of  the  same  plaintiff;    but  we  do  not  deem  it  necessary  to  set 
out  in   detail  all  the   entries  thereon  nor  proceedings  thereunder,   as 
the  same  questions  are  involved  with  reference  to  each,  and  may  be 
fairly  stated  in  our  discussion  of  the  questions  arising  upon  a  consid- 

2  :\Iolton  V.  Ilendorson.  G2  Ala.  42G  (1878),  cestui  a  lunatic;  Williams  v.  Otey, 
8  IIumi>h.  (Tenn.)  5()3,  47  Am.  Dec.  032  (1847),  cestui  an  infant. 

If  the  trustee,  however,  be  an  infant,  the  statute  of  limitations  will  not  run 
afrainst  the  cestui  though  the  latter  be  sui  juris.  Clayton  v.  Rose,  87  N.  C- 
lOG,  110-111  (1882). 

3  Part  of  the  opinion  is  omitted. 


Sec.  2)  CLAIM   AGAINST  TRUSTEE,  NOT   AGAINST    RES.  143 

eration  of  one  of  tlicm.  The  illc.q-ality  thus  filed  came  on  to  be  heard; 
and,  the  achiiinistrator  neillKr  appearing  in  person  nor  by  counsel, 
the  court,  u]H)n  tender  of  issue  by  the  plaintiff  in  execution,  after 
hearing-  evidence,  rendered  a  judgment  overruling  the  affidavit  of  il- 
legality, the  effect  of  which  was  an  adjudication  in  favor  of  the  valid- 
ity of  the  judgment  upon  which  said  execution  was  issued.  After- 
wards, the  plaintiff  seeking  to  enforce  this  judgment,  the  plaintiff  in 
the  junior  execution  above  referred  to,  but  whose  judgment  had  in 
the  meantime  become  dormant,  though  the  time  allowed  by  law  in 
which  it  might  be  revived  had  not  then  elapsed,  instituted  equitable 
proceedings  and  sought  thereunder  to  enjoin  the  enforcement  of  the 
judgment  and  execution  then  proceeding  against  said  estate,  ^u^onjjhe' 
same  grounds  that  were  made  and  set  up  in  the  affidavit  of  illegality 
so  fij.e^by.^  the  administrator.  Upon  the  hearing  of  the  application, 
the  court  granted  an  injunction.  There  were  certain  affidavits  intro- 
duced upon  the  hearing,  and  as  well  certain  documentary  evidence ; 
but  as  the  questions  which  control  this  case  arise  upon  the  facts 
hereinbefore  stated,  the  consideration  of  this  additional  evidence  is 
not  necessary  to  a  correct  determination  of  this  case. 

1.  The  grant  of  this  injunction  and  the  exception  to  its  allowance 
present  for  the  adjudication  of  this  court  the  qiiestion  as  to  whether 
all  creditors  of  an  estate,  either  by  judgment  or  otherwise,  are  so 
far  in  privity  with  an  administrator  thereof  as  that  a  judgment  in 
favor  of  one  of  such  creditors  against  the  administrator  is  conclusive 
upon  all  questions  adjudicated  thereby  as  between  himself  and  other 
creditors.  It  is  a  well  recognized  and  universal  rule  of  law,  that\ 
juTlgments  unexcepted  to  and  unreversed  are,  upon  all  matters  which/ 
were  or  ought  to  have  been  adjudicated  thereby,  conclusive  as  be-/ 
tween  the  parties  thereto  and  their  privies  in  estate.  *  *  *  f]^ 
administrator  is  in  law  the  personal  representative  of  the  deceased. 
He  is,  for  all  practical  purposes  involving  the  administration  of  his 
affairs,  a  legal  substitute  for  the  deceased.  Clothed  as  a  trustee  with 
the  duty  of  administering  all  the  assets  which  may  come  into  his 
hands,  and  applying  the  same  under  the  statute  of  distributions,  it  is 
his  duty  to  represent  the  estate  in  any  litigation  in  which  it  may  be- 
come involved,  to  prosecute  suits  in  favor  of  and  defend  suits  against 
the  estate  he  represents.  He  is  the  party  chosen  of  the  law  to  whom 
these  interests  are  committed.  No  person  other  than  he,  for  or  on 
behalf  of  the  estate,  can  in  his  own  name  as  matter  of  right  prosecute 
or  defend  a  suit  in  which  his  estate  is  interested  as  plaintiff  on  the 
one  hand  or  defendant  on  the  other.  The  administrator  with  respect, 
to  such  matters  stands  upon  the  same  footing  as  the  deceased.  It  will 
not  be  seriously  insisted  that  a  judgment  rendered  against  a  person 
in  his  lifetime,  with  due  notice  of  the  pendency  of  the  action,  fairlv 
rendered,  and  to  wdiich  no  exception  was  by  him  taken,  could  there- 
after be  called  in  question  by  a  creditor  of  such  person.     No  more 


144  THE   NATURE   OF   THE   CESTUI   QUE   TRUST's   INTEREST.         (Ch.  2 

can  it  justly  be  said  that  his  estate  would  not  be  equally  bound  where 
a  judgment,  under  similar  circumstances,  has  been  rendered  against 
his  administrator.  In  contests  which  arise  between  the  administrator 
and  third  persons  who  are  indebted  to  the  estate,  the  administrator 
represents  all  persons  who  may  be  interested  therein,  either  as  heirs 
or  creditors.  As  against  persons  preferring  claims  against  the  estate, 
the  administrator  likewise  stands  as  the  representative  of  the  estate 
and  its  interests,  for  and  on  account  of  heirs  at  law  and  all  other 
creditors.  Through  him  alone  can  they  reduce  to  present  possession 
any  of  the  credits  or  assets  of  the  deceased,  or  make  the  same  avail- 
able for  the  purpose  of  distribution.  If  this  were  not  true,  and  on 
the  contrary  each  individual  creditor  and  heir  at  law  were  authorized 
in  his  own  name  to  bring  suits  and  collect  assets,  no  man  could  atTord 
to  submit  to  a  judgment  rendered  against  them  at  the  suit  of  an  ad- 
ministrator; because  the  acquiescence  therein  might  subject  him  to 
further  suit  at  the  instance  of  any  other  person  wdio  might  conceive 
that  he  had  a  claim  against  the  estate.  So  persons  indebted  to  the 
estate  could  never  pay  the  administrator,  for  fear  some  outside  cred- 
itor, upon  his  own  account,  might  bring  a  suit  against  him.  To  hold 
that  each  individual  creditor  might  upon  his  own  behalf  proceed  with 
the  collection  of  his  debt  from  the  debtors  of  the  estate  without  the 
intervention  of  the  administrator,  w^ould  involve  the  whole  affair  in 
the  most  inextricable  confusion;  for  if  one  creditor  could  so  assert 
his  right  outside  of  the  administrator,  another  could  do  so,  and  a 
man  who  was  so  unfortunate  as  to  find  himself  the  debtor  of  an  es- 
tate, w^ould  in  every  individual  instance  be  compelled  to  file  a  bill  of 
interpleader  to  determine  whether  he  should  pay  the  money  and  who 
was  entitled  to  receive  it.  The  law  avoids  all  this  confusion  by  nomi- 
nating the  administrator  in  advance  as  the  stake-holder,  and  compels 
creditors  through  him,  as  against  the  estate  and  its  debtors,  to  enforce 
their  demands.  It  is  only  through  the  administrator  that  a  creditor 
can  compel  the  payment  of  debts  due  the  estate,  for  the  reason  that 
there  is  no  direct  privity  between  individual  creditors  and  debtors 
of  an  estate.  The  only  privity  existing  between  the  administrator 
and  a  debtor  of  the  estate  is  such  as  results  from,  the  pre-existing  re- 
lation between  the  intestate  and  the  debtor,  and  privity  of  some  sort 
is  essential  to  the  maintenance  of  an  action.  Inasmuch  as  it  is  the 
duty  of  the  administrator  to  collect  the  assets  of  the  intestate,  and  in- 
asmuch as  outside  creditors  are  not  authorized  to  interfere  with  the 
collection  of  such  assets,  it  is  the  corresponding  duty  of  the  adminis- 
trator to  defend  all  suits  that  may  be  brought  against  the  estate.  It 
thus  being  his  duty  for  and  on  account  of  the  estate  to  prosecute 
and  defend  such  suits  as  its  interest  might  seem  to  require,  and  he 
being  not  only  a  proper  but  an  indispensable  party  thereto,  it  were  ill 
to  say  that  the  judgment  would  have  no  binding  force  as  against  the 
^  ^'-        estate      If  it  be  binding  upon  the  estate,  it  must  of  necessity  be  bind- 


Sec.  2)  CLAIM   AGAINST   TRUSTEE,  NOT   AGAINST   UES.  l-i'> 

ing  upon  creditors  who  could  have  no  interest  except  such  as  was 
derived  from  their  privity  with  the  administrator.  An  outside  cred- 
itor, if  he  can  do  so  at  all,  can  only  interfere  as  a  party  in  such  litiga- 
tion when  he  shows  that,  because  of  some  wronj^ful  act  of  the  admin- 
istrator, his  debt  is  likely  to  be  imperilled.  So  that  in  this  ca^e  it  was 
the  duty  of  this  administrator,  when  a  creditor  of  the  estate  sought 
to  subject  this  land  under  a  pre-existing  judgment  to  the  payment  of 
his  debt,  and  when  he  conceived  that  he  had  good  cause  for  so  doing, 
to  have  filed  this  affidavit  of  illegality.  It  was  his  duty  to  have  prose- 
cuted it  to  a  successful  determination,  if  that  could  have  been  accom- 
plished. Failing  in  that,  tJ]e_jtLdgiiienL_Qyernuling  the  affidavit  of  il- 
legality must  be  taken  as  binding  upon  the  administrator  upon  the 
point  made  in  that  affidavit;  and  inasmuch  as  no  person  other  than 
the  administrator  has  any  right  to  interfere,  then  this  complainant 
cannot  be  heard  to  impeach  the  judgment  with  which  the  administra- 
tor was  himself  satisfied.  Of  course  this  whole  argument  proceeds 
upon  the  idea  that  this  judgment  was  fairly  rendered.  If  the  adminis- 
trator and  one  creditor  permit  a  collusive  judgment  to  be  taken 
which  may  operate  as  a  fraud  upon  other  creditors,  they  may  for  that 
reason  impeach  and  set  it  aside.  Such  creditors  may  also  have  their 
election  to  proceed  against  the  administrator  and  his  bondsmen.  But 
in  this  case  there  is  no  intimation  that  this  judgment  is  void  for  any 
such  reason.  If,  without  collusion  with  the  plaintiff  in  execution 
who  is  a  creditor,  the  administrator  negligently  permit  a  judgment 
to  be  rendered  against  him  to  the  prejudice  of  the  other  creditors, 
then  the  administrator  and  his  bondsmen  might  be  answerable  to  such 
creditors.  So  far,  however,  as  this  record  discloses,  the  administrator 
filed  this  affidavit  of  illegality  in  good  faith,  intending  to  insist  upon 
it,  but  simply,  for  some  reason  not  disclosed  by  the  record,  failed  to 
be  present  when  it  was  tried  and  did  not  except  to  the  rendition  of  the 
judgment  thereon.  He  is  simply  in  the  situation  of  a  defendant  in 
execution  who  has  permitted  judgment  to  be  rendered  against  him 
by  default.  For  this  reason  alone  a  judgment  cannot  be  impeached 
or  set  aside.  If  void  for  any  other  reason,  that  reason  must  be  al- 
leged and  proved.  The  effect  of  this  disposition  of  the  affidavit  of 
illegality  is  to  adjudicate  that  the  judgment  which  was  enjoined  was, 
as  against  the  attack  made  by  the  equitable  petition,  a  valid  subsisting 
judgment  and  entitled  according  to  its  priority  to  participate  in  the 
distribution  of  this  estate.  Upon  this  question  the  administrator,  in 
behalf  of  all  concerned,  had  been  fully  heard,  and  we  hold  that  both 
heirs  and  creditors  are  concluded.^     *     *     * 

2  Whilo  this  is  not  a  case  of  teeliuiL-al  trust,  yet  the  principle  iuvolved  is  the 
same. 

Ken.Tb.— 10 


^ 


146  THE   NATURE   OF   THE   CESTUI    QUE   TKUSt's   INTEREST.         (Cll.  2 


V.  The  Owner  of  the  Legal  Title,  Not  of  the  Equitable  In- 
terest— THAT  IS,  THE  Trustee,  Not  the  Cestui  que  Trust — 
CAN  Vote  as  Owner  of  Trust  Res. 

In  the  Matter  of  the  NORTH  SHORE  STATEN  ISLAND  FERRY 

COMPANY. 

(Supreme  Court,  General  Term,  8ocoik1  Judicinl  District.  1S72.    03  Barb.  550.) 

Appeal  from  an  order  made  at  a  Special  Term,  setting  aside  and 
declaring  null  and  void  an  election  of  directors  of  the  North  Shore 
Staten  Island  Ferry  Company. 

George  W.  Wilson  died  April  15,  1872.  His  widow,  Adele  M. 
Wilson,  and  Mortimer  L.  Fowler  were  on  April  23,  1872,  appointed 
administratrix  and  administrator.  The  North  Shore  Staten  Island 
Ferry  Company  was  a  corporation  incorporated  by  chapter  135,  Laws 
of  1853  of  the  State  of  New  York,  with  a  capital  stock  of  12,500 
shares.  At  the  death  of  George  W.  Wilson  5528  of  said  shares  stood 
in  his  name.  ]\Iay  2,  1872,  the  annual  election  of  fifteen  directors  was 
held.  Fowler  attended  and  produced  a  certificate  of  the  Surrogate 
of  the  appointment  of  Mrs.  Wilson  and  himself  as  administratrix  and 
administrator  and  endorsed  on  said  certificate  a  power  of  attorney 
from  Mrs.  Wilson  to  Fowler  to  vote  said  stock  at  said  election.  He 
ofifered  to  vote  said  stock  and  objection  was  made  (1)  that  Fowler's 
name  as  administrator  did  not  appear  on  the  transfer  book;  and  (2) 
that  George  W.  Wilson  was  not  the  real  owner  of  the  stock  standing 
in  his  name  and  he  was  refused  the  right  to  vote  said  stock.  Certain 
persons  were  declared  elected  directors.  Had  not  Fowler's  vote 
been  rejected  none  of  said  persons  except  one  would  have  been 
elected. 

An  order  was  made  to  show  cause  why  the  election  should  not  be 
set  aside  and  a  new  election  of  directors  had.  The  Special  Term 
adjudged  that  the  inspectors  erred  in  not  receiving  the  vote  of  Fowl- 
er and  set  aside  the  election  and  ordered  a  new  one. 

On  appeal  the  Special  Term  order  was  affirmed. 

Gilbert,  J.  The  statute  under  which  this  company  was  incorporat- 
ed (3  Edm.  Stat.  p.  872)  provides  that  the  stock  of  the  company 
shall  be  deemed  personal  estate  (section  10),  and  that  each  stockhold- 
er shall  be  entitled  to  as  many  votes  as  he  owns  shares  of  stock  in 
said  company  (section  4). 

Upon  the  death  of  Mr.  Wilson,  the  intestate,  and  the  appointment 
of  Mr.  Fowler  and  Mrs.  Wilson  as  administrators  of  his  goods,  etc., 
and  their  acceptance  of  the  trust,  the  latter  became,  by  operation  of 
law,  vested  with  the  legal  title  to  the  stock  in  question,  and  conse- 
quently  stockholders  of  the  company,  representing  the   estate  of   the 


Sec.  2)  CLAIM   AGAINST   Tia-.STEE,  NOT   AGAINST    RES. 


14T 


decedent.  As  such  they  had  all  the  rij^hts  appertaining^  to  the  owner- 
ship of  the  stock,  one  of  which  was  the  ri<,dit  of  voting  at  elections 
of  directors  of  the  company.  (Peoi)lc  v.  Tibbets,  4  Cowen,  304. 
Bailey  v.  Hollister,  2G  N.  Y.  112.  Middlebrook  v.  Merchants'  Bank, 
3  Keyes,  135.) 

No  formal  transfer  on  the  books  was  necessary  to  give  this  right. 

The  fact  that  the  decedent  held  the  stock  subject  to  a  trust  or  duty 
in  favor  of  others  does  not  afifect  the  question. 

The  right  to  vote  follows  the  legal  ownership,  and  the  corporation 
has  nothing  to  do  with  the  equities  between  the  owner  and  third 
persons. 

Upon  the  death  of  a  trustee  of  personal  property,  the  trust  de- 
volves upon  his  representative.  And  as  to  every1)ody  except  the  ces- 
tui que  trust,  the  latter  is  absolute  owner.  (Bunn  v.  Vaughan,  3 
Keyes,  345.  Ex  parte  Willcocks,  7  Cowen,  402,  17  Am.  Dec.  525.) 
As  trustee,  however,  he  owes  the  duty  of  active  management  for  the 
protection  and  preservation  of  the  trust  estate.  Where  that  consists 
of  stock  in  a  corporation  the  duty  of  voting  at  elections  of  directors 
thereof  is  too  plain  for  argument. 

The  order  appealed  from  should  be  affirmed,  with  costs. 


VI.  The:  Trustee,  Not  the  Cestui  que  TRUsT,nAS  the  Burdens 

OF  Ownership, 

In  re  NORWEGIAN  CHARCOAL  IRON  COMPANY. 
MITCHELL'S  CASE. 

(In  Chancery,  before  the  Master  of  the  Rolls.  Sir  .John  Itomilly,  1S70.     L.  R. 

9  Eq.  Cas.  3G3.) 

The  Norwegian  Charcoal  Iron  Company,  Limited,  was  registered 
under  the  Companies  Act,  in  18G2,  on  the  1st  of  September,  1864. 
James  ^litchell  applied  for  and  obtained  an  allotment  of  lOU  shares 
and  he  paid  iTOO.  in  respect  of  calls  thereon. 

On  the  Gth  of  August,  1865,  he  executed  a  transfer  of  80  of  those 
shares,  for  a  nominal  consideration,  to  Francis  Henry  \'andyke,  who 
was  at  the  time  an  infant,  and  a  clerk  in  the  office  of  :Mr.  George 
Forster,  a  stock  broker,  and  the  transfer  was  duly  registered.  There 
was  some  evidence  to  show  that  at  this  time  the  shares  might  have 
been  sold  in  the  market  for  value,  but  it  was  contended  that  the  ob- 
ject of  the  transfer  was  to  escape  liability.  It  was  a  matter  of  dis- 
pute whether  the  transfer  was  out  and  out,  Vandyke  alleging  that 
he  took  the  shares  simply  as  trustee  for  James  Mitchell,  and  upon  an 
express  promise  by  him   that  the   shares   should   in   a  short  time   be 


148  TiiK  XATuiir:  of  the  cestui  que  trust's  interest.      (Ch.  3 

taken  out  of  \'aiKiykc's  name.  James  Mitchell  died  in  May,  1SG6. 
On  the  13th  of  September,  18G6,  Vandyke  attained  the  age  of  twen- 
ty-one years.  Shortly  afterwards  legal  proceedings  were  taken  by 
the  company  for  the  purpose  of  recovering  from  Vandyke  the  ar- 
rears of  calls  due  on  his  shares,  and  he  being  in  pecuniary  difficulties, 
and  having  no  means  of  meeting  the  company's  demands,  applied 
to  William  Mitchell,  one  of  the  executors  of  James  Mitchell  for  as- 
sistance, and  received  some  small  sums  of  money  from  him.  Vandyke 
alleged  that  these  sums  were  given  to  enable  him  to  keep  out  of  the 
way  of  proceedings  by  the  company,  and  to  suspend  taking  any  steps 
to  repudiate  the  shares  until  some  arrangement  could  be  come  to  with 
reference  thereto;  William  Mitchell,  on  the  other  hand,  alleged 
that  the  sums  were  given  out  of  charity.  Subsequently  further  ap- 
plications were  made  to  him  on  behalf  of  the  company  for  payment  of 
the  calls  on  the  shares ;  but  he  neither  paid  the  calls  nor  took  any 
steps  to  repudiate  his  liability  in  respect  thereof. 

On  the  22d  of  June,  1868,  the  80  shares  were  declared  forfeited  for 
non-payment  of  calls. 

By  a  resolution  passed  the  28th  of  June,  and  confirmed  on  the  9th 
of  July,  18G8,  it  was  resolved  that  the  company  should  be  wound  up 
voluntarily. 

Two  summonses  were  taken  out,  one  by  Vandyke  and  the  otlier 
by  the  liquidator,  seeking  to  rectify  the  register  by  substituting  the 
names  of  the  executors  of  James  Mitchell  as  the  holders  of  these  80 
shares  for  the  name  of  Vandyke. 

By  the  articles  of  association  the  directors  were  empowered  to  re- 
ject the  transfer  only  in  the  case  of  the  transferror  being  indebted  to 
the  company.  At  the  date  of  the  transfer  to  Vandyke,  James  Mitchell 
was  not  so  indebted. 

The  Court  was  of  opinion  that  Vandyke  was  a  trustee  for  Mitchell; 
and  that  the  company  were  aware,  when  they  registered  the  transfer, 
that  Vandyke  was  an  infant,  and  also  that  there  was  some  arrange- 
ment between  him  and  Mitchell  with  respect  to  the  shares. 

Lord  Romilly,  M.  R.  In  this  case  certain  shares  are  taken  by  an 
infant  and  are  transferred  to  him.  The  company  have  full  opportu- 
nity of  knowing  that  he  is  an  infant,  and,  in  fact,  they  know  every- 
thing about  him.  After  he  attains  the  age  of  twenty-one  he  is  per- 
fectly well  aware  that  these  shares  are  standing  in  his  own  name, 
and  he  remains  for  two  years  doing  nothing  whatever,  receiving  ap- 
plications from  the  company,  but  never  repudiating  the  shares.  Now 
I  have  held  that  if  a  person  becomes  adult,  either  immediately  after 
the  winding-u]^  or  immediately  before,  and  takes  no  step,  that  he  can- 
not be  blamed  for  so  doing,  because  he  cannot  tell  whether  the  com- 
pany intend  to  enforce  their  claim  against  him  and,  that  therefore  he 
is  not  bound,  till  some  steps  are  taken,  to  resist  his  being  a  share- 
holder in  the  company;    that  when  he  remains  for  two  years  and  is 


Sec.  2)  CLAIM   AGAINST   TRUSTEE,  NOT   AGAINST   ItES.  149 

constantly  applying  to  the  executors  of  the  person  who  had  trans- 
ferred the  shares  to  him,  he  is  bound  to  tell  the  company  that  he  re- 
pudiates the  shares  and  will  have  nothing  to  do  with  them. 

Then  I  think  the  contention  of  the  official  liquidator  fails  in  this 
respect.  The  distinction  is  very  properly  drawn  between  a  person 
who  wants  to  get  rid  of  his  shares  because  the  company  happens  to 
be  a  failing  company,  and  a  person  who  wishes  to  put  them  in  the 
name  of  a  trustee.  This  takes  place  not  unfrequently  in  many  of 
these  companies,  as  the  company  refuses  to  acknowledge  any  trusts. 
Now,  Mr.  Mitchell  takes  these  shares  and  transfers  a  large  number 
of  them  (80  I  think)  into  the  name  of  the  infant,  with  the  knowledge 
of  the  infant,  the  infant  being  perfectly  aware  of  it,  and  allowing 
the  thing  to  be  done.  I  have  considered  the  question  whether  he  could 
repudiate  them  or  not,  but  now  comes  the  question  whether  that  is  a 
valid  transaction.  For  that  purpose  the  question  of  infancy  does  not 
arise;  it  is  the  same  question  exactly  as  it  would  be  between  two 
adult  parties.  One  person  may,  if  he  pleases,  become  a  trustee  for 
another.  He  knows  the  consequences  of  so  doing.  He  knows  that 
he  becomes  personally  liable  for  the  calls,  and  that  he  is  personally 
liable  to  be  made  a  contributory.  There  are  two  sets  of  rights;  one 
is  as  between  himself  and  the  person  whom  I  may  call  the  cestui  que  i 
trust,  and  the  other  is  as  between  himself  and  the  company.  As  be^j 
tween  himself  and  the  company  he  is  a  shareholder  and  a  contribu- ' 
tory  and  cannot  resist  anything;  but  as  between  himself  and  the  per- 
son for  whose  benefit  he  agreed  to  take  them  he  has  a  right  over  as 
against  him ;  that  is  to  say,  he  has  a  right  to  call  upon  him  who  is  the 
real  owner  of  the  shares  to  make  good  any  sums  of  money  which  he 
may  have  to  pay  for  the  calls  or  for  contribution  or  the  like.  Conse- 
quently he  may  be  entitled  to  come  against  Mr.  Mitchell's  estate  to 
make  good  anything  which  he  will  have  to  pay  in  the  course  of  this 
liquidation  to  the  company;  but  that  does  not  prevent  him  from  be- 
ing the  contributory  to  the  company,  or  from,  in  his  own  person, 
making  good  those  sums  wdiich  he  may  be  properly  called  upon  to 
pay;  and  the  company  cannot  come  against  the  person  in  whose 
name  they  do  not  stand  by  reason  of  an  assignment  made  between 
two  other  persons  which  they  have  not  opposed  or  resisted,  and  of 
wdiich  they  know  a  great  deal.  Whether  they  could  have  opposed 
it  at  the  time  is  not  the  question  now. 

The  result  is,  that  I  must  keep  him  on  the  list  of  contributories  as 
he  remains  at  present,  and  that  I  must  dismiss  the  application. 


■ji-' 


^  : 


150  .    THE   NATURE   OF   THE   CESTUI   QUE   TRUSt's   INTEREST.         (Ch.  2 

O'MALLEY,  Defendant  in  Error,  v.  GERTH  and  Others,  Plaintiffs 

in  Error. 

(Court  of  Errors  uud  Appeals  of  Now  Jorsoy.  1902.     07  N.  J.  Law,  (UO,  52  Atl. 

563.) 

In  Tort.     On  error  to  the  Essex  County  Circuit  Court. 

Fort,  T.^  The  defendant  in  error  is  a  policeman  of  the  City  of 
Newark.  While  on  duty,  on  the  2nth  day  of  April,  1900,  he  was  pass- 
ing through  Campbell  Street  and  stepped  on  acover  over  a  coal-hole. 
The  cover  turned  and  he  fell  astride  it  into  the  hole  and  was  serious- 
ly injured. 

The  premises  in  front  of  which  the  coal-hole  w^as  were  the  proper- 
ty of  Julius  Gerth  in  his  lifetime.  By  his  will  this  property  was 
made  a  part  of  the  residue  of  his  estate,  and  was  left  in  trust  to  his 
executors  to  let  and  rent  it  and  to  collect  the  rents  accruing  from 
the  same,  and,  after  paying  taxes,  insurance,  repairs  and  other  char- 
ges, to  pay  the  net  surplus  to  the  testator's  widow.  The  executors 
have  a  power  of  sale.  The  three  defendants  are  named  as  executors 
in  the  will,  and  all  qualified. 

The  accident  occurred  through  the  faulty  condition  of  the  coal-hole, 
owing,  undoubtedly,  to  the  spreading  of  a  cracked  flag-stone  in  which 
the  rim  of  the  lid  or  cover  rested.  Because  of  the  enlargement  of 
the  hole  the  lid  at  times  would  get  in  a  position  where  it  would  slip 
in  the  hole  and  turn  upon  its  edge  from  pressure,  and  it  did  so  when 
the  defendant  in  error  stepped  upon  it.  Whether  the  defendants  had 
knowledge  of  this  condition  of  the  hole  and  lid,  and  whether  they  had 
failed  to  repair  within  a  reasonable  time  after  notice  thereof,  was  left 
to  the  jury  as  a  question  of  fact  which  they  must  find  in  the  affirma- 
tive before  the  verdict  could  be  for  the  plaintiff.     They  so  found. 

The  additional  lines  of  defence  relied  u])on  were :     *     *     * 

Second:  That  the  damage  resulted  from  a  defect  in  the  sidewalk, 
and  that  the  City  was  charged  with  its  repair,  and  it  alone  was  liable 
for  injuries  resulting  from  non-repair.     , 

Third:  That  if  the  defendants  were  liable,  they  could  not  be  held 
as  individuals,  but  only  as  executors  or  trustees,  their  title  to  the 
property  being  solely  one  of  trust.     *     *     * 

The  second  proposition  is  not  tenable.  Even  if  the  City  could  be 
made  liable  in  a  case  like  this,  it  is  still  an  undoubted  legal  rule  that 
the  owner  of  the  premises,  or  the  occupant  thereof,  or  both,  are  lia- 
ble. The  maintenance  of  a  trap  like  this  upon  a  sidewalk  in  front  of 
one's  premises  is  a  nuisance.  Busw.  Per.  Inj.  §  187;  Cooley,  Torts, 
748;  Davenport  v.  Ruckman,  37  N.  Y.  5G8;  Durant  v.  Palmer,  5 
Dutcher  (N.  J.)  544. 

1  Part  of  the  opinion  is  omitted. 


Sec.  2)        CLAIM  AGAINST  TRUSTEE,  NOT  AGAINST  RES.  151 

Nor  is  the  position  that  the  defendants  in  this  case  cannot  be  held  j 
as  individuals  sustainable. 

The  cases  cited  by  counsel  for  the  defendants  were  cases  where 
receivers  of  railroads  appointed  by  the  court  were  sued  as  individuals 
for  injuries  happening  to  passengers  or  others  upon  trains  operated 
under  the  receivership  and  within  the  line  of  their  duty.  The  case 
of  Cardot  v.  Barney,  63  N.  Y.  281,  20  Am.  Rep.  533,  which  was  of 
this  character,  was  relied  upon  by  the  defendant's  counsel  to  sustain 
his  contention'.  In  Kain  v.  Smith,  80  N.  Y.  458,  that  case  was  distin- 
guished from  cases  of  the  class  before  us,  and  the  rule  in  the  class  of 
cases  where  the  trust  is  one  voluntarily  assumed  is  fully  stated.  A 
party  having  independent  control  is  liable  for  the  acts  of  persons  un- 
der his  control  whether  of  contract  or  tort.  Rogers  v,  Wheeler,  43 
N.  Y.  598. 

Trustees  for  the  benefit  of  bondholders  of  a  railway  who  assume 
duties  under  the  terms  of  their  trusteeship  are  personally  liable  for 
torts  arising  from  negligence  or  misconduct  of  the  employees  op- 
erating the  road  under  them.  Sprague  v.  Smith,  29  Vt.  421,  70  Am. 
Dec.  424. 

The  fact  is  unimportant  that  the  defendants  were  acting  as  trus- 
tees, or  in   a  representative  capacity,  in  the  care   or  control  of  the 
property.     An  action  in  a  case  of  this  kind  lies  against  them  as  indi-    '^^jf--- 
viduals.     Whether  they  may  have  indemnity  out  of  the  trust  estate  [I    /^ 
is  of  no  concern  as  to  third  parties.     Mason  v.  Pomeroy,  151  Mass.  V-'^'- 
164,  167,  24  N.  E.  202,  7  L.  R.  A.  771;    Odd  Fellows  v.  McAllister,^' 
153  Mass.  292,  297,  26  N.  E.  862,  11  L.  R.  A.  172. 

Judgment  unanimously  afifirmed.^ 


MAYOR  AND  CITY  COUNCIL  OF  BALTIMORE  v.   STIRL- 
ING AND  RIDGELY,  Trustees. 

(Court  of  Appeals  of  Maryland.  18GS.     20  .Md.  48.) 

Appeal  from  the  Superior  Court  of  Baltimore  City.  S.'tx^ 

Suit  by  Baltimore  City  to  recover  $1101.91   alleged  to  be  due  by 
the  defendants,  as  trustees,  of  the  estate  of  Nicholas  G.  Ridgely  for 
the  benefit  of  Eliza  E.  Ridgely  during  her  life  for  city  taxes  for  the 
years  1863,  1864  and  1865.     The  trustee,  Ridgely,  resided  in  Balti-''^ 
more  County,  and  the  other  trustee,  Stirling,  was  a  resident  of  Balti-'A^  <5^ , 
more  City.     This  suit  was  instituted  to  determine  whether  the  taxes  ^ 
in  question  were  payable  to  the  appellant  or  to  the  Commissioners  of 
Baltimore  County,  both  claiming  them. 

2  The  trustee,  and  not  the  cestui  que  trust,  is  indictable  for  a  nuisance. 
People  V.  Townsend,  3  Hill  (N.  Y.)  479  (1842). 


152  THE  NATUUE  OF  THE  CESTUI  gui-  tufst's  INTKUEST.       (Cll.  2 

A  pro  forma  jiulj^nnont  was  entered  by  agreement  for  the  defend- 
ants and  the  plaintifif  appealed. 

Brent,  J.,  dehvered  the  opinion  of  the  court.^ 

This  court  in  the  case  of  Latrobe  v.  Mayor  and  City  Council  of 
Baltimore,  19  Aid.  13,  having  settled  the  doctrine,  that  the  residence 
of  the  trustee,  and  not  that  of  the  cestui  que  trust  decides  the  situs  for 
taxation  upon  property  of  the  description  mentioned  in  the  record, 
the  only  ([uestion  presented  by  this  appeal  arises  from  the  fact,  that 
in  this  case  there  are  two  trustees,  one  of  whom  resides  in  Baltimore 
City,  and  the  other  in  Baltimore  County. 

The  tax  laws  of  the  State  do  not  expressly  provide  for  such  a  case 
and  our  decision  must  be  made  to  rest  upon  what  we  regard  to  be 
equitv  and  right.  The  property  is  certainly  not  liable  to  a  double 
tax.  If  the  whole  of  it  were  taxable  in  Baltimore  City,  under  the 
authority  of  Latrobe  v.  the  Mayor  etc.  of  Baltimore,  it  would,  under 
the  same  authority,  be  also  taxable  in  Baltimore  County.  This  cannot 
be.  We  think  it  should  be  taxed  one-half  as  of  the  place  of  resi- 
dence of  each  trustee, — that  is,  one-half  should  be  taxed  to  the 
trustee  residing  in  Baltimore  City  and  the  other  half  to  the  trustee 
residing  in  Baltimore  County.     *     *     * 

Judgment  reversed. 

1  I'art  ul  tlie  upiuiuji  is  omitted. 


Sec.  1)  BY   ACT   OF   THE   PAKTY.  153 


CHAPTER  III. 

TRANSFER  OF  THE  RESPECTIVE  INTERESTS  OF 
TRUSTEE  AND  CESTUI  QUE  TRUST. 


SECTION  1.— BY  ACT  OF  THE  PARTY.^ 
I.  By  Act  of  the  Trustee. 


Vavasour,  J.,  said  that  the  subpoena  began  in  the  time  of  Edward       6^^ 
HI;    but  this  was  always  against  the   feoffee  upon  confidence  him-   p 
self,  for  against  his  heir  the  subpoena  was  never  allowed  until  the  . 
time  of  Henry  VI  and  in  this  point  the  law  was  changed  by  Fortes- 
cue,  Chief  Justice. — Keilwey,  42,  pi.  7. 


If  the  feoffee  makes  a  feoffment  over  the  feoffor  has  no  remedy 
against  his  feoffee;  the  same  law  if  he  dies,  the  heir  of  the  feoffee 
is  seized,  as  it  seems  to  me,  to  his  own  use,  for  the  confidence  which 
the  feoffor  put  in  the  person  of  his  feoffee,  cannot  descend  to  his 
heir,  nor  pass  to  the  feoffee  of  his  feoffee,  but  he  is  feoffee  to  his 
own  use  as  the  law  was  taken  until  the  time  of  Henry  IV;  bu^if 
the^  second  feoffee  has  notice  of  the  use  those  in  the  chancery  wilf 
reform  this  at  this  day  by  subpoena  and  the  heir  of  the  feoffee  upon 
confidence  was  seized  to  his  own  use  until  the  commencement  of  the 
reign  of  Edward  IV  (Henry  IV?)  and  then  commenced  the  sub- 
poena against  the  heir  and  against  the  feoffee  of  the  feoft'ee. — Keil- 
wey, 46,  pi.  2,  per  Frowike,  J. 


BROOKE'S  ABRIDGEMENT,  FEOFFMENTS  AL.  USES,  fol. 

329,  pi.  10. 

Replevin.  The  defendant  avowed  for  a  rent  charge,  for  that  J. 
D.  and  J.  B.  were  seized  of  40  acres  of  land  in  fee  to  the  use  of  R. 
N.  by  the  gift  of  R.  and  granted  a  rent  to  Alice,  the  wife  of  R.,  for 

1  In  connection  with  the  cases  in  this  section  the  student  should  read  an 
article  by  D^an  Ames,  "Purchaser  for  Value  without  Notice,"  1  Harvard  Law- 
Review.  1. 


/  7  s? 


154  TKAXSFEU    OK    KKSPECTIVi:    I.NTF.RESTS    OF    PARTIES.  (Ch.  3 

her  life  with  clause  of  distress  and  he  distrained  and  avowed  this  as 
a  distress  from  the  land  charf:;cd.  The  plaintiff  said  that  J.  D.  and  J. 
B.  were  seized  in  fee  to  the  use  of  W.  N.  and  g-ranted  the  rent  to  llie 
said  Alice,  she  having-  notice  of  the  said  use. and  J  D.  and  J.  l).  en- 
feoffed H.  and  then  W.  N.,  the  cestui  que  use  released  to  said  H. 
his  right  in  the  land,  without  this  that  J.  D.  and  J.  B.  were  seized 
to  the  use  of  the  said  R.  N.  And  the  defendant  demurred  in  law  to 
the  bar  to  the  avowry  and  the  question  is  whether  the  rent_shall  be 
j^  tto  the  use  of  the  cestui  que  use  as  the  land  was  or  to  the_  use.  of  the 
^  ■  grantee.  By  Pollard,  Brook  and  Fitzherbcrt,  Justices,  the  rent  shall 
be  to  the  use  of  the  cestui  que  use  and  then  the  release  of  Jhe^  cestui' 
que  use  to  the  feoffees  extinguished  the  rent  by^the  J^tatiite  of  1 
Rich.  Ill,  wl-iich  provides  that  the  release  of  the  cestiiT  que  use  shall 
be  good  against  him  and  his  heirs,  and  the  feoffees  and  their  heirs. 
*  *  *  Per  Fitzherbcrt,  J.  If  a  man  makes  a  feoffment  wMthout 
consideration,  the  feoffee  shall  be  seized  to  the  use  of  the  feoffor  or 
to  the  use  to  which  the  feoffor  was  seized.  *  *  *  Per  Brook,  J. 
If  a  feoffee  to  use  make  a  feoffment  upon  consideration  to  him  who 
has  no  notice  of  the  use,  that  shall  change  the  use.  *  *  *  Pol- 
lard, J-  Feoffees  to  use  enfeoff  others  without  consideration,  this 
is  to  the  first  use.  but  if  made  upon  consideration  and  to  him  who 
has  no  notice  of  the  use  the  use  is  changed.     (11  Hen.  VIII,  4.) 


ROBES  V.  BENT  AND  COCK. 

(Tn   rii;inrory.  bofore  rx)rd   Koopor    Ejiorton,   T.'OO.     Moore.   .5.")2.) 

In  chancery  the  case  was  this.  Robes  purchased  a  copyhold  of  in- 
heritance in  the  name  of  Bent  and  another  in  trust,  Robes  himself 
being  a  villain.  Bent  surrenders  his  moiety  to  the  use  of  his  son,  the 
other  died  seized.  The  son  of  Bent  and  the  heir  of  the  other  for 
money  sold  the  copyhold  which  was  worth  iSO.  for  £50.  to  Cock  who 
had  no  notice  of  the  trust.  Robes  sued  by  subpcena  the  son  of 
IJent  and  the  heir  of  the  other  and  also  Cock.  It  was  determined  by 
iCgerton,  Lord  Keeper,  that  Robes  should  recover  the  £50.  of  Bent 
and  the  heir  of  the  other  and  that  Cock  should  hold  in  peace.  Tiut 
if  notice  had  been  proved  in  Cock,  Robes  should  have  had  the  land. 
No  recompense  for  the  excess  of  value  was  given  against  the  ven- 
dors, because  no  fraud.  And  Egerton  vouched  a  case  of  31  Hen. 
VI  of  which  he  had  a  copy  from  the  tower  that  a  feoffee  to  use  sold 
the  land  and  died ;  and  a  decree  in  chancery  was  made  by  advice 
of  all  the  judges  of  England  that  the  cestui  que  use  should  have  the 
monev  of  the  executors  of  the  feoflee. 


Sec.  1)  BY   ACT   OF   TIIK    PAHTY.  155 

HARRISON  V.  FORTH. 

(In  riiiinoory,  1605.     Precedents  in  Chancery,  51.) 

The  Master  of  the  Rolls  [Sir  John  Trk\-ok1  was  of  opinion  in 
this  case,  that  if  A.  purchases  an  estate,  with  notice  of  an  incum-  ->, 
brance,  or  that  it  is  redeemable,  and  then  sells  it  to  B.  who  has  no 
notice ;  who  afterwards  sells  it  to  C.  who  has  notice ;  that  by  this, 
the  first  notice  to  A.  the  first  purchaser,  is  thereby  revived,  and  that 
C.  the  last  purchaser  shall  be  liable  to  the  incumbrance  or  redemption, 
as  if  it  had  never  been  in  the  hands  of  one  who  had  no  notice. 

Afterwards,  on  appeal  to  my  Lord  Keeper  [Sir  John  Somers], 
it  being  urged,  that  in  such  case  an  innocent  purchaser  without  no- 
tice may  be  forced  to  keep  his  estate,  and  cannot  sell  it,  and  shall  be 
accountable  for  all  the  profits  received  ab  initio,  his  Lordship  held, 
that  though  A.  and  C.  had  notice,  yet  if  B.  had  no  notice,  the  plain- 
tifif  could  not  be  relieved  against  the  defendant  C,  and  ordered  C.  to 
be  examined  on  interrogatories,  if  he  ever  saw  the  conveyance  from 
the  plaintifif  to  her  sisters,  and  then  to  be  tried  if  the  defendant  C. 
paid  any,  and  what  consideration  for  the  lands ;  and  if  B.  had  notice 
at  the  time  of  his  purchase  that  it  was  redeemable;  for  if  he  had  not, 
the  plaintifif  could  not  be  relieved,  though  A.  and  C.  had  notice. 


BOVEY  V.  SMITH. 

<In  Chancery,   before  T^ord   Chancellor  Nottingham   and  T/>rd   Chief   Jnstice 
North,  1682.     1  Vernon,  60.) 

A  trustee  having  sold  the  land  to  a  stranger,  that  had  no  notice 
of  the  trust  and  a  fine  with  proclamations  and  five  years  past,  the 
trustee  afterwards,  for  valuable  consideration  really  paid  purchases 
these  lands  again  of  the  vendee.  And  it  was  decreed  by  the  Lord 
Chancellor  with  the  concurring  opinion  of  the  Lord  Chief  Justice 
North,  that  the  trustee  notwithstanding  the  fine,  proclamations,  and 
non-claim  for  five  years,  should  stand  seized  in  trust  as  at  first,  as  if 
the  land  had  never  been  sold  nor  any  fine  levied.^ 

1  If  the  trustee  in  parting  with  the  title  to  the  trust  res  ooinniits  no  breach 
of  trust,  and  subsequently  reacquires  title  to  it,  he  will  hold  the  same  free 
from  any  obligation  to  his  cestui  que  trust.  Groveling  v.  Fritts,  o-i  N.  J. 
Eq.  134,  135  (1881). 

If  a  trustee  in  breach  of  trust  transfers  the  trust  res  to  a  donee  wlio  has 
no  notice  of  the  trust,  and  the  donee  transfers  the  property  while  still  igno- 
rant of  his  donor's  fraud,  he  is  not  accountable  to  the  cestui  que  trust  for  the 
value  of  the  property.  Bonesteel  v.  Bonesteel,  30  Wis.  516  (1872).  lie  may 
also  purchase  the  property  from  a  subsequent  bona  tide  purchaser  for  value 
and  hold  the  same  free  from  any  obligation  to  the  cestui  que  trust.  Mast  v. 
Henry,  65  Iowa,  193,  21  N.  W.  559  (1884). 

The  common  statement  that  a  bona  fide  transferee  without  value  of  the 
trust  res  is  in  the  same  positicm  as  if  lie  had  notice  of  the  cestui's  rights, 
therefore,  needs  some  qualification. 


156  TUANSFER   OF   KKSl'ECTI VE    INTERESTS   OF   PARTIES.  (Ch.  3 

TOURVIIJ.H  V.  NAISII. 

(In  rimnoory.  liofon*  Lord  (hniuvlldr  Talbot,  U'M.     3  P.  Wins,  no?.) 

A.  purchased  an  estate,  and  having  paid  down  a  part  of  the  pur- 
chase money,  g'ave  bond  for  the  residue.  The  plaintiff  had  an  equi- 
table lien  on  the  purchased  premises,  of  which  the  defendant  alleged 
he  had  no  notice  at  the  time  of  making  his  purchase,  but  was  ap- 
prised thereof  before  payment  of  the  money  due  on  the  bond.  And 
it  was  contended  that  this  notice  was  not  material  since  the  giving 
of  the  bond  was  as  payment;  and  the  purchaser,  after  he  had  given 
his  bond  for  payment  of  the  purchase  money,  is  Ijound  at  all  events 
to  j:)rocced,  and  cannot  plead  at  law  that  there  is  any  equitable  in- 
cumbrance on  his  purchased  premises. 

Lord  Chancellor.  If  the  person  who  has  a  lien  in  equity  on  the 
premises,  gives  notice  before  actual  payment  of  the  purchase  money, 
it  is  sufficient ;  and  though  the  purchaser  has  no  remedy  at  law 
against  the  payment  of  the  residue,  for  which  he  gave  his  bond,  yet 
he  would  be  entitled  to  relief  in  equity,  on  bringing  his  bill  and, 
showing,  that  though  he  has  given  his  bond  for  payment  of  the 
residue  of  his  purchase  money,  yet,  now  he  has  notice  of  an  incum- 
brance under  which  circumstances  the  court  would  stop  payment  of  the 
money  due  on  the  bond.  >     ^w?    -w.  / 


WIGG  V.  WIGG. 

(In  rhancery.  before  Lord  Chancellor  Hardwicke,  1739.     1  Atkyns.  382.) 

Lands  descended  to  the  heir-at-law  subject  to  an  equitable  charge 
and  he  sold  them  to  a  purchaser  for  a  valuable  consideration.  In  a 
suit  by  those  having  the  equitable  charge  the  question  was,  whether 
this  was  a  continuing  charge  on  the  lands  in  the  hands  of  the  pur- 
chaser. 

Lord  Chancellor.  I  think  the  plaintiffs  have  a  strong  case  both 
for  their  legacies  and  interest. 

There  are  three  questions: 
-^'  -,    First,  if  the  plaintiffs  have  any  continuing  charge  on  the  lands. 
U^'.  Secondly,  if  they  are  proper  to  come  into  this  court. 

Thirdly,  if  there  is  sufficient  notice  to  affect  the  i)urchaser. 

[The  first  two  questions  were  answered  in  the  affirmative.] 

As  to  the  third  question,  of  notice  to  the  purchaser,  it. appears Jlc 
had  notice,  for  though  he  had  no  notice  before  he  paid  his  money, 
yet  he  had  notice  before  the  execution  of  the  conveyance,  and  it 
is  all  but  one  transaction. 


Sec.  1)  BY   ACT   OF   THE   PARTY.  157 

DIXON  V.  HILL  and  Another. 
(Supreme  Court  of  Michigau,  1858.     5  Mich.  404.) 

Error  to  Calhoun  Circuit. 

August  2,  185G,  Arza  Lewis  made  a  general  assignment  for  the 
benefit  of  creditors  to -George  H.  French,  which  was  fraudulent 
upon  its  face  as  it  authorized  a  sale  of  the  assigned  property  on 
credits  Freocli  on  September  24,  1856,  agreed  to  sell  the  property 
tQ-iiin  &  Mahoney,  who  were  to  pay  down  $250  and  give  their  joint 
note  for  $250  payable  in  three  months  and  for  the  balance  their 
notes  in  four  equal  payments,  at  twelve,  eighteen,  twenty-four  and 
thirty  months  and  were  to  take  possession  the  next  morning.  They  ' 
so  took  possession  and  began  the  inventory  and  sale  of  the  goocTsT 

October  3,  1856,  Dixon,  as  Shexi£t..of  Calhoun  County,  on  a  writ 
■ia-Javor  of  Culver,  Foote  and  Wilkie  attached-  the-  goods  in  the 
possession  of  Hill  &  Mahoney.  Hill  &  Alahoney  had  then  paid  French 
nothing  and  had  given  no  notes.  After  the  attachment  the  $250  were 
paid  and  the  notes  given.  Hill  &  Mahoney  replevied  the  goods  from 
the  Sheriff. 

On  the  trial  of  the  replevin  suit,  the  Sheriff  having  justified  under 
the  attachment,  the  court  charged  the  jury:  "That  if  the  jury  should 
find  that  the  plaintiffs  obliged  themselves  to  pay  French,  the  assignee, 
the  purchase  price  of  the  goods  in  question,  whether  by  writing  or 
parol,  the  possession  having  been  given  to  the  plaintiffs,  that  would  be 
a  valuable  consideration."  To  this  defendant  excepted.  Verdict  for 
plaintiffs,    judgment    thereon    and   writ   of    error   by   defendant. 

CampbelIv,  J.^  No  one  but  a  purchaser  for  a  valuable  considera- 
tion can  claim  title  to  property  which  has  been  fraudulently  assigned, 
against  the  action  of  an  attaching  creditor.  Such  purchasers  are 
protected  upon  the  equitable  principle  that  they  should  not  be  depriv- 
ed of  that  which  they  have  honestly,  and  without  notice  of  any  fraud, 
bought  and  paid  for  in  fair  dealing  with  the  person  holding  the  legal 
title.  But^the  consideration  must,  in  all  cases,  be  actually  passed  be-); 
fore  notice.  Unless  payment  has  been  actually  made  in  some  shape,  ' 
the  authorities  are  quite  clear  that  the  purchase  will  not  be  upheld. 
In  equity,  a  purchaser  is  protected  to  the  extent  of  the  payments 
actually  made,-  and  no  further,  even  where  future  payments  are 
provideii^lor,  unless  those  are  secured  in  such  a  manner  that  the 
purchaser  cannot  be  relieved  against  them.  This  could  only  happen 
where  he  gives  negotiable  paper ;  for  upon  a  debt  not  negotiable,  the 
failure  of  title  would  exonerate  him.  *  *  *  jj^  tj^g  (^a^se  before 
us,   no  consideration   whatever  had   been  paid   or   secured.      Sucb-..^  /<22<, 

1  Part  of  the  opiniou  is  omitted. 

2  lu  some  jurisdictions  the  purchaser  may  keep  the  property  bought,  sub- 
ject to  a  lieu  for  the  unpaid  purchase  price  in  favor  of  the  equitable  incum- 
brancer.    Hardin's  Elxecutors  v.  Harrington,  11  Bush  (Ky.)  367,  374  (1875). 


158  TRANSFER   OP   RESPKCTIVE   INTERESTS   OF   PARTIES.  (Cll.  3 

purchase  cannot  avail,  cither  at  law  or  in  equity,  against  the  remedies 
of  creditors.  The  court  erred  in  making  the  charge  in  favor  of  its 
validity.    Judgment  reversed  and  new  trial  granted. 


SAUNDERS  V.  DEHEW. 

(In    Chanr-ory,    before   Lords    Conunissioiicrs.    Sir    .Tohn    Trevor.    Sir    Williniii 
Itiiwlinson,  and  Sir  Geoi-p'  Ilutdiins.  ICfK?.     2  Vernon.  271.) 

Anne  r>avlv,  being  possessed  of  a  term  for  years,  makes  a  volun- 
tary settlement  thereof,  in  trust  for  herself  for  life,  remainder  to  her 
daughter  Isabella  Barnes  for  life,  remainder  to  the  children  of  Isa- 
bella, by  Mr.  Barnes,  her  then  husband.  Isabella,  for  £200..  mort- 
gages the  lands  in  question  to  the  plaintiff,  who  pretends  he  had  no 
notice  of  the  settlement ;  Isabella  in  the  mortgage  deed,  being  called 
the  daughter  and  heir  of  John  Bayly.  The  plaintiff  hearing  of  it  gets 
an  assignment  of  the  term  from  the  trustees. 

Per  Curiam.  Though  a  purchaser  may  buy  in  an  mctmil)rance,  or 
lay  hold  on  any  plank  to  protect  himself,  yet  he  shall  not  [)rotect 
himself  by  the  taking  a  conveyance  from  a  trustee  after  he  had  no- 
tice of  the  trust,  for  by  taking  a  conveyance  with  notice  of  the  trust, 
he  himself  becomes  the  trustee,  and  must  not,  to  get  a  plank  to  save 
himself,  be  guilty  of  a  breach  of  trust.  And  the  plaintiff's  bill  being 
brought  against  the  children  of  Isabella  to  foreclose  them,  the  court 
refused  so  to  do,  saying,  if  he  might  be  suffered  to  protect  himself, 
by  thus  getting  in  the  legal  estate,  thev  would  not  carry  it  on  by  a 
decree  in  equity  to  foreclose. 


GOSHEN    NATIONAL    BANK    v.    WILLIAM    BINGHAM    and 

Others. 

WILLIAM    BINGHAM    and    Others    v.    GOSHEN    NATIONAL 

BANK. 

(Court  of  Appeals  of  New  York,  Second  Division,  1890.     118  N.  T.  34!).  23  N. 
B.  ISO,  7  L.  R.  A.  595,  10  Am.  St.  Rep.  7G5.) 

Appeals  from  judgments  rendered  by  the  General  Term  of  the 
Supreme  Court  in  the  first  judicial  department,  entered  upon  orders 
made  March  'M,  LSST,  which  affirmed  a  judgment  in  the  action  first 
above  entitled  in  favor  of  the  defendants  and  a  judgment  in  action 
second  above  entitled  in  favor  of  plaintiff's,  both  of  which  were  en- 
tered upon  the  reports  of  a  referee. 

On  November  27,  1884,  Benjamin  D.  Brown  applied  to  the  cashier 
of  the  Goshen  National  Bank,  appellant,  at  Goshen,  N.  Y.,  to  cash  a 
sight   draft    for   $1T,0U0,   drawn   by   him    upon   the   firm   of   William 


Sec.  1)  BY  ACT  OF  Tin;  party.  159 

Bingham  &  Co.  of  New  York,  the  individual  members  of  which  firm 
are  the  respondents,  accompanied  by  a  quantity  of  the  bonds  of  the 
West  Point  Manufacturing  Company,  of  the  face  .vaUie  of  $17,000. 
Brown  represented  that  he  had  negotiated  a  sale  of  these  bonds  at 
their  face  value  with  William  Bingham  &  Co. ;  that  they  had  directed 
him  to  draw  upon  them  at  sight  for  $17,000,  the  draft  to  be  accom- 
panied by  the  bonds,  and  that  the  draft  would  be  paid  upon  presenta- 
tion. Such  representations  were  absolutely  false.  The  bonds  had 
no  market  value.  Brown  was  a  bankrupt  and  had  no  funds  in  the 
bank  except  such  as  resulted  from  the  credit  given  him  upon  the 
faith  of  the  draft  on  Bingham  &  Co.,  accompanied  by  the  bonds. 
The  cashier  of  the  Goshen  National  Bank,  relying  upon  such  repre- 
sentations, cashed  the  draft  for  the  $17,000,  and  placed  the  proceeds 
to  the  credit  of  Brown  upon  the  books  of  the  bank.  He  gave  Brown 
sight  drafts  on  New  York  for  $12,000,  and  certified  a  check  drawn 
by  Brown  to  his  own  order,  dated  November  26,  1884,  for  $.j,000. 
On  the  morning  of  November  2Sth,  Brown  called  at  the  office  of 
William  Bingham  &  Co.,  and  stated  that  he  wanted  to  get  some 
currency.  Mr.  Bingham  passed  the  check  to  the  firm's  cashier  direct- 
ing him  to  give  Brown  currency  for  the  amount.  The  cashier  gave 
him  a  check  drawn  on  the  Corn  Exchange  Bank  for  $5,000.  Brown 
had  the  check  cashed  at  the  Corn  Exchange  Bank.  He  also  had  the 
New  York  drafts  cashed,  amounting  to  $12,000,  which  he  had  ob- 
tained from  the  Goshen  National  Bank.  After  procuring  the  checks 
and  drafts  to  be  cashed,  he  fled  to  Canada  where  he  remained  at  the 
time  of  the  trial  of  these  actions.  When  Bingham.  &  Co.  took  from 
Brown  the  check  certified  by  the  Goshen  National  Bank  it  was  not 
indorsed. 

The  referee  found  in  the  action  second  entitled  that  "at  the  time 
of  the  transfer  of  the  said  certified  check  by  Brown  to  the  plaintiff's, 
it  was  intended  both  by  Brown  and  the  plaintiffs  that  said  certified 
check  should  be  indorsed  by  Brown,  and  it  was  supposed  by  both 
parties  that  he  had  so  indorsed  it,  and  if  the  plaintiff's  had  known  that 
it  was  not  indorsed  they  would  not  have  paid  the  consideration  there- 
for." 

He  found  in  the  action  first  entitled,  "that  Brown  made  no  state- 
ment to  the  defendants,  or  to  either  of  them  at  the  time  of  the  trans- 
fer of  the  check  that  such  check  was  indorsed." 

And  "prior  to  the  commencement  of  the  action  of  replevin  the 
defendants  never  requested  Brown  to  indorse  said  check." 

While  Bingham  &  Co.  held  the  check  in  question  unindorsed,  a 
demand  for  its  return  to  the  bank,  accompanied  by  a  full  explanation 
of  the  circumstances  under  which  the  certification  was  obtained,  was 
made  upon  Bingham  &  Co.,  in  behalf  of  the  bank  and  upon  their  re- 
fusal to  return  it,  an  action  to  recover  its  possession  was  commenced 
bv  the  bank  against  Bingham  &  Co. 


IGO  TRANSFER   OF   RESPECTIVE   INTERESTS   OF   FARTIES.  (Ch.  3 

That  action  is,  firstly,  above  entitled. 

Subsequently,  and  on  December  Kilh.  IJingham  &  Co.  obtained  from 
Brown  a  power  of  attorney  to  indorse  the  check.  Pursuant  thereto 
the  check  was  indorsed  and  payment  thereafter  demanded  of  the 
bank. 

This  was  refused,  and  thereupon  the  action,  secondly  above  en- 
titled, was  commenced  by  Bingham  &  Co.,  to  recover  the  amount  of 
the  check. 

Parker,  J.^  As  against  Brown,  to  whose  order  the  check  was 
payable,  the  bank  had  a  good  defense.  But  it  could  not  defeat  a 
recovery  by  a  bona  fide  holder  to  whom  the  check  had  been  indorsed 
for  value.  By  an  oversight  on  the  part  of  both  Brown  and  Bingham 
&  Co.  the  check  was  accepted  and  cashed  without  the  indorsement  of 
the  payee.  Before  the  authority  to  indorse  the  name  of  the  payee 
upon  the  check  was  procured  and  its  subsequent  indorsement  thereon, 
Bingham  &  Co.  had  notice  of  the  fraud  which  constituted  a  defense 
for  the  bank  as  against  Brown.     Can  the  recovery  had  be  sustained? 

It  is  too  well  settled  by  authority,  both  in  England  and  in  this 
country,  to  permit  of  questioning,  that  the  purchaser  of  a  draft  or 
check,  wdio  obtains  title  without  an  indorsement  by  the  payee,  holds 
it  subject  to  all  equities  and  defenses  existing  between  the  original 
parties  even  though  he  has  paid  full  consideration,  without  notice 
of  the  existence  of  such  equities  and  defenses.     *     *     * 

This  rule  is  only  applicable  to  negotiable  instruments  which  are 
negotiated  according  to  the  law-merchant. 

When,  as  in  this  case,  such  an  instrument  is  transferred  but  with- 
out an  indorsement,  it  is.  treated  as  a  chose  in  action  assigned  to  the 
purchaser.  The  assignee  acquires  all  the  title  of  the  assignor^  and 
may  maintain  an  action  thereon  in  his  own  name.  And  like  all  other 
choses  in  action  it  is  subject  to  all  the  equities  and  defenses  existing 
in  favor  of  the  maker  or  acceptor  against  the  previous  holder. 

Prior  to  the  indorsement  of  this  check,  therefore,  Bingham  & 
Co.  were  subject  to  the  defense  existing  in  favor  of  the  bank  as 
against  Brown,  the  payee. 

Evidence  of  an  intention  on  the  part  of  the  payee  to  indorse  does 
not  aid  the  plaintiff.  It  is  the  act  of  indorsement,  and  not  the  inten- 
tion, which  negotiates  the  instrument,  and  it  cannot  be  said  that  the 
intent  constitutes  the  act. 

The  effect  of  the  indorsement  made  after  notice  to  Bingham  &  Co. 
of  the  bank's  defense  must  now  be  considered.  Did  it  relate  back 
to  the  time  of  the  transfer,  so  as  to  constitute  the  plaintiffs  holders 
by   indorsement  as  of  that  kind? 

While  the  referee  finds  that  it  was  intended  by  both  Brown  and 
the  plaintiffs  that  the  check  should  be  indorsed,  and  it  was  supposed 
that  he  had  so  indorsed  it,  he  also  finds  that  Brown  made  no  state- 

1  Part  of  the  opiniou  is  uiuitted. 


Sec.  1)  BY   ACT   OF   THE   PARTY.  IGl 

ment  to  the  effect  that  the  check  was  indorsed ;  neither  did  the  de- 
fendant-; request  Brown  to  indorse  it.  There  was,  therefore,  no 
agreement  to  indorse.  Nothing  whatever  was  said  upon  the  subject. 
Before  Brown  did  agree  to  indorse  the  plaintiffs  had  notice  of  the 
bank's  defense.  Indeed,  it  had  commenced  an  action  to  recover  pos- 
session of  the  check. 

It  woukl  seem,  therefore,  that  having  taken  title  by  assignment, 
for  such  was  the  legal  effect  of  the  transaction,  by  reason  of  which 
the  defense  of  the  bank  against  ]>rown  became  effectual  as  a  de- 
fense ag-ainst  a  recovery  on  the  check  in  the  hands  of  the  plaintiffs  as 
well,  that  Brown,  and  Bingham  &  Co.,  could  not,  by  any  subsequent 
agreement  or  act,  so  change  the  legal  character  of  the  transfer  as  to 
affect  the  equities  and  rights  which  had  accrued  to  the  bank.  That  the 
subsequent  act  of  indorsement  could  not  relate  back  so  as  to  destroy  • 
the  intervennig  rights  and  remedies  of  a  third  party. 

This  position  is  supported  by  authority.     *     *     * 

The  views  expressed  especially  relate  to  the  action  of  Bingham  & 
Co.  against  the  bank  and  call  for  a  reversal  of  the  judgment.  ^   - 

We  are  of  the  opinion  that  the  action  brought  by  the  bank  against   ■'^^'^^Jc^^;^ 
Bingham  &  Co.  to  recover  possession  of  the  check  cannot  be  maintain- 
ed and  in  that  case  the  judgment  should  be  affirmed.  . 


r'' 


'■^oIL, 


JONES  V.  POWLES. 


7^1. 


(In  Chancery,  before  the  Master  of  the  Rolls,  Sir  John  Leach,  1833.    3  Mylne 

&  Keen,  581.)  ^     ^ 

By  indentures  of  lease  and  release,  dated  respectively  the  31st  and 
22d  of  December,  1800,  John  Jones,  a  hatter  in  Hereford,  mortgaged 
a  freehold  house  and  premises,  situate  in  High  Street,  in  that  city,  of    _,     • 
which  he  was  seized  in  fee,  to  William  Holbrook  and  his  heirs,  to 
secure  the  sum  of  £200.,  advanced  to  him  by  Holbrook,  with  interest. 

John  Jones  paid  off  the  mortgage  and  all  arrears  of  interest  in  '- 
the  month  of  August,  1808,  and  at  the  same  time  took  from  Holbrook 
a  memorandum,  which  was  indorsed  upon  the  mortgage  deed,  ac- 
knowledging such  payment ;  but  he  never  obtained  a  reconveyance  of 
the  property,  and  at  the  time  of  his  death,  which  took  place  in  the 
month  of  May,  1814,  the  legal  estate  in  the  mortgaged  premises  re- 
mained outstanding  in  Holbrook.  Immediately  upon  the  death  of 
John  Jones,  one  Benjamin  Meredith,  who  had  been  his  shopman  and 
assisted  him  in  his  business,  produced  and  proved  in  the  proper  Ec- 
clesiastical Court  an  instrument  purporting  to  be  the  will  of  John 
Jones,  by  virtue  of  which  he  obtained  undisturbed  possession  of  the 
messuage  and  premises  comprised  in  the  mortgage.  This  instru- 
Ken.Tr.— 11 


162  TRANSFER   OP   RESPECTIVE   INTERESTS   OF   PARTIES.  (Cll.  3 

merit  was  in  the  following  words:  "The  will  and  testament  of  John 
Jones,  hatter,  dated  September  12,  1802.  I  do  hereby  \yill  and  be- 
queath, after  all  my  just  debts  and  funeral  expenses  are  paid,  the 
whole  of  my  real  and  personal  property  to  my  assistant  Mr.  Benja- 
min Meredith.  In  testimony  of  which  witness  my  hand :  John 
Jones.     Witnesses:     John  Cowmeadow,  Henry  Hill,  Thomas  Jones." 

Meredith,  shortly  after  the  death  of  John  Jones,  had  occasion  to 
borrow  a  sum  of  £300.  from  one  Hall,  upon  the  security  of  the  proper- 
ty in  question  ;  and.  accordm<:^ly,  in  consideration  of  £300.  lent  to  Mere- 
dith by  Hall,  Holbrook,  as  trustee  of  the  le^^^al  estate  for  Meredith,  and, 
at  his  request,  joined  with  Meredith  in  a  deed,  dated  the  2d  of  Febru- 
ary, 1815,  by  which  the  messuage  and  premises  in  High  Street  were 
conveyed  to  Hall,  his  heirs  and  assigns,  subject  to  redemption  upon 
payment  of  the  £300.  and  interest. 

Meredith  died  in  the  month  of  April,  181."),  having  devised  the 
equity  of  redemption  of  the  mortgaged  premises  to  his  wife  Susannah, 
in  fee;  and  by  divers  mesne  conveyances  the  title  to  that  equity  of 
redemption  became  in  the  month  of  March,  1821,  vested  in  a  person 
of  the  name  of  James  Jones  in  fee. 

In  the  month  of  October  in  that  year,  one  Watkins.  at  the  re([uest 
^  of  James  Jones,  paid  off  the  £300.  then  due  upon  the  mortgage  to 

I        ./       Hall,  and,  in  consideration  of  the  money  so  paid,  the  mortgaged  prem- 
.^'^jp^     ises  were,  at  the  same  time,  conveyed  by  Hall  and  Jones  to  Watkins, 
subject   to  redemption  by  Jones,   on   payment  of   the   £300.   and   in- 
terest;   and  that  sum  was,  by  a  subsequent  transaction  in  September, 
1822,  increased  to  £600. 

Soon  after  the  period  of  the  last  mentioned  transactions,  James 
Jones  and  Watkins  having  entered  into  copartnership,  they  applied  to 
John  Powles  for  a  loan  of  £4.50.,  and  Powles  having  advanced  the 
money,  Watkins  with  the  consent  of  his  partner  Jones,  deposited  with 
Powles  the  mortgage  deed,  and  all  the  title  deeds  relating  to  the 
property,  by  way  of  security  for  his  advances.  Powles  having  aft- 
lijiA.Aj  erwards  lent  them  further  sums,  he  was  eventually  let  into  possession 
\    c/^.  as   mortgagee,   and    he   continued   in    possession    until    the   month   of 

April,  1828,  when  he  died,  leaving  the  defendant,  Sarah  Powles,  his 
widow,  whom  he  appointed  as  executrix,  and   to  whom   he   devised 
,  ^     .  all  his  mortgages  and  trust  estates. 

'  Vv  OjLV^'y  Upon  the  death  of  her  husband,  Sarah  Powles  entered  into  pos- 
•A^Co^^sbssion,  and  made  further  advances  to  Jones  and  Watkins,  on  the 
security  of  the  same  property,  to  the  amount,  in  the  whole,  of  £2000.; 
and  in  the  month  of  September,  1830,  James  Jones  and  Watkins,  by 
a  deed  which  recited  that  Sarah  Powles  had  contracted  for  the  pur- 
chase of  this  estate  for  £1200.,  and  that  she  was  to  retain  that  sum 
in  part  discharge  of  the  moneys  due  to  her  from  Jones  and  Watkins, 
it  was  witnessed  that,  in  consideration  of  £1200,  and  of  the  discharge 
given  by  Watkins  to  Jones  from  the  £000.  due  to  him,  Watkins  and 


Sec.  1)  BY   ACT   OF  TIIK    PARTY,  1G3 

Jones  conveyed  and  released  tlie  house  and  premises  to  Sarah  Powles,.   /\ 
her  heirs  and  assigns,  forever. 

In  the  month  of  July,  ISol,  the  present  bill  was  filed  by  David 
Jones  and  Sarah  his  wife,  against  Sarah  Powles.  The  bill  alleged 
that  John  Jones  died  intestate,  leaving  the  plaintiff,  Sarah  Jones,  his 
heiress-at-law ;  that  John  Jones  never  made  any  will  duly  executed 
and  attested  to  pass  real  estate  by  devise,  and  that  the  signature  and 
the  attestations  of  the  witnesses  to  the  pretended  will  were  forged  or 
fictitious ;  and  it  prayed  that  the  plaintiffs  might  be  permitted  to  re- 
deem the  estate,  on  payment  of  what  should  be  found  due  in  respect 
of  the  mortgage;  and  also,  if  necessary,  that  an  issue  might  be  di-  l'  . 
rected  for  the  purpose  of  trying  whether  John  Jones  made  any  valid 
devise  of  the  property  in  question. 

The  defendant  having  put  in  her  answer,  setting  forth  her  title, 
as  it  has  been  already  stated,  the  plaintiffs  filed  a  supplemental  bill, 
in  which  they  detailed  the  history  of  the  several  mortgage  transac- 
tions, as  before  mentioned,  and  alleged  that  the  defendant  was  in  pos- 
session and  enjoyment  of,  and  claimed  to  be  entitled  to  the  premises 
not  as  mortgagee,  but  as  absolute  owner  under  the  forged  will.  The 
supplemental  bill  further  stated  that,  at  the  instance  of  the  plaintiffs, 
the  administration  with  the  pretended  will  annexed,  obtained  by 
Meredith,  had  been  declared  void  by  the  Ecclesiastical  Court,  and 
fresh  letters  of  administration  granted  to  the  plaintiff,  Sarah  Jones. 
It  then  charged  that  the  defendant  had  notice  of  the  forgery,  and 
prayed  the  same  relief  as  if  these  matters  had  been  stated  in  the 
original  bill. 

The  defendant,  by  her  answer  to  the  supplemental  bill,  admitted 
that  the  mortgage  to  Holbrook  was  paid  off  in  the  life  time  of  John 
Jones,  bijLthatJJie_l£gal--£state-was_jiat_j:ecoilveyed  at  his  death ;  and 
she  claimed  to  be  entitled  to  absolute  ownership  of  the  house  and 
premises,  as  a  purchaser  for  valuable  consideration,  without  notice 
of  the  forgery;  and  she  denied  the  title  of  the  plaintiff  Sarah  Jones, 
as  the  heiress-at-law  of  John  Jones. 

At  the  hearing  of  the  cause  the  Master  of  the  Rolls  directed  that 
the  bill  should  be  retained  for  twelve  months,  with  liberty  to  the 
plaintiff's,  in  the  meantime,  to  begin  an  action  of  ejectment  to  recover 
possession  of  the  premises;  and  the  defendant  was  not  to  set  up  the 
Statute  of  Limitations,  or  the  legal  estate  in  the  premises,  which  was 
outstanding  in  William  Holbrook  at  the  death  of  John  Jones,  and 
which  had  subsequently  been  conveyed  to  the  defendant. 

An  action  of  ejectment  was  accordingly  brought,  and  was  tried  at 
the  last  Spring  assizes  for  the  county  of  Hereford,  when  the  plain- 
tiffs recovered  a  verdict,  having  fully  established,  by  their  evidence, 
that  the  pretended  will  of  John  Jones  was  a  forgery,  and  that  the 
plaintiff  Sarah  Jones  was  his  heiress-at-law. 

The  evidence  in  the  cause  established  that,  in  the  month  of  July. 


164  TRANSFER   OF   RESPECTIVE   INTERESTS   OF   PARTIES.  (Ch.  3 

1825,  notice  was  given  to  John  Powles,  the  mortgagee,  and  the  de- 
endant  Sarah,  his  wife,  by  a  soHcitor  acting  on  behalf  of  a  party  who 
claimed  to  be  the  heir  of  John  Jones,  that  he  had  received  instruc- 
tions to  institute  legal  proceedings  for  the  purpose  of  setting  aside 
the  will,  on  the  ground  that  it  was  a  forgery. 

The  cause  now  came  on  for  further  directions  upon  the  equity  re- 
served. 

The  iMasticr  of  the  Roli,s.  The  defendant  is  a  purchaser  for 
valuable  consideration  from  persons  claiming  title  under  Meredith, 
who  entered  into  possession  of  the  property  in  question  as  the  devisee 
of  Jones  the  rightful  owner. 

The  legal  estate  was  outstanding  in  a  satisfied  mortgagee  under 
Jones;  and  the  mortgagee,  by  direction  of  Meredith,  whom  he  be- 
lieved to  be  such  devisee,  conveyed  the  legal  estate  to  Hall,  by  way 
of  better  security  to  Hall  for  money  advanced  by  him,  by  way  of 
mortgage,  to  Meredith.  Meredith  died  in  possession  having  devised 
the  property  to  his  wife,  who  devised  to  the  parties  under  whom  the 
defendant  claims  as  a  purchaser  for  valuable  consideration.  The 
conveyance  to  Hall  by  the  satisfied  mortgagee  of  Jones,  recites  the 
fact  of  the  mortgage,  and  that  it  was  satisfied,  and  that  Meredith 
was  the  devisee  of  Jones,  and  that  the  conveyance  of  the  legal  estate 
to  Hall  was  made  by  the  direction  of  Meredith.  Meredith,  therefore, 
and  those  who  claim  as  volunteers  under  him,  could  have  no  title 
against  the  plaintiff  as  heir  at  law  of  Jones. 

The  question  is,  whether  the  defendant,  claiming  as  a  purchaser  for 

c^^^c-nL."  valuable  consideration  without  notice  of  the  plaintiff's  title  as   heir, 

h^A^/z  can  protect  herself  by  the  legal  estate  which  she  has  acquired  by  the 

■v/    i    /  conveyance  from  Hall. 


W    ^l>rt'^M<y. 


My  impression  at  the  opening  of  this  case  was,  that  the  protection 
of  the  legal  estate  extended  only  to  cases  where  the  title  of  the  pur- 
chaser for  valuable  consideration  without  notice  was  impeached  by 
reason  of  some  secret  act  or  matter  done  by  the  vendor,  or  those 
under  whom  he  claimed;  but  upon  full  consideration  of  all  the  au- 
thorities which  have  been  referred  to  and  the  dicta  of  judges  and 
text-writers,  and  the  principles  upon  which  the  rule  is  grounded,  I 
am  of  opinion  that  the  protection  of  the  legal  estate  is  to  be  extended, 
not  merely  to  cases  in" which  the  title  of  the  purchaser  for  valuable 
consideration  without  notice  is  impeachable  by  reason  of  a  secret  ac^ 
done,  but  also  to  cases  in  which  it  is  impeached  by  reaspnjDf  the  false^ 
hood  of  a  fact  of  title  asserted  by  the  vendor  or  those  under  whom_ 
he  claims,  where  such  asserted  title  is  clothed  with  possession;  and 
the  falsehood  of  the  fact  asserted  could  not  have  been  detected  by 
reasonable  diligence. 

This  is  the  situation  in  which  the  defendant  stands.     There  was  no 
reasonable   ground    for   suspicion   that   the   will   was   forged;    a  long 


Sec.  1)  BY   ACT   OF   THE   PARTY. 


165     —   / 


possession  had   followed  the  alleged   devise,  and   no  reasonable  dili- 
gence could  have  lead  to  a  discovery  of  this  forgery. 

I  must  therefore  declare,  that  as  to  all  sums  of  money  advanced  by 
the  defendant  on  the  security  of  this  property  previously  to  notice  of 
the  forgery,  she  is  to  be  considered  as  a  purchaser  for  valuable  con- 
sideration without  iidticc;  and  the  accounts  between  the  parlies  must 
be  taken  upon  that  principle. 


DUEBER  WATCH  CASE  MANUFACTURING  COMPANY  v. 
DAUGHERTY  and  Others. 

(Supreme  Court  of  Ohio,  1900.     02  Ohio  St.  580,  57  N.  E.  455.) 

Error  to  the  Circuit  Court  of  Stark  County. 

This  was  a  suit  by  plaintiffs  below  claiming  to  be  pledgees  of  cer- 
tain stock,  against  the  company  issuing  it,  for  a  sale  of  the  stock  and 
an  application  of  the  proceeds  to  their  claim,  the  company  itself  claim- 
ing to  own  the  stock  and  refusing  to  recognize  the  plaintiffs'  right  to 
it  by  a  transfer  of  it  on  the  books  of  the  company.     Judgment  was 
rendered  in  the  common  pleas  in   favor  of  the  plaintiffs,  which  on 
error,  was  affirmed  by  the  Circuit  Court.     On  November  23,  1891,  ' 
the  plaintiff's,  Daugherty  and  j\Iichner,  for  the  accommodation  of  John 
A.  Coburn  and  James  W.  Dulaney,  endorsed  a  note  for  $1000,  pay- 
able to  the  City  National  Bank  of  Akron.     Coburn  agreed  and  prom- 
ised at  the  time,  in  order  to  secure  the  plaintiffs  against  loss,  that  he 
would  transfer  and  assign  to  them  a  certain  certificate  of  stock  he^ 
then  owned  in  the  company.     On  January  7,  1892,  he  did  assign  and"' 
transfer  the  stock  to  the  plaintiffs  with  authority  to  have  the  same  If 
transferred   to   them   on  the  books  of  the   company.     The  plaintiffs    -^  o^tcc^ 
were  compelled  to  pay  the  note  and  have  been  only  partially  indemni-    -' 
fied;   and  there  is  still  due  them  something  over  $200. 

The  company  by  answer  and  cross  petition  stated  in  substance  that 
the  corporation  had  transferred  without  consideration  to  CoTjurn 
four  shares  of  its  stock  so  as  to  qualify  him  to  act  as  a  director;  that 
this  stock  was  to  be  surrendered  when  his  services  as  a  director  were 
not  required;  that  he  had  left  the  State  of  Ohio  and  ceased  to  be 
eligible  as  a  director  because  of  nonresidence  in  the  state;  that  he 
had  promised  to  return  and  reassign  said  stock,  but  had  failed  to  do 
so;  that  before  plaintiffs  acquired  said  stock  they  knew  it  belonged 
to  the  defendant.  The  defendant  prayed  that  the  stock  be  declared 
to  belong  to  it  and  that  plaintiffs  be  declared  to  have  no  interest  in 
it  and  be  ordered  to  transfer  the  same  to  the  defendant. 

The  evidence  clearly  disclosed  that  whilst  at  the  time  the  note 
was  given  and  the  agreement  to  transfer  the  stock  was  made,  Novem- 
ber 23,  1891,  the  plaintiffs  had  no  knowledge  of  the  claim  of  the  com- 
pany to  be  the  equitable  owner  of  the  stock,  yet  at,  and  some  time 


106       TUANRFER  OF  RESrECTIVK  INTERESTS  OF  PARTIES.     (Ch.  o 

before,  it  was  transferred  to  llicni  l)y  assig-nineiit  they  had  such  knowl- 

ed.c^e. 

The  claim  of  the  C()nii)any  was  tliat  Cohiirn  was  simply  a  nominal 
share  holder,  with  no  real  interest  whatever  in  the  slock  held  by 
him. 

MiNSiiAij.,  J.^  These  questions  arise  upon  the  case:  1.  Did  the 
aj^reement  to  transfer  give  to  the  plaintiffs  any  equitable  interest  m 
the  stock  ?  2.  If  so,  was  their  equity  superior  in  merit  to  that  of  the 
company?  3.  Did  the  assignment  of  the  stock  made  January  7,  1892, 
with  knowledge  of  the  claim  of  the  company,  give  them  a  superior 
right  to  the  latter,  though  the  equities  were  equal?  4.  Can  the  com- 
pany, under  the  circumstances  disclosed  by  the  answer,  be  heard  to 
make  a  claim  to  the  stock  against  an  innocent  third  person  ?  *  *  * 
2.  The  question  then  arises,  was  this  equity  superior  to  that  of  the 
company  based  on  the  agreement  with  Coburn  for  a  reassignment  of 
the  stock?  It  is  the  undoubted  rule  that  as  between  equities  that  are 
equal  in  merit,  the  one  that  is  prior  in  point  of  time  is  prior  in  right. 
So  that  before  the  priorities  of  competing  equities  can  be  determined, 
their  respective  merits  must  be  considered,  and  if  it  be  found  that  the 
latter  equity  is  superior  in  this  regard,  it  must  be  awarded  jiriority  in 
right.  Hume  v.  Dixon,  37  Ohio  St.  G6 ;  Campbell  v.  Sidwell,  Gl 
Ohio  St.  179,  55  N.  E.  cm.     *     *     * 

Whilst  every  case  must  be  decided  upon  its  own  peculiar  facts,  and 
it  will  be  difficult  to  give  a  more  definite  rule  than  is  given  in  Hume 
V.  Dixon,  adopting  the  principle  of  that  case  and  the  solution  of  this 
one  is  not  difficult.  For  purposes  of  its  own,  and  which  we  need  not 
here  comment  upon,  it  placed  the  legal  title  to  the  stock  in  question  in 
Coburn.  He  held  a  certificate  to  the  efifect  that  he  owned  it.  On  the 
faith  of  what  this  certificate  purported  and  on  the  promise  to  transfer 
it  in  a  week  as  collateral  security,  the  plaintiffs  accommodated  the  prin- 
cipals on  the  note  by  becoming  their  sureties.  The  principals  have 
not  fully  indemnified  them.  Unless  they  are  permitted  to  avail  them- 
selves of  this  collateral  they  may  suffer  a  loss.  To  permit,  under  the 
circumstances  this  secret  equity,  if  it  may  properly  be  termed  one,  to 
be  asserted  as  prior  in  right  to  that  of  the  plaintiffs,  tends  to  shock 
the  natural  sense  of  justice.  One  who,  for  his  own  purposes,  places. 
•  the  legal  title  to  his  property  in  another,  must  take  the  hazard  ot 
any  loss  that  may  result  from  his  dealing  with  it  as  his  own,  so  far  as 
innocent  third  persons  are  concerned.  On  principles  of  natural  jus- 
tice his  equity  is  inferior  to  that  of  any  person  who  acquires  in  good 
faith  any  title  to  the  property. 

3.  It  is  now  generally  conceded  that  the  assignment  of  a  certificate 
of  stock  with  power  of  attorney  to  have  it  transferred  on  the  books 
of  the  company,  gives  to  the  assignee  the  status  of  a  legal  owner  of 
the  stock.     It  conforms  to  the  practice  and  general  understanding  of 

1  Part  of  the  opinion  is  omitted. 


Sec.  1)  BY    ACT   OF   Tin:    TARTY.  1(57 

the  commercial  world,  l^jiiicroy,  Iv|.  §  710;  Railway  Co.  v.  Rank, 
56  Ohio  St.  :5r)l,  ;}s;!.  i:  N.  E'  249,  43  L.  R.  A.  777.  Hence,  on 
January  7,  1892,  wiicn  the  stock  wa.s  assigned  by  Coburn  to  the  plain- 
tiff.s  and  delivered  to  them,  they  became  clothed  with  what  is  regfardcd 
as  the  legal  title,  or  in  other  words,  held  as  against  the  company  a 
title  by  est()i)pel  to  the  stock  superior  to  any  right  of  the  comjjany  to 
set  uj)  in  its  own  favor  a  secret  equity.  Cook  on  Stockholders,  § 
41G.  It  is  true  that  at  this  time  they  had  knowledge  of  the  claim  of 
^the  conipanw  but  had  no  such  laiowledge  at  the  time  the  agreement 
v^'as  made  for  the  tran-t'er.  And  here  it  will  be  observed  that  the 
claim  of  the  coni])an\  w a>  not  that  of  an  innocent  purchaser  for  value. 
Its  claim  is  that  of  a  mere  equity  for  a  reconveyance,  prior  in  time, 
to  the  equity  of  the  plaintiffs.  The  contest  is  simply  between  equities. 
In  such  cases  the  settled  doctrine  is  stated  by  Pomeroy  to  be,  "That 
if  a  second  or  other  subsequent  holder,  who  would  otherwise  be  post- 
poned to  the  earlier  ones,  obtains  the  legal  estate,  or  acquires  the 
best  right  to  call  for  the  legal  estate  he  thereby  secures  an  advantage 
which  entitles  him  to  priority.  It  is  absolutely  essential,  however, 
that  he  should  have  acquired  his  equitable  interest  without  any  notice' 
of  the  prior  claims."  Pomeroy,  Eq.  §§  727,  729;  Adams,  Eq.  IGl, 
1()2.  The  language  of  the  last  author  is:  "It  has  been  already  stat- 
ed that  in  order  to  avoid  the  postponement  of  the  latter  equity,  free- 
dom from  notice  is  indispensable.  The  notice^  however  here  referred 
to,  is  a^  notice  existing  at  the  acquirement  of  the  equity,  not  a  notice 
at_the__completion  of  the  right.  The  latter  purchaser  or  incumbrancer, 
on  payment  of  his  money,  becomes  an  honest  claimant  in  equity,  and 
is  entitled,  if  he  can,  to  protect  his  claim.  But  he  is  not  bound  to  look 
for  protection  until  he  has  ascertained  that  danger  exists ;  and  his 
right  to  obtain  it  will  continue,  notwithstanding  the  institution  of  a 
suit  to  settle  the  priorities  of  the  conflicting  claimants."  The  plain- 
tiffs seem  to  be  clearly  within  the  rule  here  stated.  They  had  no 
knowledge  of  the  company's  claim  when  they  acquired  their  equity, 
and  had  a  right  to  protect  it  by  taking  an  assignment  of  the  stock 
for  that  purpose,  which  they  did  on  January  7,  1892,  though  at  the 
time  they  had  knowledge  of  the  company's  claim.  This  gives  to 
them  an  unquestioned  priority  over  the  company,  and  the  right  to  a 
sale  of  the  stock  for  the  satisfaction  of  their  claim.  Gibler  v.  Trimble, 
supra  [14  Ohio,  323].  This  case  clearly  supports  the  doctrine  that- 
where  the  equity  is  acquired  without  notice,  the  owner  may  protect 
himself  against  an  earlier  equity  by  acquiring  the  legal  title,  though, 
at  the  time  of  so  doing,  he  had  notice  of  the  earlier  equity. - 

-  The  discussiou  of  the  hrst  and  fourth  questions  is  omitted.     The  court  af- 
firmed. 


1G8  TKANSFEU   OF   RKSrECTIVE   INTERESTS  OF   PARTIES.  (CIl.  3 

DODDS  V.  IIILT.S. 

(In  Chancory,  before  Vice  Chancollor  Sir  W.  Tage  Wood,  ISCn.    2  ITpniniiiiK  & 

Millor.  424.) 

The  plaintiff  was  a  married  woman  (suing  by  next  friend),  upon 
whom  certain  shares  in  the  Whittle  Dean  Water  Company  had  been 
settled  for  her  separate  use.  The  shares  stood  in  the  name  of  Henry 
Hills,  as  sole  trustee  having  formerly  stood  (as  the  share  certificate 
showed)  in  his  name  jointly  with  that  of  another  person. 

On  the  19th  of  September,  1857,  Hills  obtained  an  advance  from 
the  defendant.  Smith,  out  of  the  funds  of  a  club  of  which  Smith 
was  secretary;  as  security  for  which  he  executed  a  transfer  of  the 
said  trust  shares,  and  handed  the  same,  together  with  the  certificate 
of  the  shares,  to  Smith.  He  also  gave  a  promissory  note  to  the 
treasurer  of  the  club. 

Further  advances  were  made  by  Smith,  partly  out  of  the  funds  of 
the  same  and  another  club  of  which  also  Smith  was  secretary,  and 
partly  out  of  his  own  moneys;  and  it  was  verbally  arranged  between 
Hills  and  Smith  that  the  shares  should  be  held  by  Smith  as  security 
for  these  further  sums.  The  security  of  the  shares  appeared  to  have 
been  given  to  Smith  personally  to  indemnify  him,  and  not  directly 
as  a  security  to  the  clubs.  At  the  time  when  these  advances  were 
made.  Smith  had  no  notice  of  the  trust,  or  that  the  shares  were  not  the 
absolute  property  of  Hills.  Hills  regularly  received  the  dividends, 
and  paid  them  over  to  the  plaintiff. 

On  the  Tth  of  June,  1863,  Hills  absconded;  and  on  the  30th  of 
June  a  petition  in  bankruptcy  was  filed,  under  which  he  was  declared 
bankrupt. 

On  the  14th  of  June,  1803,  the  plaintiff"  and  her  husband  informed 
Smith  that  Hills  held  the  shares  upon  trust  for  the  plaintiff. 

On  the  19th  of  June,  1863,  Smith  sent  the  transfer,  wnth  the  certifi- 
cate, to  the  secretary  of  the  company  for  registration,  and  the  shares 
were  on  the  following  day  registered  in  the  name  of  Smith. 

The  Whittle  Dean  W^ater  Company  was  constituted  by  act  of  Par- 
liament, with  which  the  Companies  Clauses  Consolidation  i\ct  was 
incorporated. 

The  bill  prayed  that  the  transfer  of  the  shares  might  be  set  aside; 
or,  in  the  alternative,  that  the  plaintiff  might  be  let  in  to  redeem. 

Vice  Chancellor  Sir  W.  Page  Wood.^  It  is  impossible  to  give  the 
plaintiff  any  relief  against  this  transfer.  It  is  a  case  of  great  hard- 
ship upon  the  plaintiff;  but  the  defendant  Smith  does  not  appear  to 
me  to  be  in  any  way  answerable  for  that.  The  shares  stood  in  the 
name  of  Hills  apparently  as  absolute  owner;  and  he  purported,  as 
such  owner,  to  transfer  them  to  Smith  by  way  of  security.  There 
is   some   obscurity   in   the   evidence,    as    to   whether    Smith    took   the 

1  Part  of  the  oiiiiiiou  is  oinltlt'd. 


Sec.  1)  BY   ACT  OF   THE   PARTY.  169 

shares  as  representing-  the  (hffcrent  clubs;  but  the  real  efTcct  of  the 
evidence  is,  I  think,  that  the  security  was  given  personally  to  Smith 
himself,  which  somewhat  simplifies  the  case.  After  the  transfer  was 
given  to  Smith,  Hills  continued  to  receive  the  dividends ;  and  the 
arrangement  seems  to  have  been  this :  Smith,  being  responsible  to 
his  societies  for  the  money,  required  Hills  to  give  him  by  way  of 
indemnity,  such  a  power  over  the  shares  as  would  enable  him.  Smith, 
whenever  he  pleased,  to  make  himself  legal  owner.  That  Hills  did, 
by  executing  a  transfer,  and  Smith  allowed  him  to  remain  on  the 
register  and  receive  the  dividends  as  long  as  he  made  no  default  in 
respect  of  the  advances,  being  content  as  mortgagee  with  the  power 
given  to  him  of  registering  the  transfer.  When  this  arrangement 
was  made,  Smith  had  no  notice  of  the  trust;  and,  after  having  re- 
ceived notice,  he  registered  the  transfer.  At  the  time  of  the  transfer 
he  acquired  the  power  to  register  himself  as  owner  of  the  shares. 
Hills  could  not  displace  the  equity  thus  acquired,  nor  was  anything 
further  necessary  to  be  done  on  his  part  to  complete  the  transaction. 
Although  it  is  true  that,  as  between  him  and  the  company.  Smith  did  j 
not  become  the  owner  until  after  registration,  nothing  but  his  own'X""^ 
act  was  necessary  to  make  him  complete  master  of  the  shares.     His  "^ 

position  was  like  that  of  a  person  to  whom  an  estate  is  conveyed,  to 
become  legally  vested  on  the  performance  of  some  condition,  such  as  ^ 
the  making  of  a  demand,  or  the  like ;   and  in  such  a  case,  notice  of  a 
trust  would  not  prevent  the  subsequent  performance  or  effect  of  this 
condition. 

It  was  suggested  that  the  transfer  could  not  be  completed  without 
a  breach  of  trust;  but  that  is  not  so.  After  the  notice.  Smith  did  not 
require  Hills  to  commit  any  breach  of  trust,  or  to  do  anything.  It  is 
the  case  of  a  person  advancing  money  on  an  equitable  security  with- 
out notice  of  a  trust,  and  afterwards  getting  in  the  legal  estate,  and 
no  more  involves  a  breach  of  trust  than  when  a  mere  incumbrancer 
gets  in  the  legal  estate  as  tabula  in  naufragio.  *  *  *  There  was 
nothing  unreasonable  in  allowing  the  mortgagor  to  hold  until  it  be- 
came necessary  to  enforce  the  power  of  taking  actual  possession. 

The  plaintiff  is  of  course  entitled  to  redeem,  and  there  will  be  the 
usual  decree  for  account  and  redemption. 


LEVI  MOORE  V.  METROPOLITAN  NATIONAL  BANK. 

(Court  of  Appeals  of  New  York,  1873.     55  N.  T.  41,  14  Am.  Kep.  173.) 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme  Court 
in  the  third  judicial  department,  affirming  a  judgment  in  favor  of  de- 
fendant, the  Metropolitan  Bank,  entered  upon  an  order  dismissing 
the  complaint  as  to  it,  upon  trial  of  issues  of  fact  settled  herein  to  be 
tried  by  a  jury. 


170  TUANSKIOU   OF   RESPECTIVK    INTKUESTS   OF   PARTIES.  (Cll.  3 

'  /        This  action  was  brought  to  restrain  defendants  from  disposinp^  of 

and  to  recover  possession  of  a  certificate  of  indebtedness  of  the  State 
of  New  York  for  $10,000,  issued  by  the  new  capitol  commissioner? 
under  chapter  830  of  the  Laws  of  18GS.  Issues  were  settled  and  di- 
rected to  be  tried  by  a  jury. 

^v-*' I.  0  I^  ap]KMre(l,  upon  the  trial  that  the  certificate  in  question  was  de- 

livered by  plaintiff  to  defendant  Miller  with  an  assignment  thereon, 
as  follows: 
"■$10,000. 

"For  value  received.  I  hereby  transfer,  assign  and  set  over  to 
Isaac  Miller  the  within  described  amount,  say  ten  thousand  dollars. 

"Levi  Moore." 
This  assignment  and  delivery  was  induced  by  false  representations 
upon  the  part  of  ]\liller  as  to  his  responsibility.  Miller  applied  to 
plaintitY  for  a  loan  of  $7,000  and  relying  upon  such  representations 
the  latter  delivered  to  him  the  certificate  so  assigned,  receiving  there- 
for two  notes  amounting  to  $7,000  and  Miller's  check  for  $3,000, 
and  under  the  agreement  that  Miller  should  get  the  certificate  cashed 
in  New  York,  paying  the  $3,000  out  of  the  proceeds.  In  case  it  was 
xot  cashed  in  three  weeks,  the  certificate  was  to  be  returned  and  the 
check  anfl  notes  taken  up.  The  certificate  was  not  cashed  in  the 
three  weeks.  Upon  the  trial  before  the  jury,  plaintifif  introduced  in 
evidence  the  certificate  with  said  assignment  thereon,  and  also  a 
similar  assignment  from  Miller  to  defendant,  the  Metropolitan  Na- 
tional Bank,  dated  November  22,  18G8.  At  the  close  of  the  evidence 
the  counsel  for  the  bank  moved  for  a  dismissal  of  the  complaint  as 
to  it  upon  the  ground,  among  others,  that  upon  the  plaintiff's  proofs 
the  bank  was,  prima  facie  a  bona  fide  purchaser  for  value  of  the  cer- 
tificates from  Miller,  and  so  was  entitled  to  hold  the  certificate ;  which 
motion  was  granted  and  plaintiff  excepted. 

Grovf.r,  J.^  The  judge  erred  in  ordering  a  dismissal  of  the  com- 
plaint against  the  bank.  *  *  '^  But  a  reversal  of  the  judgment 
in  favor  of  the  bank  upon  this  ground  merely,  will  leave  the  real  and 
only  question  litigated  between  the  plaintiff  and  the  bank  undisposed  of. 
This  should  be  avoided,  if  it  is  presented  by  the  case  in  a  manner 
enabling  the  court  to  determine  it.  That  question  is,  whether  the 
bank,  having  in  good  faith  taken  a  transfer  of  the  certificate  from 
Miller  as  security  for  his  note,  given  to  it  at  the  time  for  money  then 
loaned  by  the  bank  to  him,  acquired  a  title  to  the  certificate,  valid  as 
against  the  plaintiff,  as  security  for  the  money  so  loaned.  It  is 
clear  that  it  acquired  nothing  more,  as  against  the  plaintiff  or  Miller. 
*  *  *  The  case  shows  that  the  plaintiff  executed  an  absolute 
transfer  of  the  certificate  written  thereon  to  Miller,  and  delivered 
the  same  to  him.  It  further  shows  that  Miller,  in  making  the  pur- 
chase, practiced  such  a  fraud  upon  the  plaintiff'  as  would  authorize 

1  Part  of  tlu'  ()i)iiii()ii  is  omitted. 


Sec.  1)  BY   ACT   OF   TIIK    PARTY.  171 

him  to  rescind  the  contract,  as  to  him,  and  that  he  did,  upon  the  dis- 
covery of  sucli  fraud,  elect  to  rescind  the  same.  The  question  is  thus 
presented  whether  a  bona  fide  purchaser  of  a  chose  in  action,  not 
ncg-otiablc,  from  one  to  whom  the  owner  has  transferred  the  apparent 
absohite  ownership,  upon  the  faith  of  such  ownership  obtains  a 
valid  title  as  against  such  owner,  although  his  vendor  had  not  such 
title.  The  counsel  for  the  plaintiff  insists  that  this  precise  question 
was  decided  against  the  title  acquired  by  such  purchaser,  by  this 
court,  in  Bush  v.  Lathrop  (22  N.  Y.  035),  where  it  was  held  that 
equities  existing  between  the  assignor  and  assignee  of  a  chose  in  ac- 
tion, not  negotiable,  attend  the  title  transferred  to  a  subsequent  as- 
signee for  value,  without  notice, — that  the  latter  takes  the  exact 
position  of  his  vendor.  The  counsel  for  the  bank,  to  sustain  its  title, 
cites  ^IcNeil  v.  Tenth  National  Bank  (46  N.  Y.  325,  7  Am.  Rep. 
341).  In  this  it  was  held  that,  where  the  owner  of  corporate  stocks 
conferred  upon  another  an  apparent  title  to  or  power  of  disposition 
over  it,  he  is  estopped  from  asserting  his  title  as  against  an  innocent 
third  party  who  has  acquired  title  in  good  faith  from  such  apparent 
owner.  It  is  obvious  that  both  these  cases  cannot  be  upheld,  unless 
there  shall  be  found  to  be  a  distinction  between  the  acquisition  of 
title  to  stocks  in  a  corporation  and  choses  in  action  not  negotiable. 
*  *  *  Whv  should  the  owner  of  a  horse  or  of  bank  shares,  who 
has  given  to  another  an  absolute  written  transfer  of  all  his  right 
thereto  for  some  purpose  other  than  that  of  passing  the  title,  be  pre- 
cluded, as  against  a  bona  fide  purchaser  from  such  person,  from  as- 
serting his  title,  while,  under  the  .same  state  of  facts  he  may  reclaim 
from  such  purchaser  a  bond  and  mortgage  or  a  certificate  of  indebted- 
ness like  the  one  in  question?  As  to  the  former  he  is  estopped,  while 
as  to  the  latter  the  same  state  of  facts,  it  is  insisted,  will  work  no  such 
result.  The  counsel  for  the  plaintiff  insists  that  such  distinction 
should  be  made,  for  the  reason  that  the  purchaser  of  corporate  shares 
and  chattels  from  the  apparent  owner  obtains  a  legal  title  which  is 
valid  and  may  be  asserted  in  a  court  of  law,  while  the  assignee  of  a 
chose  in  action,  not  negotiable  at  common  law  obtained  an  equitable 
title  only ;  and  that  the  equity  of  the  former  owner,  being  prior  in 
time  to  that  acquired  by  the  purchaser,  is  superior  thereto,  the  rule 
in  equity  being  that,  where  the  equities  are  equal,  the  first  in  time 
shall  prevail;  but  upon  what  ground  the  same  state  of  facts  that 
will  estop  a  party  from  the  assertion  of  a  legal  title  will  not  also 
estop  him  from  the  assertion  of  an  e([uitable  one  the  counsel  fails  to 
show,  for  the  very  good  reason  that  no  such  ground  exists.  It  is  so 
oibvious  that  the  estoppel  should,  upon  principle  apply  to  the  latter 
equally  with  the  former,  that  a  distinction  can  only  be  justified  upon 
authority.  *  *  *  It  follows  that  the  bank,  if  it  made  the  loan  in 
good  faith  to  Miller,  upon  the  credit  of  the  certificate,  acquired  a 
title  thereto  valid  against  the  plaintiff  to  the  extent  of  the  loan.    From 


172  TRANSFER   OF   RESPECTIVE   INTERESTS   OF   PARTIES.  (Ch.  3 

the  papers  it  appears  that  the  certificate,  at  the  time,  amounted  to 
something-  more  than  the  loan  to  Miller  by  the  bank.  This  excess  be- 
longs to  the  plaintifif.     *     *     * 

The  judgment  in  favor  of  the  bank  must  be  reversed  and  new 
trial  ordered,  costs  of  the  appeal  to  abide  the  final  judgment  for 
costs  in   the   cause." 


CARRITT  V.  REAL  &  PERvSONAL  ADVANCE  COMPANY. 

(Higli  Com-i  nf  .Tustico.  ("h.-iiu'cry  Division.  ISSO.     L.  R.  42  Ch.  Div.  2C>3.) 

By  an  indenture  of  lease,  dated  the  23d  of  January,  1880,  and 
made  between  Batty,  of  the  first  part  and  Scoley  of  the  other  part, 
a  certain  messuage  and  premises  were  demised  to  Scoley  for  the  term 
of  ninety-seven  and  one-half  years,  from  the  25th  December,  1879,  at 
the  rent  and  subject  to  the  covenants  and  conditions  therein  contained. 

By  an  indenture  of  mortgage  dated  the  23d  of  August,  1880,  and 
made  between  Scoley  of  the  first  part  and  Carter  of  the  other  part, 
•^the  said  messuage  and  house  were  demised  to  Carter  for  the  residue 
of  the  term  (except  the  last  day  thereof)  subject  to  a  provision  for  re- 
demption on  payment  by  Scoley  to  Carter  of  the  principal  sum  of 
£500.  and  interest  as  therein  mentioned. 

On  the  2d  of  April,  1881,  Scoley  executed  a  further  charge  on  the 
premises  in  favor  of  Carter  for  securing  a  further  advance  of  ioO. 

By  an  indenture  dated  the  24th  of  February,  1886,  and  made  be- 
tween Scoley  of  the  first  part  and  Chuck  of  the  other  part,  after  re- 
citing the  above  mentioned  lease,  mortgage  and  further  charge,  and 
that  the  principal  sums  thereby  secured  were  still  owing,  but  that  all 
interest  had  been  paid,  and  that  Scoley  had  agreed  with  Chuck  for 
the  sale  to  him  of  the  said  premises,  subject  to  the  mortgage  and 
further  charge  and  the  principal  moneys  and  interest  thereby  secured, 
at  the  price  of  £13-4.,  it  was  witnessed  that  in  pursuance  of  the  as- 
signment  and  in  consideration  of  the  sum  of  £184.  paid  by  Chuck  to 
Scoley  (the  receipt  of  which  sum  Scoley  thereby  acknowledged),  Scoley 

/'       r 

2  Tho  assiirnniont  from  plniiitiff  to  :\Iooro  did  not  pass  the  lesal  title  to  the 
rortiticate  of  indclMcdncss  ;  at  most  it  ixavo  him  a  power  of  attorney  which  at 
tlic  eonnnon  hiw  would  have  authorized  him  To  sue  in  a  court  of  law  in  the 
assignor's  name  to  collect  tho  obligation.  What  was  the  effect  of  ^Icwre's 
assignment  to  the  bankV  It  did  not  pass  the  legal  title  because  Moore  did  not 
have  the  legal  title  to  pass.  It  was  not,  it  is  submitted,  the  creation  of  u  new 
power  of  attorne.v,  nor  was  it  an  assig)uuent  of  the  existing  power  of  attorney 
held  by  Moore.  It  was,  if  anything,  the  substitution  of  the  bank  as  attorney 
in  the  old  power  of  attorney  in  Moore's  place.  If  this  be  trms  the  (lucstion 
arises  whether  Moore  had  by  virtue  of  his  power  of  attorney  the  implied 
right  to  substitute  the  bank  as  attorney  in  his  own  place.  If  he  had,  could  the 
bank  by  virtue  of  the  fact  that  it  paid  Moore  a  valuable  consideration  for 
the  substitution  and  had  no  notice  of  the  fraud  by  which  Moore  had  secured 
the  power  of  attorney  stand  in  a  better  position  than  Moore  and  have  the 
right  as  against  the  plaintilT  to  collect  the  debt  and  repay  itself  its  advance  in 
full?    See  1  Harvard  Law  Review,  7,  8. 


Sec.  1)  BY   ACT   OF  THE   PARTY.  173 

as  beneficial  owner  conveyed  the  premises  to  Chuck,  to  hold  the  same 
to  Chuck  for  the  residue  of  the  term  of  years  created  by  the  above 
lease,  at  the  rent  and  subject  to  the  covenants  by  and  in  the  lease 
reserved  and  contained,  and  to  the  said  mortgat^e  and  further  charge, 
and  the  £550.  and  interest  thereby  secured.  And  the  indenture  con- 
tained a  covenant  by  Chuck  to  pay  the  rent  reserved  by  the  lease  of 
the  23d  of  January,  1880,  and  observe  and  perform  the  covenants 
and  conditions  therein  contained  and  keep  Scoley  indemnified  against 
all  claims  and  demands  on  account  thereof. 

The  assignment  of  Scoley  to  Chuck  was  made  to  him  solely  as 
trustee  for  Frederick  Carritt  and  the  plaintiff,  who  were  then  in 
partnership  as  solicitors,  and  who  paid  the  whole  of  the  consideration 
which  was  paid  to  Scoley  in  respect  of  such  assignment.  It  was  the 
fact,  however,  that  no  money  passed,  but  Messrs.  Carritt  having  a 
claim  against  Scoley,  it  had  been  arranged  that  Scoley  should  con- 
.  vey  the  equity  of  redemption  in  the  property  in  consideration  of  the 
release  of  that  claim. 

By  an  agreement  dated  the  29th  of  April,  1886,  and  made  between 
Chuck  of  the  first  part  and  Frederick  Carritt  and  the  plaintiff  of  the 
other  part,  Chuck  agreed  that  he  would  assign  or  dispose  of  the  prem- 
ises as  Frederick  Carritt  and  the  plaintiff  should  from  time  to  time 
direct,  and  that  in  the  meantime  the  premises  subject  to  the  said  in- 
cumbrances, should  be  held  by  Chuck  in  trust  only  for  Frederick  Car- 
rit  and  plaintiff. 

In  the  month  of  March,  1887,  Chuck  applied  to  the  defendants  for 
a  loan  of  £50.  upon  the  security  of  the  equity  of  redemption  in  the 
above  premises,  and  represented  to  them  that  he  w-as  the  owner  of 
the  house,  subject  to  a  mortgage  of  £550.  The  defendants,  relying 
upon  his  representations  and  the  fact  of  the  assignment  of  the  24th 
of  February,  1886,  being  in  his  possession,  advanced  him  the  sum  of 
£50.,  which  was  secured  to  them  by  an  equitable  charge  by  demise 
of  the  equity  of  redemption  in  the  premises  for  the  wdiole  term  less 
one  day,  dated  the  30th  of  March,  1887,  and  by  a  promissory  note. 
At  the  time  of  the  execution  of  the  mortgage  Chuck  deposited  with 
the  defendants  the  assignment  of  the  21th  of  February,  1886.  He 
afterwards  absconded. 

The  plaintiff  by  his  statement  of  claim  alleged  that  he  and  Fred- 
erick Carritt  retained  the  assignment  of  the  24th  of  February,  1886, 
till  the  same  was  wrongfully  and  feloniously  abstracted  from  their 
custody  by  Chuck,  and  that  the  abstraction  was  not  discovered  by  the 
plaintiff  and  his  partner,  or  either  of  them,  till  after  Chuck  had  de- 
livered the  assignment  to  the  defendants;  that  in  April,  1887,  Fred- 
erick Carritt  retired  from  the  partnership,  and  thereupon  all  his  in- 
terest in  the  premises  vested  in  the  plaintiff,  who  continued  to  act  as 
Carter's  solicitor;  and  further,  that  Chuck  entered  into  the  transac- 
tion with  the  defendants  fraudulently,  and  in  breach  of  trust,  and  that 
the  defendants  took  no  assignment  of  the  premises,  nor  any  written 


174  TKANSFKK    OF    KKSI'KCTIVE    INTKRESTS   OF    TAUTIES.  (Cll.  3 

document  conveying  to  them  any  interest  therein,  and  neglected  to 
make  proper  inquiries,  or  investigate  the  title  before  making  the  ad- 
vance. It  appeared,  however,  that  the  defendants  besides  their  equi- 
table charge  took  a  statutory  declaration  from  Chuck  that  he  had 
not  charged  or  surrendered  his  interest  in  the  property. 

The  plaiiUiff  claimed  a  declaration  that  the  defendants  had  no  in- 
terest or  claim  on  the  premises,  and  delivery  up  of  all  documents  re- 
lating thereto. 

Witnesses  were  examined  on  both  sides,  but  the  evidence  went 
chiefly  to  the  question  of  negligence  as  to  the  custody  of  the  deed  of 
the  2'4th  of  February,  1886.^ 

Chitty.  ].  The  question  is  one  of  priority  arising  between  the 
plaintiff  and  the  defendants,  each  of  whom  has  only  an  equitable 
title  so  far  as  an\'  ([uestion  falls  to  be  decided  by  me.  The  plaintiff 
alleges  and  rightly,  that  he  is  first  in  point  of  time.  The  defendants, 
who  come  second,  say  that  in  the  circumstances  of  the  case  priority 
ought  to  be  ascribed  to  them. 

The  property  dealt  with  is  leasehold,  demised  for  an  ordinary 
building  term ;  and  the  legal  estate  is  outstanding  in  a  mortgagee, 
that  mortgage  having  been  created  by  a  demise  for  the  residue  of  the 
original  term  except  the  last  day.  Subject  to  that  demise,  the  original 
term  remains  vested  in  Chuck. 

The  plaintiff's  title  stands  thus:  Messrs.  Carritt  (a  firm  of  solicit- 
ors, of  whom  the  plaintiff  Mr.  Carritt,  is  now  the  representative,  the 
partnership  having  been  dissolved)  had  a  claim  against  Scoley,  and 
it  was  arranged  that  Scoley  should  convey  the  equity  of  redemption 
in  the  property  that  I  have  mentioned  in  consideration  of  the  release 
of  that  claim.  It  was  considered  "not  convenient"  by  Messrs.  Car- 
ritt to  take  the  deed  in  their  own  name;  but  having  a  confidential 
clerk  named  Chuck,  they  proposed  to  take  the  deed  in  his  name  aS' 
trustee  for  them.  The  transaction  assumed  the  form  (and  there  is 
nothing  in  the  evidence  to  show  that  the  form  does  not  correctly 
represent  the  true  transaction)  of  a  sale  of  the  equity  of  redemption 
at  the  price  of  the  amount  of  the  claim.  The  deed  of  assignment, 
which  is  in  the  common  form,  is  an  assignment  by  Scoley  to  Chuck. 
Some  little  time  after.  Chuck  executed  a  deed  of  trust  in  favor  of 
Messrs.  Carritt,  the  trust  not  appearing  in  any  way  on  the  face  of 
the  assignment.  Subsequently  Chuck,  being  in  possession  of  the 
deed  of  assignment,  went  to  the  defendants  and  borrowed  money 
from  them,  giving  them  an  equitable  charge  by  the  demise  for  the 
original  term  less  the  last  day.  He  acted  ostensibly  (but  fraudident- 
ly)  as  if  he  were  the  owner  of  the  property,  subject  only  to  the  mort- 
gage. The  defendants  did  not  investigate  the  title.  If  they  had  in- 
vestigated the  title,  and  Chuck  had  acted  honestly,  there  would  have 
appeared  on  the  abstract  the  declaration  that  Chuck  had  executed  in 
favor  of  Messrs.  Carritt.  Chuck  made  a  statutory  declaration,  in 
which  he  slated  that  he  had  not  charged  or  incumbered  "his  interest" 


Sec.  1)  BY   ACT   OF   TIIK    I'AItTY.  175 

in  the  C{|uity  of  redemption.  Except  by  not  having  investip:ated  the 
title,  it  is  clear  that  the  defendants  took  all  reasonable  precautions. 
They  were  satisfied  that  Chuck  was  a  respectable  man.  and  they  did 
not  inquire  of  those  in  whose  employment  he  was,  Messrs.  Carritt, 
nor  were  they  bound  to  do  so.  Chuck  was  introduced  to  them  by  a 
person  they  knew ;  they  had  no  reason  to  suspect  Chuck's  honesty ; 
and  they  accordingly  advanced  him  the  money,  making  the  loan  he 
asked  for,  and  took  from  him  a  deed  which  created  only  an  equitable 
interest  in  them,  and  at  the  same  time  took  from  him  the  deed  of  as- 
signment which  had  been  executed  by  Scoley. 

Now  there  was  evidence  in  regard  to  the  custody  of  the  assign- 
ment itself;  the  result  is,  in  my  opinion  that  Messrs.  Carritt  did 
not  establish  that  the  deed  of  assignment  was  ever  placed  in  either 
one  of  their  safes.  The  plaintiff  said,  and  said  truly,  that  it  was  the 
duty  of  Chuck  to  put  the  deed  of  assignment,  as  well  as  the  deed  of 
trust,  in  one  of  their  safes;  but  Mr.  Carritt,  who  gave  his  evidence 
very  fairly,  was  unable  to  show  that  the  deeds  or  either  of  them,  had 
ever  been  in  their  custody  in  that  sense.  I  must  take  it  as  a  fact  that 
they  allowed  Chuck,  in  whom  they  had  the  greatest  confidence,  to  re- 
main in  possession  of  the  deed  and  they  took  no  precaution  with 
reference  to  the  declaration  of  trust,  although  their  not  keeping  the 
deed  of  trust  away  from  the  hands  of  Chuck  is  an  immaterial  fact  in 
the  case.  The  point  made  for  the  defendant  is  that  the  plaintiff  al- 
lowed Chuck  to  have  possession  of  the  deed  of  assignment. 

Now  the  case,  therefore,  as  between  the  plaintiff  and  the  defend- 
ants, is  this :  the  defendants  claim  through  a  trustee  for  the  plaintiff. 
The  law  allows  a  man  for  convenience,  being  the  absolute  owner,  to 
take  a  conveyance  of  land,  or  a  transfer  of  stock,  or  an  assignment 
of  a  lease,  or  indeed  any  other  property,  instead  of  to  himself,  to  a 
trustee  to  hold  for  him;  and  though  it  may  not  be  prudent  to  allow 
the  indicia  of  title,  the  title-deed,  the  stock  certificate,  or  the  like,  to 
remain  with  the  trustee,  yet  it  is  clear  law  that  the  deeds,  or  certificates 
of  title,  or  other  the  indicia  of  title,  are  lawfully  and  rightfully  in  the 
custody  of  the  trustee.  I  say  it  is  not  altogether  prudent  for  the 
equitable  owner  to  leave  the  deed  in  the  hands  of  his  trustee  because 
in  many  cases  the  trustee  has  the  legal  title  also;  and  taking  the 
case,  for  instance,  of  stock,  he  can  make  a  perfect  assignment  of 
stock  to  a  purchaser  for  value,  who  takes  it  without  any  notice,  and 
thereby  obtains  a  good  title  against  the  equitable  owner,  for  whom 
the  transferror  held  the  stock  merely  as  trustee.  But  the  cestui  que 
trust,  the  absolute  equitable  owner,  has  at  least  some  safeguard  in 
a  case  of  that  kind  if  he  keeps  the  certificate  in  his  own  possession, 
because  the  trustee  then  has  a  greater  difficulty  in  procuring  the  trans- 
fer to  be  registered  in  the  books  of  the  company.  Still  I  go  back  to 
the  proposition  that  there  is  no  negligence  on  the  part  of  a  cestui  que 
trust  in  allowing  all  the  instruments  of  title  to  remain  in  the  custody 
of  the  trustee. 


170  THAXSKEU   OF   RKSI'KCTIVE   INTERESTS   OF   PARTIES.  (Cll.  3 

Then  I  come  to  the  law  of  the  case,  and  it  appears  to  me  that  this 
case  is  covered  by  the  decision  of  the  House  of  Lords  in  the  case  of 
Shropshire  Union  Railways  and  Canal  Company  v.  Reg-.  [L.  R.  7 
H.  h.  496].  After  having;  carefully  read  the  speeches  delivered  to 
the  House  on  that  occasion,  I  take  this  proposition  from  Lord  Cairns' 
address,  which  appears  to  give  the  ground  upon  which  the  House  of 
Lords  decided.  He  says  [page  510]  :  "The  present  appears  to  me 
to  be  simply  the  case  of  an  ordinary  trustee  holding  property  of  the 
kind  in  question  for  a  cestui  que  trust  and  an  incumbrance  created 
by  the  trustee,  which  can  only  carry  to  that  fresh  incumbrancer  such 
interest  as  the  trustee  could  give.  The  trustee  could  not  give  an  in- 
terest as  against  the  cestui  que  trust,  and,  therefore  it  appears  to 
me  that  the  incumbrancer  now  represented  by  the  plaintiff  in  the 
mandamus,  is  not  entitled  to  have  the  transfer  in  the  company's  books 
of  the  stock  in  question."  In  his  address  Lord  Cairns  deals  with 
the  proposition,  upon  which  I  have  heard  considerable  argument 
at  the  bar,  whereby  it  was  sought  to  establish  a  difference  between 
the  case  of  a  trustee  holding  for  a  married  woman,  child  or  the  like, 
and  the  case  where,  for  the  mere  purpose  of  convenience,  the  absolute 
owner  procures  a  person  to  act,  and  simply  creates  the  trust  for  the 
purpose  of  his  own  convenience;  and  that  distinction,  Lord  Cairns 
holds,  cannot  be  maintained.  He  had  the  case  before  him  of  the 
absolute  owners  having  put  the  stock  in  the  name  of  a  trustee.  It  is 
true  that  in  that  case  Lord  Cairns  says,  on  the  facts,  that  the  persons 
who  had  created  the  trust,  being  a  corporation,  could  not  hold  in 
their  own  name ;  but  when  his  address  is  considered  from  beginning 
to  end,  it  will  be  seen  that  no  distinction  on  that  ground  can  be  re- 
lied on.  The  result  is,  so  far  as  I  have  gone,  that  the  fraudulent 
act  of  Chuck  does  not  displace  the  equitable  title  of  the  plaintiff.  _ 
Judgment  for  plaintiff".^ 


BURCHARD  v.  HUBBARD  and  Others. 

(Supremo  Court  of  Ohio,  1842.    11  Ohio,  316.) 

This  was  a  bill  in  chancery  from  the  County  of  Sandusky. 
In    November,    1822,   a    patent   issued   to   Elizabeth    Whitaker    for 
,    .      twelve  hundred  and  eighty  acres  of   land,  being  the  "Whitaker   re- 
serve," in  Sandusky  County.     June  3,  1823,  Elizabeth  Whitaker  con- 
veyed it  to  George  F.  Whitaker  in  fee.     October  10,  1823,  George  F. 
conveyed  in  fee  190  acres,  including  the  land  in  controversy,  to  Isaac 
\\'hitaker.     October  12,  1823,  Isaac  mortgaged  the  190  acres  to  James 
Whitaker  to  secure  the  payment  August  12,  1832,  of  $400  with  inter- 
■^1'       est  annually. 

1  Cave  V.  Cave,  L.  R.  15  Ch.  Div.  0.39  (1880)  ace.    Contra  Tonny  v.  Watts,  2 
De  G.  &  Sm.  501,  521  (1848) ;  Lane  v.  Jackson,  20  Beav.  535  (1855). 


{Sec.  ])  BY   ACT   OF   THK    PARTY.  177 

Part  of  this  190  acres  was  sold  at  a  tax  sale  in  December,  1S31, 
to  R.  Dickinson,  who  received  a  tax  deed.  Shortly  after  Dickinson 
agreed  to  hold  the  land  for  Isaac's  benefit  and  to  reconvey  to  him  up- 
on reimbursement  of  the  amount  paid  and  disbursements.  Dickinson 
transferred  to  George  F.  this  tax  title  by  deed  dated  January  15, 
1834,  to  be  held  upon  the  same  terms  as  it  had  been  by  Dickinson. 

In  March,  _1835,  Burchard  agreed  to  purchase  this  tract  of  190 
acres  from  George  V.  Whitakor  for  $800,  with  Dickinson's  assent,  but 
upon  condition  that  the  sale  should  be  approved  by  James  and  Isaac. 
It  was  approved  of  with  the  understanding  that  $200  should  be  in- 
vested in  wild  lands  for  Isaac's  benefit.  Dickinson,  being  a  lawyer, 
was  consulted  as  to  the  best  mode  of  transmitting  the  title.  He  ad- 
vised that,  instead  of  conveying  directly  to  the  complainant  Burchard, 
Isaac  should  make  a  deed  to  George  F.  in  whom  it  was  supposed  the 
tax  title  was  already  vested,  and  that  George  F.  Whitaker  should 
then  convey  to  Burchard,  who  would  thus  derive  a  perfect  and  unen-  ,  y^ 
cumbered  title.  '_ 

April  12,  1835,  a  deed  to  George  F.  was  made  by  Isaac,  and  left 
in  Dickinson's  hands,  by  whom  it  was  retained  until  July,  1835,  when 
it,  together  with  a  release  of  the  mortgage  by  Isaac,  was  delivered 
to  Burchard,  and  they  were  by  him  recorded  August  14;th.  On  No- 
vember 3,  1835,  George  F.  Whitaker  executed  a  deed  in  fee  for  the 
land  to  complainant. 

But,  in  the  meantime,  George  F.  Whitaker,  July  15,  1834,  had  sold 
this  same  tract  of  land  for  $700  to  defendant  Hubbard,  to  whom  in 
June,  1835,  he  made  a  deed  in  fee  for  150  acres  of  the  west  part  of 
the  190  acres.  This  deed  was  recorded  June  26,  1835.  In  1838, 
Hubbard  sold  and  conveyed  to  Brooks.  Neither  Hubbard  nor  Brooks 
had  any  actual  notice  of  the  transactions  of  George  F.  Whitaker  with 
the  complainant,  but  they  were  informed  and  believed  that  George 
F.  had  a  perfect  title.  The  complainant  had  no  notice  of  the  transac- 
tion between  George  F.  and  Hubbard. 

The  bill  is  filed  by  Burchard,  setting  forth  his  title,  and  praying  to 
be  quieted  therein.  The  defendants,  Hubbard  and  Brooks,  answer 
denying  all  notice  of  Burchard's  interest,  and  claim  that  they  are  bona 
fide  purchasers,  and  have  an  equity  prior  to  the  complainant's,  for 
which  they  claim  protection. 

Birch ARD,  J.  The  first  question  in  this  case  grows  out  of  a  tax 
sale,  and  the  decision  of  it  will  settle  the  merits  of  this  controversy. 
[The  tax  title  was  held  invalid.] 

Whether  the  subsequent  passing  of  the  legal  title,  through  George 
F.  Wliitaker,  will  inure  to  the  benefit  of  Hubbard,  by  reason  of  the 
^venants  contained  in  Whitaker's  deed,  is  the  material  and  remaining 
question  in  tlie  case.  It  will  be  observed,  that  a  mere  naked  legal 
title  was  all  that  ever  passed  through  him.  Burchard  was  the  pur- 
chaser, and  the  title  was  conveyed  to  George  F.  Whitaker,  as  a  mat- 
Ken.Tr.— 12 


178  TRANSFER   OF   RESPECTIVE   INTERESTS   OF   PARTIES.  (Ch.  3 

ter  of  convenience.  Taking  the  title,  then,  as  between  the  two,  the 
law  constituted  George  F.  a  mere  trustee  of  the  naked  legal  title.  A 
trust  resulted  to  Burchard,  whose  money  was  paid  to  the  bona  fide 
owner.  Had  George  F.  Whitaker  acquired  for  himself  the  legal  and 
equitable  title,  he  would,  by  reason  of  the  warranty  contained  in  his 
deed,  Tiave  been  estopped  at  law^  from  denying  the  title  to  Hubbard ; 
and,  in  chancery  his  conveyance  to  Hubbard  would  have  been  bind- 
ing on  his  conscience. 

We  are  asked  to  extend  and  apply  this  rule,  as  against  the  com- 
plainant. To  do  so,  in  the  state  of  facts  here  existing,  would  be 
pushing  it  beyond  reason.  The  equity  of  the  complainant  is  equal  to 
that  of  the  respondents.  He  had  no  notice  of  their  rights ;  his  pur- 
chase did  the  respondents  no  harm ;  it  did  not  mislead  them.  The 
deed,  in  fact,  was  not  delivered  to  George  F.  Whitaker,  but  went  into 
the  hands  of  Dickinson,  the  agent  and  attorney  of  the  complainant, 
who  received  it,  and  delivered  it  to  the  complainant,  by  whom  it  was 
put  on  record.  H  the  doctrine  of  estoppel  could  apply,  it  would  vest 
no  better  title  in  Hubbard  than  George  F.  Whitaker  himself  acquired ; 
that  is,  a  trust  estate. 

In  equity,  he  who  is  prior  in  time,  other  things  being  equal,  hath 
the  better  right.  Tried  by  this  rule,  complainant  has  the  better  equity 
in  the  lands.  He  purchased  of  the  rightful  owner,  and  paid  his  mon- 
ey. Hubbard  bought  of  a  stranger  to  the  title.  His  payments  were 
completed,  on  the  24th  of  June,  1835,  at  which  time  he  took  his  deed, 
from  a  stranger  who  had  nothing  but  a  void  tax  title.  This  created 
no  equity  to  the  lands  then  owned  by  Isaac  Whitaker.  Before  this 
time,  complainant  had  become  interested  in  the  land  by  purchase,  and 
payment  of  the  money  to  Isaac,  the  real  owner. 

True,  the  deed  from  Isaac  to  George  F.  Whitaker,  bears  date  the 
12th  day  of  April,  1835,  but  it  was  not  delivered  until  the  August  fol- 
lowing. The  acknowledgment  bears  date  the  10th  of  August,  and 
Hubbard  in  his  answer,  says  he  had  no  knowledge  of  it.  Hubbard's 
equity  in  the  land,  if  he  have  any,  can  only  date  from  the  time  George 
F.  Whitaker  received  a  legal  title.  It  commenced  with  the  delivery 
of  Isaac's  deed  to  George  F.  Whitaker;  not  with  the  delivery  of 
George's  deed  to  Hubbard.  Before  this,  Burchard  had  acquired  an 
equity  which  chancery  would  have  enforced  as  against  Isaac,  the  real 
owner.  And  it  would  be  strange,  if  Isaac's  subsequent  deed,  given 
without  consideration  on  the  part  of  George  F.,  could,  by  operation 
of  law,  vest  a  title  that  would  defeat  him. 

Is  it  doubted,  if  George  F.  had  refused  to  convey,  under  these 
circumstances,  that  equity  would  have  compelled  him?  He  having 
made  such  conveyance,  it  must  be  held  operative,  and  Burchard's 
equity  being  prior  in  time,  his  title  should  be  quieted.     ■ 

/' 


Sec.  1)  BY   ACT   OF   THE   PARTY.  179 

MOORE  V.  JERVIS. 

(In  Chancery,  before  Vice  Chancellor  Sir  Lancelot   Shadwell,  184.'.     2  Coll- 

yor,  60.) 

The  Vice  Chancellor.  Charles  Timmis  placed  in  the  hands  of 
the  defendant,  Mr.  Jervis,  by  way  of  loan,  at  interest,  a  sum  of  £800. 
and  upwards,  and  took  his  promissory  note  for  it,  payable  to  Charles 
Timmis  only,  not  to  Charles  Timmis  or  his  order.  This  sum,  for 
I  think  the  evidence  of  identity  quite  sufficient,  was  trust  money, 
which  Timmis  held  as  trustee  for  the  benefit  of  other  persons,  but 
so  that,  as  to  a  certain  proportion,  Timmis  had  himself  a  beneficial 
interest.  The  trust  was  known  at  the  time  to  Mr.  Jervis,  but  did 
not  appear  on  the  face  of  the  note — which  gave  no  notice  that  the 
payee  was  not  the  only  person  interested  in  the  money,  though,  per- 
haps, the  circumstance,  that  he  could  not  negotiate  it,  so  as  to  con- 
fer on  an  indorsee  a  right  to  bring  an  action  upon  it  against  Mr.  Jer- 
vis in  the  indorsee's  own  name,  may  be  thought  of  a  nature  to  give 
rise  to  inquiry.  Each  must  be  taken  to  have  been  aware,  that  this 
investment  was,  as  it  was,  a  plainly  irregular  one,  and  a  plain  breach 
of  trust,  not  less  so,  by  reason  that  the  borrower  was  a  gentleman 
of  fortune  and  respectability.  _  , 

Timmis,   being  thus   the  holder   of   the   note,   indorses   it,  and   de-     ^c-i-vu'vt 
posits  it  with  the  plaintiff,  a  banker,  as  a  security  for  money  lent,  and      T'  ,.  J 
to  be  lent,  to  him  by  the  plaintiff.     TJiis  of  course  was  a  breach  of 
trust,  but  it  does  not  appear  that  the  plaintiff  had  any  notice  of  the 
title  to  the  note,   save   such  as   ex   facie  it  afforded.     The   plaintiff, 
however,    acquired   only    an    equitable    title,    and   therefore    no   better 
title  to  the  note,  or  the  money  secured  by  it,  than  Timmis  could  right-     j^^f^^^_^^^_ 
fully  confer,  and,  consequently  no  title  as  against  those  for  whom  he  " 
was  a  trustee.^ 


PINKETT  V.  WRIGHT. 

(In  Chancery,  before  Vice  Chancellor  Sir  James  Wigram,  1842.    2  Hare,  120.) 

By  a  settlement,  dated  the  3d  of  April,  1828,  Francis  Johnson 
vested  certain  foreign  stocks  in  John  Wright  and  Henry  Robinson, 
upon  trusts,  under  which,  the  plaintiffs,  and  some  of  the  defendants, 
were  beneficially  interested.  These  stocks  were  later  converted  into 
i21,000.  consols.  Subsequently  consols  amounting  to  i5,000.  were 
sold  and  the  proceeds  invested  in  160  shares,  of  ilOO.  each,  of  the 
capital  of  the  Provincial  Bank  of  Ireland.  On  July  9,  1830,  John- 
son, Wright  and  Robinson  executed  a  declaration  of  trust,  indorsed 

1  The  English  rule  prevails  in  several  jnrisdie-tions  in  the  United  States,  es- 
pecially in  New  York,  where  the  decisions  of  Chancellor  Kent,  contra,  have 
been  overruled. 


180       TRANSFER  OF  RESPECTIVE  INTERESTS  OF  PARTIES.     (Ch.  3 

on  the  settlement,  dcclarinp^  that  Wright,  as  to  said  160  shares  was  a 
trustee  upon  the  trusts  of  the  settlement.  Johnson  died  in  1833,  and 
the  defendant  Reynolds  was  his  executor.  From  Octolx^r,  1837,  un- 
til his  bankruptcy,  Wright  had  225  shares  of  the  stock  of  the  Pro- 
vincial Bank  of  Ireland  standing  in  his  name.  The  Provincial  Bank 
had  allotted  a  number  of  additional  shares  of  ilO.  each,  by  way  of 
bonus,  to  the  original  shares;  but  no  question  arose  as  to  them,  it 
being  admitted  that  they  would  follow  the  original  shares. 

January  1,  1840,  Wright,  being  indebted  to  the  Provincial  Bank, 
agreed  to  assign  100  shares  of  the  225  shares  to  the  bank  as  security 
by    letter    reading    as    follows : 

"To  the  Directors  of  the  Provincial  Bank  of  Ireland — Gentle- 
men :  As  security  for  the  sum  of  i4,000.  held  by  me  on  loan  from 
y  the  bank,  I  hereby  oblige  myself  to  transfer  unto  the  name  of  any 

one  of  your  number,  whenever  you  shall  desire  it,  100  shares  of  ilOO. 
each,  of  the  stock  of  the  Provincial  Bank  of  Ireland  now  standing  in 
my  name.  John  Wright." 

November  23,  1840,  Wright  and  his  partners,  bankers  in  London, 
stopped  payment.  November  24,  1840,  plaintiff's  solicitor  notified  the 
bank  of  the  claim  of  the  parties  interested  under  the  settlement  of 
April  3,  1828,  to  the  said  100  shares.  December  17,  1840,  a  fiat  in 
bankruptcy  issued  against  Wright   and   assignees   were   appointed. 

The  bill  was  filed  by  the  plaintiff's  interested  under  the  settlement 
against  the  trustees,  the  Provincial  Bank  (by  R.  Murray,  their  pub- 
lic offtcer),  the  assignees  in  bankruptcy  and  others  praying  the  ap- 
pointment of  new  trustees  of  the  settlement,  that  the  said  160  shares 
and  32  additional  shares,  standing  in  Wright's  name,  might  be  trans- 
ferred to  such  new  trustees;  and  that,  if  necessary,  the  interests  of 
the  other  defendants  in  the  shares  standing  in  Wright's  name,  might 
be  ascertained  and  declared. 

Vice  Ciianckllor.^  *  *  *  Secondly,  I  shall  consider  the 
claims  of  the  plaintiffs  and  the  bank.  *  *  *  The  next  point  I 
propose  to  consider  is,  that  which  was  rested  upon  the  relation  in 
which  it  was  said  that  Wright  and  the  bank  stood  towards  each  other 
as  partners.     *     *     * 

I  conclude,  for  the  reasons  I  have  stated,  that  the  bank  is  not  en- 
titled to  a  priority  over  the  plaintiffs,  in  respect  of  any  general  rule 
of  law  arising  out  of  the  partnership  contract  between  the  bank  and 
Weight.  I  conclude,  in  effect,  that  in  respect  of  all  dealings  between 
the  bank  and  a  proprietor,  for  or  in  respect  of  his  shares,  the  bank 
must  be  considered  as  a  stranger,  dealing  in  like  manner,  would  be. 
The  bank  must  establish  its  right  to,  or  lien  upon,  the  shares  of  a 
proprietor,  by  special  contract,  as  a  stranger  would  be  compellable 
to  do. 

1  Part  of  the  opinion  is  omitted. 


Sec.  1)  BY   ACT  OF  THE   PARTY.  181 

The  question  then  is,  whether  the  bank  has  estabhshed  a  priority 
over  the  plaintiffs,  by  the  specific  contract  between  Wright  and  the 
Bank  of  the  1st  of  January,  1840. 

That  the  bank  has  estabhshed  an  interest  in  Wright's  shares,  as 
against  Wright  and  his  assignees,  admits  of  no  doubt.  *  *  * 
The  claim  of  priority  over  the  plaintiffs,  however,  depends  upon  oth- 
er considerations.  The  claim  was  rested  upon  the  suggestion,  that 
the  bank  had  the  legal  interest  in,  or  control  over,  Wright's  shares, 
both  as  holders  of  the  capital  in  the  concern,  and  by  the  power  the 
bank  has  to  refuse  to  permit  a  transfer  of  the  shares;  and  it  was 
said,  that  the  equities  between  the  plaintiffs  and  the  bank  were  the 
same,  and  that  a  Court  of  Equity  would  allow  the  bank  to  retain 
any  advantage  which  its  position  gave  it.  My  answer  to  this  argu- 
ment will  be  found  in  the  observations  I  have  already  made.  From 
October,  1837,  to  the  1st  of  January,  1840,  Wright  was  a  trustee 
for  the  plaintiffs  of  160,  part  of  225  shares,  standing  in  his  name. 
I  have  already  stated  the  grounds  upon  which  I  consider  the  shares 
comprised  within  the  trusts  of  the  settlement  of  1828  to  be  identified 
with  those  comprehended  in  the  225  that  stood  in  Wright's  name  on 
the  1st  of  January,  1840.  When  Wright,  therefore,  on  that  day, 
agreed  to  pledge  100  shares  to  the  bank  as  security  for  his  private 
debt,  he  agreed,  to  the  extent  of  35  of  those  shares,  to  pledge  shares 
of  which  he  was  a  trustee  for  the  plaintiffs.  This  he  could  not  be 
either  compelled  by  the  bank,  or  permitted  by  this  Court,  to  do,  un- 
less the  bank  (considered  as  a  stranger  advancing  money  upon  the 
100  shares  it  claims)  could  establish  a  better  equity  than  that  of  the" 
plaintiffs,  to  call  for  a  transfer  of  the  35  shares  in  dispute.  For  the 
reasons  I  have  already  stated,  I  cannot  consider  the  bank  as  standing 
in  a  better  situation  than  a  stranger  would  stand,  in  respect  of  any 
contract  with  a  proprietor  for  the  transfer  of  his  shares.  Now,  I  can 
discover  no  satisfactory  ground  upon  which,  as  between  the  plain^ 
tiffs  and  the  bank,  I  can  deprive  the  former  of  that  priority  which 
time  and  dates  prima  facie  give  them.  The  persons  to  whom  the  se- 
curity is  given  by  Wright,  on  behalf  of  the  company,  are  the  directors 
of  the  company.  Wright,  who  is  the  author  of  the  wrong  of  which 
the  plaintiffs  complain,  by  a  letter  addressed  to  the  directors  of  the 
company,  of  whom  he  is  one,  engages  that  property,  of  which  he  is 
trustee,  shall  be  transferred  to  himself  and  his  co-directors;  and  that, 
for  purposes  in  which  he  is  beneficially  interested.  I  think  that  the 
position  of  the  parties  (no  transfer  having  been  made)  is  sufficient 
to  leave  the  plaintiff's  in  possession  of  the  original  priority  which  time 
alone  would  give  them. 

In  coming  to  the  conclusion  which  I  have  stated,  I  do  not  rely 
upon  the  doctrine  of  constructive  notice  arising  from  Wright's  posi- 
tion, either  as  a  partner,  or  a  director.     The  directors  who  took  the 


^. 


182  TRANSFER   OF   RESPECTIVE    INTERESTS   OF   PARTIES.  (Ch.  3 

security  from  \Vrii;ht  arc  purchasers  of  trust  property ;  one  of  whom 
knew  that  it  was  trust  property.  Admitting-,  for  the  purposes  of 
the  argument,  but  not  farther,  that  the  plaintiffs  had  not  perfected 
their  equitable  title  by  notice  to  the  bank  (if  I  can  consider  the  bank 
as  unaffected  by  notice),  I  think,  under  such  circumstances,  the 
claims  of  the  plaintiffs  cannot  be  postponed  to  that  of  the  bank.  But 
I  by  no  means  admit  that  any  such  notice  to  the  bank  was  necessary 
to  perfect  the  plaintiffs'  equity,  as  against  a  subsequent  equitable  in- 
cumbrancer. On  the  contrary,  having  come  to  the  conclusion  that 
the  bank  has  not  any  lien  upon  Wright's  shares,  resulting  from  their 
partnership  relation,  I  think  the  plaintiffs'  equitable  title  was  perfect- 
ed by  the  deed  of  trust  executed  by  the  trustees  of  the  settlement  in 
July,  1830,  without  notice  to  the  bank  or  any  other  person.  The 
"trust  in  favor  of  the  plaintiffs  was  perfected ;  and  the  bank  is  in  the 
situation  of  a  person  taking  a  subsequent  equitable  incuml)rancc  on 
the  property.^ 


ELDRIDGE  and  Another  v.  TURNER,  by  His  Next  Friend,  etc. 

(Supreme  Court  of  Alabama,  1847.     11  Ala.  1040.) 
■  I  j} ,  '.  , 

cu  The   defendant   in   error   filed   his  bill   against   John   M.   Eldridge, 

.(S^^--  Henry  B.  Turner  and  James  W.  Camp.  Camp  sold  his  interest  in  a 
stallion  to  Henry  B.  Turner,  who  in  consideration  therefor  made  a 
note  promising  to  pay  said  Camp  for  the  use  of  the  defendant  in  er- 
ror $500.  Subsequently  Camp  endorsed  this  note  to  Eldridge  who 
sued  the  maker  and  obtained  judgment.  The  bill  prayed  an  injunc- 
tion to  restrain  the  collection  of  all  the  judgment  but  the  costs;  that 
the  defendant  therein  be  a  trustee  for  the  complainant  in  respect  to 
the  amount  due  and  to  become  due  on  the  judgment;  and  that  such 
'^  other  relief  as  might  be  proper  be  granted.  An  injunction  was  grant- 
ed accordingly. 

Pending  the  suit  Camp  died,  but  the  suit  was  not  revived  against 
his  representatives. 

The  Chancellor  was  of  opinion  that  Camp  became  a  trustee  for 
the  complainant,  as  soon  as  the  note  was  made  and  delivered  to  him; 
that  the  difficulty  of  collecting  the  money  from  Camp  or  Eldridge', 
if  the  latter  should  collect  the  money  on  his  judgment,  was  sufficient 
to  vest  the  Court  of  Chancery  with  jurisdiction.  Therefore  it  was 
considered  that  the  bill  not  being  revived  against  the  representatives 
of  Camp  abate  as  to  him ;  and  it  was  ordered  and  adjudged  that  the 
injunction  be  perpetuated. 

Collier,  C.  J.^  Wc  cannot  think  that  the  bill  in  this  case  is  want- 
ing in  equity.     The  inducement  of  the  maker  of  the  note,  it  is  al- 

2  Affirmed  by  House  of  Lords,  12  CI.  &  F.  7G4  (1846). 

3  Part  of  the  opinion  is  omitted. 


Sec.  1)  BY   ACT   OF   THE   PARTY. 


183 


leged,  was  not  only  to  obtain  the  payee's  interest  in  the  horse  which 
they  held  as  joint  property,  but  to  lend  his  aid  in  promoting  the 
,bounty  in  favor  of  his  son.  *  *  *  Conceding  that  Camp's  inter- 
est in  the  horse  was  worth  $500,  or  even  more,  yet  if  he  sold  it  under 
a  stipulation  with  the  purchaser  that  he  would  take  his  note  for  that 
amount,  agreeing  upon  its  face  that  the  money  should  be  paid  for  the 
benefit  of  an  infant  son  of  the  vendee,  the  vendor,  by  the  acceptance 
of  the  note,  and  delivery  of  the  horse,  became  a  trustee  for  the  son. 
*  *  *  If,  under  such  circumstances,  the  vendor  could  exempt 
himself  from  the  performance  of  the  trust,  then  he  might  success- 
fully practice  a  fraud  on  the  maker  of  the  note,  who  but  for  the 
destination  the  money  was  to  receive,  never  would  have  entered  into 
the  contract. 

Tlie  indorsement  of  the  note  by  the  payee  to  Eldridge,  though  for  l,^o(i^^-<.^ 
JlJuII  consideration,  cannot  affect  the  rights  of  the  beneficiary.     Up-  -y  tH^c-'u.  -< 
_on  its  face  it  purports  to  be  an  undertaking  to  pay  for  the  use  of  the  f^'^^  f 
complainant  (Turner  v.  Eldridge,  6  Ala.  821),  and  of  course  inform- 
ed the  endorsee  what  was  the  character  of  the  security  he  received. 

Assuming  the  case  made  by  the  bill  to  be  true  and  the  Indorsement 
of  the  note  was  a  breach  of  trust  on  the  part  of  Camp,  which  author- 
ized the  cestui  que  trust  to  come  in  equity  and  assert  his  right  to  the 
Qioney,..  To  make  that  right  effectual  and  as  expeditious  as  might  be, 
it  was  allowable  to  pray  an  injunction  to  restrain  the  indorsee  in  the 
enforcement  of  the  judgment. 

The  object  of  the  bill  in  this  case  is,  to  secure  a  trust  fund  in  the 
hands  of  the  defendant.  Turner,'  and  as  secondary  and  ancillary  to 
this  object,  a  judgment  against  the  holder  of  the  fund  is  sought  to  be 
enjoined. 

[The  Court  held  that  the  cause  should  not  have  been  heard  without 
bringing  in  the  personal  representatives  of  Camp  and  reversed  the 
decree  and  remanded  the  cause  that  the  defect  of  parties-  might  be 
remedied.]  

SPAULDING,  Receiver,  v.  KENDRICK  and  Another. 
(Supreme  Judicial  Court  of  Massacliusetts,  1S98.    172  Mass.  71,  51  N.  E.  453.) 

Bill  in  equity,  by  the  receiver  of  the  Stockbridge  Savings  Bank,  to  /. 

recover  the  sum  of  five  thousand  dollars,  the  property  of  the  bank,  al- 
leged to  have  been  misappropriated  by  Frederick  A.  Hobbs,  a  former 
receiver  of  the  bank,  who  had  been  removed  from  his  office.     Trial  ^^ 

in  the  Superior  Court,  before  Lilly,  J.,  who  found  for  the  defendant 
Kendrick,  who  alone  defended  and  the  plaintiff  alleged  exceptions. 
The  facts  appear  in  the  opinion. 

Knowlton,  J.'-  The  bill  alleges  that  the  sum  of  $5000  was  taken 
by  Hobbs  from  the  funds  in  his  hands  as  receiver,  and  sent  to  Wil- 


1  Part  of  the  opinion  is  omitted. 


H 


184  TRANSFER   OF   RESPECTIVE    INTERESTS   OF   PARTIES.  (Cll.  3 

Ham  A.  Dickinson  of  Amherst  in  the  form  of  a  draft,  and  hy  him 
dehvered  to  one  James  I.  Cooper,  who  received  it  as  the  attorney  of 
the  defendant  Kendrick,  and  turned  it  over  to  him.  The  plaintiff 
discontinued  his  suit  as  ai^ainst  all  the  defendants  except  Kendrick" 
and  Hobhs,  and  Kendrick  alone  defends.  Kendrick  and  one  Stock- 
bridge  were  sureties  for  Hobbs  upon  a  bond  given  by  him  as  trustee 
under  the  will  of  one  Dickinson,  in  the  sum  of  $8000,  and  previously 
to  the  receipt  of  the  money  Kendrick  had  filed  a  petition  in  the  Pro- 
bate Court  asking  to  be  relieved  from  further  liability  on  the  bond. 

We  may  assume  upon  the  evidence  that  the  money  belonged  to  the 
bank,  and'  was  misappropriated  by  Hobbs.  There  was  evidence  to 
warrant  the  finding  of  the  judge,  that  the  defendant  Kendrick  had 
no  knowledge  that  the  money  was  other  than  the  property  of  Hobbs, 
and  that  he  received  it  through  his  attorney  in  good  faith,  and  as 
security  for  a  liability  of  a  greater  amount  than  $r)000  and  on  account 
thereof  forbore  to  prosecute  his  petition  for  relief  as  surety  on  the 
bond  of  Hobbs.  The  evidence  warranted  a  finding  that  this  receipt 
of  it  was  the  same  in  legal  effect  as  if  it  had  been  put  into  his  pos- 
session by  Hobbs  with  his  own  hand,  to  be  held  as  security  against 
loss  as  surety  on  the  bond.  The  evidence  tended  to  show  that  the 
draft  w^is  sent  to  Mr.  Dickinson  to  be  held  and  used  as  such  se- 
curity, and  that,  if  the  delivery  of  it  to  Mr.  Cooper  was  not  expressly 
authorized  by  Hobbs,  it  was  within  the  general  purpose  of  Hobbs, 
and  was  soon  afterwards  known  to  him  and  ratified  by  him. 

The  law  of  the  case  is  settled  by  numerous  decisions.  If  a  thief 
gives  stolen  money,  or  negotiable  securities  before  their  maturity, 
in  payment  of  his  debt,  or  as  security  for  it,  to  one  who  in  good 
faith  receives  the  money  or  securities  as  belonging  to  him,  the  creditor 
can  hold  the  property  as  against  the  true  owner.  As  between  the 
payor  and  payee  there  is  no  mistake  which  affects  the  validity  of  the 
transaction.  One  receiving  money  or  other  negotiable  securities  in 
payment  of  or  as  security  for  an  existing  debt  is  not  bound  to  inquire 
wliere  the  money  or  securities  were  obtained.  It  is  better  that  money 
or  a  negotiable  security,  passing  from  hand  to  hand  to  one  who  right- 
ly receives  it  for  a  valuable  consideration,  should  carry  on  its  face 
its  own  credentials.  *  *  *  It  has  often  been  decided  in  this  Com- 
monwealth that  a  pre-existing  debt  is  a  valuable  consideration  for  a 
payment  made  or  a  security  given  on  account  of  it.  *  *  * 
Exceptions  overruled. 


Sec.  1)  BY   ACT   OF  THE   PARTY.  185 


II.  By  Act  of  tiik  Cestui  quk  Trust. 

FRANCIS  NORTH  v.  CHAMPERNOON  and  Others. 
(In  Chancery,  before  Lord  Chnncollor  Nottingham,  1G81.    2  Chancery  Cases,  78.) 

Sir  Francis  North  purchased  lands  in  Essex;  the  fee  of  some  part 
of  the  lands  were  in  trustees  but  the  trust  was,  after  debts  paid,  to 
Richard  AUington  in  tail  with  other  remainders  over.  Richard  Al- 
lington  the  cestui  que  trust  in  tail  suffered  a  common  recovery  with 
double  voucher  to  bar  the  remainders  over  limited  by  way  of  trust, 
but  no  legal  tenant  to  the  praecipe,  for  the  freehold  was  in  the  trus- 
tees who  were  no  parties  to  the  recovery.  And  the  great  question 
was  whether  the  recovery  did  bar  the  remainders  in  trust,  for  the 
plaintiff's  title  was  under  that  recovery. 

The  decree  is  in  these  words:  His  Lordship  upon  long  debate  of 
the  matter,  on  hearing  what  was  alleged  by  counsel  on  either  side 
touching  the  same,  declared,  that  he  was  fully  satisfied  that  the  said 
recovery  did  sufficiently  bar  all  remainders  depending  upon  the  es- 
'  tate  tail  of  Richard  AUington,  who  suffered  the  same,  it  being  a  gen- 
eral rule,  that  any  legal  conveyance  or  assurance  by  a  cestui  que  trust 
shall  have  the  same  effect  and  operation  upon  the  trust,  as  it  should 
have  had  upon  the  estate  in  law  in  case  the  trustees  had  executed 
their  trust. 


DEARLE  V.  HALL.  ,-^.^U  ^  '^^^  !l' 

(In  Chancery,  before  Lord  Chancellor  Lyndhurst,  1827.    3  Russell.  1.) 

The  Lord  ChanceIvLOR.  The  cases  of  Dearie  v.  Hall  and  Lov- 
eridge  v.  Cooper  were  decided  by  Sir  Thomas  Plumer ;  and  from  his 
decree  there  is  in  each  of  them  an  appeal,  which  stands  for  judg- 
ment. As  the  two  cases  depend  upon  the  same  principle,  though  the 
facts  are,  to  a  certain  degree,  dift'erent,  the  better  course  will  be  to 
dispose  of  both  together;  and  as  Dearie  v.  Hall  was  the  first  of  the 
two  which  came  before  the  court  below,  though  it  was  not  argued  on 
appeal  till  after  Loveridge  v.  Cooper  had  been  heard,  I  shall  first  di- 
rect my  attention  to  the  facts  on  which  it  depends. 

Zachariah  Brown  was  entitled,  during  his  life,  to  about  £93.  a  year, 
being  the  interest  arising  from  a  share  of  the  residue  of  his  father's 
estate,  which,  in  pursuance  of  the  directions  in  his  father's  will,  had 
been  converted  into  money,  and  invested  in  the  names  of  the  execu- 
tors and  trustees.  Among  those  executors  and  trustees  was  a  solicit- 
or by  the  name  of  Unthank,  who  took  the  principal  share  in  the  man- 
agement of  the  trust.     Zachariah  Brown,  being  in  distress  for  money, 


186  TRANSFER   OF   RESPECTIVE    INTERESTS   OF   PARTIES.  (Ch.  3 

in  consideration  of  the  sum  of  £204.,  p^rantcd  to  Dearie,  one  of  the 
plaintiffs  in  the  suit,  an  annuity  of  £37.  a  year,  secured  by  a  deed 
of  covenant  and  a  warrant  of  attorney  of  the  grantor  and  a  surety ; 
and.  by  way  of  collateral  security.  Brown  assigned  to  Dearie  all  his 
interest  in  the  yearly  sum  of  £93. ;  but  neither  Dearie  nor  Brown  gave 
any  notice  of  this  assignment  to  the  trustees  under  the  father's  will. 

Shortly  afterwards,  a  similar  transaction  took  place  between 
Brown  and  the  other  plaintiff,  Sherring,  to  whom  an  annuity  of  £27. 
a  year  was  granted.  The  securities  were  of  a  similar  description ; 
and,  on  this  occasion,  as  on  the  former,  no  notice  was  given  to  the 
trustees. 

These  transactions  took  place  in  1808  and  1809.  The  annuities 
were  regularly  paid  till  June,  1811;  and  then,  for  the  first  time,  de- 
fault was  made  in  payment. 

Notwithstanding  this  circumstance,  Brown  in  1812,  publicly  adver- 
tised for  sale  his  interest  in  the  property  under  his  father's  will.  Hall, 
attracted  by  the  advertisement,  entered  through  his  solicitor  Mr.  Pat- 
ten, into  a  treaty  of  purchase ;  and  it  appears  from  the  correspond- 
ence between  Mr.  Patten  and  Mr.  Unthank  that  the  former  exercised 
due  caution  in  the  transaction,  and  made  every  proper  inquiry  con- 
cerning the  nature  of  Brown's  title,  the  extent  of  any  incumbrances 
affecting  the  property,  and  all  other  circumstances  of  which  it  was 
fit  that  a  purchaser  should  be  apprised.  No  intimation  was  given  to 
Hall  of  the  existence  of  any  previous  assignment;  and,  his  solicitor 
being  satisfied,  he  advanced  his  money  for  the  purchase  of  Brown's 
interest,  and  that  interest  was  regularly  assigned  to  him.  Mr.  Pat- 
ten requested  Unthank  to  join  in  the  deed;  but  Mr.  Unthank  said, 
"I  do  not  choose  to  join  in  the  deed;  and  it  is  unnecessary  for  mc  to 
do  so,  because  Z.  Brown  has  an  absolute  right  to  this  property,  and 
may  deal  with  it  as  he  pleases."  The  first  half-year's  interest,  sub- 
ject to  some  deductions,  which  the  trustees  were  entitled  to  make, 
was  duly  paid  to  Hall ;  and,  shortly  afterwards  Hall  for  the  first  time 
ascertained  that  the  property  had  been  regularly  assigned,  in  1808 
and  1809,  to  Dearie  and  to  Sherring. 

Sir  Thomas  Plumer  was  of  opinion  that  the  plaintiffs  had  no  right 
to  the  assistance  of  a  Court  of  equity  to  enforce  their  claim  to  the 
property  as  against  the  defendant  Hall,  and  that,  liaving  neglected  to 
give  the  trustees  notice  of  their  assignments,  and  having  enabled  Z. 
Brown  to  commit  this  fraud,  they  could  not  come  into  this  court  to 
avail  themselves  of  the  priority  of  their  assignments  in  point  of  time, 
in  order  to  defeat  the  right  of  a  person  who  had  acted  as  Plall  had 
acted,  and  who,  if  the  prior  assignments  were  to  prevail  against  him, 
would  necessarily  sustain  a  great  loss.     In  that  opinion  I  concur. 

It  was  said  that  there  was  no  authority  for  the  decision  of  the 
Master  of  the  Rolls, — no  case  in  point  to  support  it;  and  certainly 
it  does  not  appear  that  the  precise  question  has  ever  been  determined, 


vScC.  1)  BY   ACT   OF  THE   PARTY.  187 

or  that  it  has  been  even  brought  before  the  court,  except,  perhaps,  so 
far  as  it  may  have  been  discussed  in  a  non-reported  case  of  Wrig-ht 
V.  Lord  Dorchester.  But  the  case  is  not  new  in  principle.  Where 
personal  property  is  assigned,  delivery  is  necessary  to  complete  the 
transaction,  not  as  between  the  vendor  and  vendee,  but  as  to  third 
persons,  in  order  that  they  may  not  be  deceived  by  apparent  posses- 
sion and  ownership  remaining  in  a  person,  who,  in  fact  is  not  the 
owner.  Thi^  doctrine  is^  not  confined  to  chattels  in  possession,  but 
e2d:ends  to  choses  in  action,  bonds,  etc.;  in  Ryall  v.  Rowles  [1  Ves. 
Sr.  318]  it  is  expressly  applied  to  bonds,  simple  contract  debts,  and 
other  choses  in  action.  It  is  true  that  Ryall  v.  Rowles  was  a  case  in 
bankruptcy;  but  the  Lord  Chancellor  called  to  his  assistance  Lord 
Chief  Justice  Lee,  Lord  Chief  Baron  Parker,  and  Mr.  Justice  Bur- 
nett; so  that  the  principle  on  which  the  court  there  acted  must  be 
considered  as  having  received  most  authoritative  sanction.  These 
eminent  individuals,  and  particularly  the  Lord  Chief  Baron  and  Mr. 
Justice  Burnett,  did  not,  in  the  view  which  they  took  of  the  question 
before  them,  confine  themselves  to  the  case  of  bankruptcy,  but  stated 
grounds  of  judgment  which  are  of  general  application.  Lord  Chief 
Baron  Parker  says,  that,  on  the  assignment  of  a  bond  debt,  the  bond 
should  be  delivered,  and  notice  given  to  the  debtor;  and  he  adds, 
that,  with  respect  to  simple  contract  debts,  for  which  no  securities  are 
holden,  such  as  book  debts  for  instance,  notice  of  the  assignment 
should  be  given  to  the  debtor,  in  order  to  take  away  from  the  debtor 
the  right  of  making  payment  to  the  assignor,  and  to  take  away  from 
the  assignor  the  power  and  disposition  over  the  thing  assigned.  1 
Ves.  Sr.  367;  2  Atk.  177.  In  cases  like  the  present,  the  act  of  giving 
the  trustee  notice  is,  in  a  certain  degree  taking  possession  of  the  fund ; 
it  is  going  as  far  toward  equitable  possession  as  it  is  possible  to  go; 
for,  after  notice  given,  the  trustee  of  the  fund  becomes  a  trustee  for 
the  assignee  who  has  given  him  notice.  It  is  upon  these  grounds  that 
'Tarn  disposed  to  come  to  the  same  conclusion  with  the  late  Master  of 
the  Rolls. 

I  have  alluded  to  a  case  of  Wright  v.  Lord  Dorchester,  which  was 
cited  as  an  authority  in  support  of  the  opinion  of  the  Master  of  the 
Rolls.  In  that  case,  a  person  of  the  name  of  Charles  Sturt  was  en- 
titled to  the  dividends  of  certain  stock,  which  stood  in  the  names  of 
Lord  Dorchester  and  another  trustee.  In  1793  Sturt  applied  to 
Messrs.  Wright  &  Co.,  bankers  at  Norwich,  for  an  advance  of  money, 
and,  in  consideration  of  the  moneys  which  they  advanced  to  him, 
granted  to  them  two  annuities,  and  assigned  his  interest  in  the  stock 
as  a  security  for  the  payment.  No  notice  was  given  by  Messrs. 
Wright  &  Co.  to  the  trustees.  It  would  appear  that  Sturt  afterwards 
applied  to  one  of  the  defendants.  Brown,  to  purchase  his  life  interest 
in  the  stock;  Brown  then  made  inquiry  of  the  trustees,  and  they 
stated  that  they  had  no  notice  of  any  incumbrance  on  the  fund :     up- 


18S  TRANSFER   OF   RESPECTIVE    INTERESTS   OF   PARTIES.  (Ch.  3 

on  this  B.  completed  the  purchase,  and  received  the  dividends  fi)r  up- 
wards of  six  years.  Messrs.  \\'ri<;ht  then  filed  a  hill,  and  ohtained  an 
injunction,  restraining^  the  transfer  of  the  fund  or  the  payment  of  the 
dividends;  but,  on  the  answer  of  Brown,  disclosing  the  facts  with 
respect  to  his  purchase,  Lord  Eldon  dissolved  that  injunction.  At 
the  same  time,  however,  that  he  dissolved  the  injunction,  he  dissolved 
it  only  on  condition  that  Brown  should  give  security  to  refund  the 
money,  if,  after  hearing,  the  Court  should  give  judgment  in  favor  of 
any  of  the  other  parties.  That  case  was  attended  also  with  this  par- 
ticular circumstance,  that  the  party  who  pledged  the  fund  stated  by 
his  answer  that,  when  he  executed  the  security  to  Wright  &  Co.,  he 
considered  that  the  pledge  was  meant  to  extend  only  to  certain 
real  estates.  For  these  reasons  I  do  not  rely  on  the  case  of  Wright 
V.  Lord  Dorchester  as  an  authority ;  I  rest  on  the  general  principle 
to  which  I  have  referred;  and,  on  that  principle,  I  am  of  opinion 
that  the  plaintiffs  are  not  entitled  to  come  into  a  Court  of  equity  for 
relief  against  the  defendant  Hall.  The  decree  must,  therefore,  be  af- 
firmed and  the  deposit  paid  to  Hall. 

The  case  of  Loveridge  v.  Cooper  [?>  Russ.  30],  though  the  circum- 
stances are  somewhat  different,  is  the  same  in  principle  with  Dearie 
V.  Hall  and  must  follow  the  same  decision.^ 


JONES  V.  JONES. ^^rt^^'^'r^'^ 


(In  Chfinoorv,  before  Vice  riiancellor  Sir  Laucelot  Sliaflwell.  18.38.     8  Siinnns, 

G33.) 

Thomas  Jones  by  will  dated  May  25,  1815,  devised  his  freeholds  in 
trust  to  pay  the  rents  thereof  to  Sarah  Harvey  for  her  life,  and 
after  her  decease  in  trust  for  Mary  Whitworth  and  Eliza  Whitworth, 
their  heirs  and  assigns.  James  Whitworth  by  will  dated  December 
7,  1821,  devised  a  freehold  messuage  in  trust  for  Eliza  Whitworth 
for  life,  with  remainders  over. 

In  1822,  Frederick  Lewis  Brown  married  Eliza  Whitworth  and  by 
marriage  articles  Eliza  Whitworth  conveyed  the  remainder  in  fee  ex- 
pectant upon  the  death  of  Sarah  Harvey  in  one-half  of  the  premises 
devised  by  Thomas  Jones  to  trustees  to  such  uses,  after  the  marriage, 

1  In  tlio  principal  case  tlie  last  purcliaser  before  purcliasing  made  inquiry  of 
the  trn.stee  as  to  the  existence  of  prior  incumbrances  and  made  his  purcliase 
after  bciufr  assured  tliere  were  none. 

In  Foster  v.  Cockerell.  J)  lili^'li's  N.  R.  .3.32  (18.35),  the  second  purclniser  pur- 
cliased  without  inquiry  but  was  given  priority  over  a  prior  purcliaser  simply 
because  he  was  the  first  to  notify  the  trustee.  In  Meux  v.  P.ell,  1  Hare.  "^ 
(1841),  at  pages  80  and  87,  will  be  found  by  Vice  Chancellor  Wigram  the  best 
statement  of  the  reasons  in  support  of  this  position. 

In  England  an  assignee  in  bankruptcy  is  in  the  same  position  as  any  other 
assignee.  The  Fynglish  rule  prevails  in  many  slates  in  this  country,  but  there 
are  several  in  which  it  does  not  hold.  Putnam  v.  Story,  132  Mass.  205  (1882); 
Williams  v.  lugersoll,  89  N.  Y.  508,  523  (1882). 


Sec.  1)  BY   ACT   OF   TUE   TAIITY.  ISO 

as  Frederick  Lewis  Brown  and  Eliza  should  from  time  to  time  joint- 
ly appoint,  with  divers  limitations  over.  ^ 

In  November,  1825,  Brown  and  wife  borrowed  £C>GO.  of  Jane Jame.s-^ 
and  transferred  her  interest  in  all  the  devised  estate  as  security.     In 
1826,  they  borrowed  of-John_Jones_£500.  and  transferred  to  him  Mrs.   l^^,,,<^t 
Brown's   interest  in   the   same  premises   as   security.      Jones   had   no 
notice  of  the  prior  incumbrance  and  made  before  loaning  the  money 
inquiries  of  the  trustees  under  the  will  of  Thomas  Jones  and  James 
Whitworth  as  to  the  existence  of  incumbrances.     Later  in  182G,  they 
borrowed  of  John  Harris  iSOO.  and  transferred  to  him  her  interest 
in  said  premises  as  security.     Before  making  the  loan  Harris  made  '  , 
due  inquiry  for  previous  incumbrances  and  was  informed  of  the  in- 
cumbrance of  Jane  James,  now  vested  by  assignment  in  the  defend- 
ants, Thomas  Taylor  Webb  and  David  Jones,  but  not  of  the  incum- 
brance of  John  Jones.  "  "^ 

A  reference  to  a  Master  to  report  incumbrances  and  state  their  pri- 
orities was  had  and  he  reported  the  priorities  as  follows:     First  the       ^  .. 
mortgage  vested  in  Webb  and  David  Jonerr  second  the  mortgage  to  r^^-^i  o~JJ::ie^ 
John  Harris  and  third  the  mortgage  to  John  Jones  and  now  vested 
in  plaintiffs.     To  this  report  the  plaintiffs  excepted.  ".^  f"*-^ 

The  Vice:  Chancellor,  after  stating  the  substance  of  the  report, 
continued  thus :  ^ 

To  this  report  an  exception  is  taken  by  the  parties  who  claim  un- 
der John  Jones,  insisting  on  their  priority  over  Harris;   and  the  ques-    ~^^,^^^_^. 
tion  is  whether  the  report  is  right. 

At  law  the  rule  clearly  is  that  different  conveyances  of  the  same 
tenement,  take  effect  according  to  their  priority  in  time.  If  a 
man  seized  in  fee,  first  grants  one  term  of  years  and  then  another 
term,  the  second  termor  cannot  enter  till  the  first  term  has  ceased 
by  effluxion  of  time,  surrender  or  otherwise.  So,  if  freehold  inter- 
ests are  carved  out  of  the  fee  by  different  conveyances,  the  estate  of 
the  second  grantee  cannot  take  effect  in  possession,  till  the  estate  of 
the  first  has,  in  some  measure,  ceased.  The  effect  of  dift'erent  con- 
veyances is  the  same  as  if  different  successive  estates  were  granted  by 
the  same  conveyance,  first  in  possession  and  then  in  remainder.  Equi- 
ty follows  the  law;  and,  where  the  legal  estate  is  outstanding,  con- 
veyances of  the  equitable  interest  are  construed  and  treated,  in  a 
Court  of  equity,  in  the  same  manner  as  conveyances  of  the  legal  es- 
tate are  construed  and  treated  at  law.  *  *  *  The  fact  is  that 
upon  Harris'  answer  and  before  the  Master  as  well  as  in  the  argu- 
ment at  the  bar,  the  case  of  Harris  was  attempted  to  be  put  upon  the 
decisions  in  pe_arle.v.  Hall  [3  Russ.  1],  Loveridge  v.  Cooper  [3  Russ. 
30],  and  Foster  v.  Blackstone  [1  ]\Iylne  &  Keene,  297 J,  decided  by 
Sir  John  Leach  and  afterwards  by  the  House  of  Lords.  But,  in  each 
of  those  cases,  the  subject  of  discussion  was  a  chose  in  action.    *    *    * 

1  Part  of  the  opinion  is  omitted- 


100  TRANSFER   OF   RESPECTIVE   INTERESTS   OF   PARTIES.  (Ch.  3 

The  case  before  me  is  a  case  of  real  estate,  not  of  a  chose  in  action. 
John  Jones,  the  first  incumbrancer  on  the  equity  of  redemption,  took 
his  title  by  the  conveyances  of  January,  1826;  and  notice  or  posses- 
sion was  not  necessary  to  complete  his  title.  Harris  took  his  title  by 
a  subsequent  conveyance,  and  merely  gave  a  notice,  which  did  not 
and  could  not  affect  Jones.  No  fraud  whatever  can  be  imputed  to 
Jones.  He  made  some  inquiry  and  was  misled.  He  was  the  innocent 
subject  of  fraud,  and  not  the  doer  of  it;  and,  in  my  opinion,  the  ex- 
ception must  be  sustained. 


WILTSHIRE  V.  RABBITS. 

(In  Chancery,  before  Vice  Cluincellor  Sir  Lancelot   Shadwell,   1844.     14   Si- 
mons, 76.) 

George  Rabbits  by  will  dated  August  9,  1822,  bequeathed  to  Cicero 
Rabbits  and  George  Bcthell,  leaseholds  upon  trust  and  charged  them 
with  payment  of  an  annuity  of  £45.  to  his  daughter,  Frances,  wife 
of  Thomas  Tovey  for  her  separate  use.  By  indenture  dated  June  30, 
1866,  Mr.  and  Mrs.  Tovey  mortgaged  the  annuity  to  Thomas  Wilt- 
shire to  secure  i500.  and  interest.  Some  years  previously  they  had 
made  a  similar  mortgage  to  Thomas  Munday.  Plaintiffs,  Wiltshire's 
executors,  claim  priority  over  Munday  on  the  ground  that  Wiltshire 
gave  notice  of  his  security  first. 

The  Vice  Chancellor.  It  is  important  to  keep  up  the  distinction 
between  choses  in  action  and  chattel  or  freehold  interests;  and  my 
opinion  is  that  the  effect  of  this  will  was  to  pass  the  legal  interest 
in  the  leasehold  estates,  to  the  trustees,  in  trust  for  the  testator's  son 
for  life,  with  remainder  to  his  children;  but  charged  with  an  annui- 
ty of  i45.  a  year  for  the  separate  use  of  Mrs.  Tovey;  and  that  that 
is  a  chattel  interest  in  equity,  and  not  a  chose  in  action,  nor  subject 
to  any  of  the  rules  established  with  regard  to  assignments  of  choses 
in  action.  The  consequence  is  that  the  person  who  took  the  first  se- 
curity, is  entitled  to  priority  over  the  person  who  took  the  second, 
notwithstanding  the  latter  may  have  been  beforehand  with  the  for- 
mer, in  giving  the  trustees  notice  of  his  security. 


WILMOT  V.  PIKE.        b^^. 

(In  Chanrory.  before  Vice  Chancellor  Sir  .7an:es  Wi^ram.  184,5.     5  Hare,  14.) 

In  18:;?  I,  Washington  Pike  mortgaged  a  parcel  of  land  to  John 
Smith  to  secure  £700.  and  interest.  This  mortgage  was  subsequently 
transferred  to  John  Fearne.  In  May,  1826,  Washington  Pike  con- 
veyed to  John  Flewker  the  premises  comprised  in  the  first  mortgage 
and  also  a  second  parcel  of  land  by  way  of  mortgage  to  secure  £600. 


Sec.  1)  BY   ACT   OF  THE   PARTY,  191 

loaned  to  Washington  Pike  by  Sir  Robert  Wilmot.     This  mortgage 
contained  a  power  of  sale. 

Sir  Robert  Wilmot  died  in  1834  and  appointed  plaintiffs  his  ex- 
ecutors. In  182.5  Washington  Pike  borrowed  of  plaintiffs  i400.  and  >  ^,  .f^ 
gave  them  his^'bond  therefor  and  an  indenture  by  which  he  covenant- 
ed if  the  £400.  was  not  paid  by  March  3rd  next  Flewker  should  sell 
the  lands  and  from  the  proceeds  pay  the  three  sums  of  £700.,  £600. 
and  £400. 

In  ISJjO  Washington  Pike  borrowed  £300.  from  Flewker  and  mort-      _,, 
gaged  aTTof  said  premises  to  him  as  security.    Flewker  advanced  this 
£300.  and  took  said  mortgage  as  security  in  ignorance  of  the  loan  by 
the  plaintiffs  of  the  £400. 

In  1844  the  executors  of  Sir  Robert  Wilmot  filed  their  bill  praying 
a  sale  of  the  mortgaged  premises  and  the  application  of  the  proceeds 
in  payment  of  the  first  mortgage  of  £700.,  and  then  in  satisfaction  of 
the  subsequent  mortgages  of  £600.  and  £400.  to  Sir  Robert  Wilmot 
and  the  plaintififs. 

By  his  answer  Flewker  claimed  priority  of  his  mortgage  over  the 
third  mortgage  given  to  secure  the  £400.  to  the  plaintiffs. 

Vice;  Chancellor.^  At  the  time  the  bill  was  filed,  the  legal  estate 
in  the  property  comprised  in  the  first  mortgage  of  June,  1834,  was 
vested  in  Fearne,  as  first  mortgagee,  for  securing  £700.  The  proper- 
ty which  was  the  subject  of  that  mortgage,  and  also  additional  prop- 
erty, consisting  of  about  600  square  yards  of  land,  comprised  in  the 
deed  of  May,  1826,  was  vested  in  Flewker,  as  trustee,  for  securing 
£600.  and  interest  to  Sir  Robert  Wilmot.  Flewker,  therefore,  as 
trustee,  was  second  mortgagee  of  the  property  comprised  in  the  first 
mortgage  and  first  mortgagee  of  the  additional  property  comprised 
in  the  mortgage  of  May,  1826.  The  question  in  the  cause  arises  be- 
tween the  third  and  fourth  mortgages  of  July,  1835,  and  July,  1840, 
respectively. 

The  defendant  Flewker  insists,  that  neither  Fearne,  the  first  mort- 
gagee, nor  himself  as  mortgagee  in  trust,  had  notice  of  the  third  mort- 
gage at  the  time  he  advanced  his  money  upon,  and  took  the  fourth 
mortgage:  and  he  claims  priority  over  the  third  mortgagee  upon 
that  ground. 

In  support  of  the  argument  he  relies  upon  Dearie  v.  Hall  [3  Russ. 
1],  Loveridge  v.  Cooper  [3  Russ.  30],  and  Foster  v.  Blackstone  [9 
Bligh,  N.  R.  332].  He  has  also  made  a  second  point,  namely,  that, 
if  his  fourth  mortgage  is  not  entitled  to  priority  over  the  third  mort- 
gage to  the  full  extent,  he  is,  at  all  events,  entitled  to  such  priority 
to  the  extent  of  the  additional  property  comprised  in  the  mortgage  of 
May,  1826;  and  for  this  he  relies  upon  the  general  proposition  that 
he  has  the  legal  estate  in  that  additional  property,  and  had  no  notice 
of  the  third  mortgage  at  the  time  he  advanced  his  money  on  the  fourth. 

1  Part  of  tlie  opinion  is  omitted.  y  :~  ■ 


192  TRANSFER   OF   RESPECTIVE   INTERESTS   OF   PARTIES.  (CIl.  3 

Now,  with  respect  to  the  first  point  made  by  the  defendant,  I  do 
not  of  course  presume,  at  this  day  to  question  the  authority  of  the 
cases  upon  which  the  defendant  has  relied.  *  *  *  However,  in 
Jones  V.  Jones  [8  Sim.  633],  an  attempt  was  made  to  apply  Dearie 
V.  Hall  and  the  other  cases  to  equitable  interests  in  land;  but  the 
\'ice  Chancellor,  upon  the  undoubted  authority  of  cases  to  which  he 
referred,  showed  that  those  cases  had  no  apjjlication  to  cases  of  equi- 
table interests  in  land;  and  with  this  opinion  agree  all  the  modern 
text-books. 

The  only  question,  therefore,  in  my  opinion,  is,  whether  the  interest 
of  Sir  Robert  Wilmot,  under  the  mortgage  of  ^lay,  1826,  is  to  be 
considered  as  an  interest  in  land,  or  an  interest  in  money,  to  be  pro- 
duced by  the  sale  of  land.  My  opinion  is,  that  his  interest  is  that  of 
a  second  mortgagee  of  the  equity  of  redemption  of  the  property  in 
mortgage,  notwithstanding  the  form  of  the  security  gives  his  trustee 
power  of  sale.  *  *  *  j  think,  therefore,  upon  the  authority  of 
the  cases  I  have  referred  to,  that  the  first  point  must  be  decided  in 
the  plaintiffs'  favor. 

Upon  the  second  point  made  by  the  defendant  Flewker,  my  opinion 
after  some  fluctuation,  is,  that  the  defendant  is  right.  Suppose  Flew- 
ker had  sold  under  the  power  contained  in  the  second  mortgage  as 
he  had  clearly  a  right  to  do,  and,  after  retaining  in  his  hands  the 
sums  of  i700.  and  £600.  to  answer  the  respective  claims  of  the  first 
mortgagee  and  of  Sir  Robert  Wilmot,  to  have  paid  over  the  surplus 
to  Washington  Pike, — could  it  be  said  that,  by  so  doing,  he  had  ren- 
dered himself  liable  for  a  breach  of  trust?  It  clearly  could  not.  And 
again,  if,  instead  of  the  sale  wdiich  I  have  supposed,  Washington 
Pike  had  contracted  with  the  executors  of  Sir  Robert  Wilmot  for  a 
third  mortgage  to  them,  of  which  Flewker  had  no  notice;  and  sup- 
pose, that,  before  the  completion  of  that  transaction,  there  had  been 
a  deed  between  Washington  Pike  of  the  first  part,  Flewker  of  the 
second  part,  and  a  fourth  mortgagee,  of  the  third  part,  by  which 
Washington  Pike  had  assigned  over  the  equity  of  redemption  of  the 
estate  to  the  fourth  mortgagee,  for  the  purpose  of  securing  the 
payment  of  his  debt;  and  that  Flewker  had  then  declared  himself  a 
trustee  for  that  fourth  person.  Assuming,  for  a  moment,  that  the 
effect  of  such  a  deed  would  have  been  to  give  the  new  mortgagee  a 
priority  over  Sir  Robert  Wilmot's  executors,  I  apprehend  that  it 
would  clearly  have  been  no  breach  of  trust.  Sir  Robert  Wilmot's 
executors  not  having  given  any  notice  to  Flewker,  the  latter  would 
have  been  justified  in  declaring  such  trusts  of  the  surplus  as  Pike 
should  direct.  Then  the  question  is,  whether  the  efifect  of  such  a 
deed  would  have  been  to  give  a  priority  to  the  fourth  mortgagee. 
Now,  the  general  rule — the  rule  relied  on  by  IMr.  Wood  as  to  equi- 
table interests  in  land, — is  the  rule,  "Qui  prior  est  in  tempore  potior 
est  in  jure,"  and  I  have,  on  the  former  point,  decided  that  neither  the 
omission  of  one  mortgagee  to  give  notice  nor  the  activity  of  the  other. 


Sec.  1)  BY   ACT   OF   THE   rAUTY.  193 

would  in  the  circumstances  of  that  case,  give  the  second  mortgagee 
priority  over  the  first.  But,  ^if,a  first  incumbrancer  has,  a  declaration 
of  trust  only  by  the,  borrGAvfei",^' and  none  by  the  trustee,  and  the 
second  incumbi^anceV'  Tias  a  formal  mortgage  of  the  equity  of  redemp- 
tion, and  the  trustee  Is'  a  party  to  the  deed,  and  declares  himself  a 
trustee  for  the  second  incumbrancer,  will  not  that  declaration  by  the 
trustee  give  the  second  priority  over  the  first?  I  think  the  second 
would,  in  that  case,  have  a  better  right  to  call  for  the  legal  estate  than 
the~firsf:  andJf  it  would  be  so  inthe  case  of  a  stranger,  I  think  the 
trusteeVannot  be  precluded  by  his  situation,  as  trustee  from  claiming 
tlie  benefit  of  the  legal  estate  without  notice.  Hjs^  case,  however, 
migl-it.j)erhaps,  be  supported  upon  the  sirjiple  ground  that  he  had  the 
legal  estate,  and  advanced  hfs 'money,  without  notice,  leaving  every 
toistoi  which  he  had  notice  untouched  by  his  present  claim.     *     *     * 


PHILLIPS  v.  PHILLIPS. 

(In  Chancery,  before  Lord  Chancellor  Westbury,  1S61.     4  De  Gex.  Fisher  & 

Jones.  208.) 

The  Lord  Chancellor.  When  I  reserved  my  judgment  at  the 
conclusion  of  the  argument  in  this  case,  it  was  rather  out  of  respect 
to  that  argument  than  from  a  feeling  of  any  difficulty  with  regard  to 
the  question  that  had  been  so  strenuously  contested  before  me. 

The  case  is  a  very  simple  one.  The  plaintiff  claims  as  the  grantee 
of  an  annuity  granted  by  a  deed  dated  in  the  month  of  February, 
1820.  tojssue  out  of  certain  lands  in  the  County  of  Monmouth,  se- 
cured by  powers  of  distress  and  entry.  The  annuity  or  rent  charge 
.iivias  not -to  arise  until  the  death  of  one  Rebecca  Phillips,  who  died  in 
the  month  of  December,  1839  and  the  first  payment  of  the  annuity 
became  due  on  the  8th  of  March,  1840. 

The  case  was  argued  on  both  sides  on  the  admitted  basis  that 
the  legal  estate  was  outstanding  in  certain  incumbrancers  and  is  still 
outstanding.  Subject  to  the  annuity  the  grantor  was  entitled  in  fee 
simple  in  equity.  In  February,  1821,  the  grantor  intermarried  with 
one  Mary  Phillips.  On  the  occasion  of  that  marriage,  a  settlement 
dated  in  February,  1831,  was  executed  and  under  this  deed  the  de- 
fendants claim:  and  claim,  therefore,  as  purchasers  for  a  valuable 
consideration.  No  payment  has  ever  been  made  in  respect  of  the  an- 
nuity. 

The  bill  was  filed  within  twenty  years,  and  seeks  the  ordinary  re- 
lief applicable  to  the  case.  The  defendants  by  their  answer  insist 
that  the  deed  was  voluntary,  and  therefore  void  under  the  Statute  of 
Elizabeth,  as  against  them  in  their  character  as  purchasers  for  valu- 
able consideration,  and  they  also  insist  upon  the  Statute  of  Limita- 
Ken.Tr.— 13 


194  TRANSFER   OF   RESPECTIVr:    INTKRKSTS   OF   PARTIES.  (Ch.  ?> 

tions.  But  in  tlic  answer  the  defence  of  purchase  for  valuable  con- 
sideration without  notice  is  not  attempted  to  be  raised. 

At  the  hearing,  an  affidavit  of  Mary  Phillips  and  another  person 
was  produced  denying-  the  fact  of  notice  of  the  annuity  at  the  time 
of  the  grant  and  at  the  time  of  the  creation  of  the  marriage  settle- 
ment, and  the  contention  at  the  bar  was  that  the  defence  of  purchase 
for  valuable  consideration  without  notice  was  available  for  the  de- 
fendants under  these  circumstances  and  ought  to  be  allowed  as  a 
bar  to  the  claim  by  the  court.  The  Vice  Chancellor  in  his  judgment 
refused  to  admit  the  defence  of  purchase  for  valuable  consideration 
without  notice,  and  I  entirely  agree  with  him  in  the  conclusion  that 
such  a  defence  recpiires  to  be  pleaded  by  the  answer,  more  specially 
where  an  answer  has  been  put  in. 

But  I  do  not  mean  to  rest  my  decision  upon  that  particular  ground 
because  I  have  permitted  the  argument  to  proceed  with  reference  to 
the  general  proposition,  which  was  maintained  before  me  with  great 
energy  and  learning,  viz.  that  the  doctrine  of  the  Court  of  Equity  was 
this,  that  it  would  give  no  relief  wdiatever  to  any  claimant  against  a 
purchaser  for  valuable  consideration  without  notice.  It  was  urged 
upon  me  that  authority  to  this  efifect  was  to  be  found  in  some  recent 
decisions  of  this  court,  and  particularly  in  the  case  decided  at  the 
Rolls  of  the  Attorney  General  v.  Wilkins  [17  Beav.  285]. 

I  undoubtedly  was  struck  with  the  novelty  and  extent  of  the  doc- 
trine that  was  thus  advanced,  and  in  order  to  deal  with  the  argument 
it  becomes  necessary  to  revert  to  elementary  principles.  I  take  it  to 
be  a  clear  proposition  that  every  conveyance  of  an  eciuitable  interest 
is  an  innocent  convevance,  that  is  to  say,  the  grant  of  a  person  enti- 
tled merely  in  equity  passes  only  that  which  he  is  justly  entitled  to, 
and  no  more.  If,  therefore,  a  person  seized  of  an  equitable  estate 
(the  legal  estate  being  outstanding),  makes  an  assurance  by  way  of 
mortgage  or  grants  an  annuity,  and  afterwards  conveys  the  whole  es- 
tate to  a  purchaser,  he  can  grant  to  the  purchaser  that  which  he  has, 
viz.  the  estate  subject  to  the  mortgage  or  annuity,  and  no  more.  The 
subsequent  grantee  takes  only  that  wdiich  is  left  in  the  grantor. 
Hence  grantees  and  incumbrancers  claiming  in  e(|uity  take  and  are 
ranked  according  to  the  dates  of  their  securities ;  and  the  maxim  ap- 
plies, "Qui  prior  est  tempore  potior  est  jure."  The  first  grantee 
is  potior ;  that  is,  potentior.  He  has  a  better  and  superior — because 
a  prior — equity.  The  first  grantee  has  a  right  to  be  paid  first,  and 
it  is  quite  immaterial  whether  the  subsequent  incumbrancers  at  the 
time  when  they  took  their  securities  and  paid  their  money  had  notice 
of  the  first  incumbrance  or  not.  These  elementary  rules  are  recogniz- 
ed in  the  case  of  Brace  v.  Duchess  of  ]\Iarlborough  [2  P.  Wms.  491], 
and  they  are  further  illustrated  by  the  familiar  doctrine  of  the  court 
as  to  tacking  securities.  It  is  well  known  that  if  there  are  three  in- 
cumbrancers, and  the  third  incumbrancer,  at  the  time  of  his   incum- 


Sec.  1)  BY   ACT   OF  THE   PARTY.  195 

brance  and  payment  of  his  money,  had  no  notice  of  the  second  incum- 
brance, then,  if  the  first  mortgagee  or  incumbrance  has  the  legal  es- 
tate, and  the  third  pays  him  off,  and  takes  an  assignment  of  his  se- 
curity and  a  conveyance  of  the  legal  estate,  he  is  entitled  to  tack  his 
third  mortgage  to  the  first  mortgage  which  he  has  acquired,  and  to 
exclude  the  intermediate  incumbrancer.  But  this  doctrine  is  limited 
to  the  case  where  the  first  mortgagee  has  the  legal  title;  for  if  the 
first  mortgagee  has  not  the  legal  title,  the  third  does  not  by  the  trans- 
fer obtain  the  legal  title,  and  the  third  mortgage  by  payment  off  of 
the  first  acquires  no  priority  over  the  second.  Now,  the  defence  of 
a  purchaser  for  valuable  consideration  is  the  creature  of  a  court  oi\ 
equity,  and  it  can  never  be  used  in  a  manner  at  variance  with  the  ele-  '. 
mentary  rules  which  have  already  been  stated.  It  seems  at  first  to 
have  been  used  as  a  shield  against  the  claim  in  equity  of  persons  hav- 
ing a  legal  title.  Bassett  v.  Nosworthy  [Finch,  102]  is,  if  not  the 
earliest,  the  best  early  reported  case  on  the  subject.  There  the  plain- 
tiff claimed  under  a  legal  title,  and  this  circumstance,  together  with 
the  maxim  which  I  have  referred  to,  probably  gave  rise  to  the  no- 
tion that  this  defence  was  good  only  against  the  legal  title.  But 
there  appear  to  be  three  cases  in  which  the  use  of  this  defence  is 
most   familiar : 

First,  where  an  application  is  made  to  an  auxiliary  jurisdiction  of 
the  court  by  the  possessor  of  a  legal  title,  as  by  an  heir  at  law  (which 
was  the  case  in  Bassett  v.  Nosworthy)  or  by  a  tenant  for  life  for  the 
delivery  of  title  deeds  (which  was  the  case  of  Wallwyn  v.  Lee  [9 
Ves.  21],  and  the  defendant  pleads  that  he  is  a  bona  fide  purchaser  for 
valuable  consideration  without  notice.  In  such  a  case  the  defence  is 
good,  and  the  reason  given  is  that  as  against  the  purchaser  for  valu- 
able consideration  without  notice  the  court  gives  no  assistance ;  that  is, 
no  assistance  to  the  legal  title.  But  this  rule  does  not  apply  where  the 
court  exercises  a  legal  jurisdiction  concurrently  with  courts  of  law. 
Thus  it  was  decided  by  Lord  Thurlow  in  Williams  v.  Lambe  [3  B.  C. 
C.  261],  that  the  defence  could  not  be  pleaded  to  a  bill  for  dower; 
and  Sir  J.  Leach,  in  Collins  v.  Archer  [1  Russ.  &  Mylne,  281],  that 
it  was  no  answer  to  a  bill  for  tithes.  In  those  cases  the  court  of  equi- 
ty was  not  asked  to  give  the  plaintiff  any  equitable  as  distinguished 
from  legal  relief. 

The  second  class  of  cases  is  the  ordinary  one  of  several  purchasers 
or  incumbrancers  each  claiming  in  equity,  and  one  who  is  later  and 
Last  in  time  succeeds  in  obtaining  an  outstanding  legal  estate  not  held 
upon  existing  trusts  or  a  judgment,  or  any  other  legal  advantage  the 
possession  of  which  may  be  a  protection  to  himself  or  an  embarrass- 
ment to  other  claimants.  He  will  not  be  deprived  of  this  advantage 
bxiLCOurt  of  equity.  To  a  bill  filed  against  him  for  this  purpose  by 
a  prior  purchaser,  or  incumbrancer,  the  defendant  may  maintain  the 
plea  of  purchase  of  valuable  consideration  without  notice;  for  the 
principle  is,  that  a  court  of  equity  will  not  disarm  a  purchaser,  that  is, 


196  TRANSFER   OF   RKSPKCTIVE    INTERESTS   OF   PARTIES.  (Ch.  3 

will  not  take  from  him  the  shield  of  any  legal  advantage.     This  is  the 
common  doctrine  of  the  tabula  in  naufragio. 
^\  Tiiirdly,  where  there  are  circumstances  that  give  rise  to  an  equity 

—  as  distinguished  from  an  equitable  estate, — as,  for  example,  an  equity 
to  set  aside  a  deed  for  fraud,  or  to  correct  ii  for  mistake, — and  the 
purchaser  under  the  instrument  maintains  the  plea  of  purchase  for 
valuable  consideration  without  notice,  the  court  will  not  interfere. 

Now  these  are  the  three  cases  in  which  the  defence  in  question  is 
most  commonly  found.  None  of  them  involve  the  case  that  is  now 
before  me. 

It  was  indeed  said  at  the  bar  that  the  defendants,  being  in  posses- 
sion, had  a  legal  advantage  in  respect  of  the  possession,  of  which  they 
ought  not  to  be  deprived.  But  that  is  to  confound  the  subject  of 
adjudication  with  the  means  of  determining  it.  The  possession  is  the 
thing  which  is  the  subject  of  controversy,  and  is  to  be  awarded  by 
the  court  to  one  or  to  the  other.  But  the  subject  of  controversy,  and 
the  means  of  determining  the  right  to  that  subject  are  perfectly  dif- 
ferent. The  argument,  in  fact,  amounts  to  this :  "I  ought  not  be 
deprived  of  possession,  because  I  have  possession."  The  purchaser 
will  not  be  deprived  of  anything  that  gives  him  a  legal,  right  to  the 
possession,  but  the  possession  itself  must  not  be  confounded  with  the 
right  to  it. 

The  case,  therefore,  that  I  have  to  decide  is,  the  ordinary  case  of 
a  person  claiming  under  an  innocent  equitable  conveyance  that  interest 
which  existed  in  the  grantor  at  the  time  when  that  conveyance  was 
made.  But,  as  I  have  already  said,  that  interest  was  diminished  by  the 
estate  that  had  been  previously  granted  to  the  annuitant,  and  as  there 
^„i  was  no  ground  for  pretending  that  the  deed  creating  the  annuity  was 

■  ^  a  voluntary  deed,  so  there  is  no  ground  whatever  for  contending  that 
the  estate  of  the  person  taking  under  the  subsequent  marriage  settle- 
ment is  not  to  be  treated  by  this  court,  being  an  equitable  estate,  as 
subject  to  the  antecedent  annuity,  just  as  effectually  as  if  the  annuity 
itself  had  been  noticed  and  excepted  out  of  the  operation  of  the  sub- 
sequent instrument. 
if  I  have  no  difficulty,  therefore,  in  holding  that  the  plea  of  purchase 
;'  for  valuable  consideration  is  upon  principle  not  at  all  applicable  to 
the  case  before  me,  even  if  I  could  take  notice  of  it  as  having  been 
rightly  and  regularly  raised. 

We  next  come  to  examine  the  authorities  upon  which  the  defence 
relies.  Now,  undoubtedly,  I  cannot  assent  to  some  observations  which 
I  find  attributed  to  the  Master  of  the  Rolls  in  the  report  of  the  case 
of  the  Attorney  General  v.  Wilkins;  but  to  the  decision  of  that  case, 
as  explained  by  his  Honor  in  the  subsequent  case  of  Colyer  v.  Finch 
[19  Beav.  500 j,  I  see  no  reasonable  objection,  and  the  principles  that 
I  have  here  been  referring  to  are  fully  explained  and  acted  on  by  the 
Master  of  the  Rolls  in  the  case  of  Colyer  v.  Finch.  It  is  impossible, 
therefore,  to  suppose  that  he  intended  to  lay  down  anything  in  the 


Sec.  1)  BY   ACT   OF   THE   PARTY.  197 

case  of  the  Attorney  General  v.  Wilkins,  which  is  at  variance  with 
the  ordinary  rules  of  the  court  as  I  have  already  explained  them,  or 
which  could  give  countenance  to  the  argument  that  has  been  raised 
before  me  at  the  bar. 

I  have  consequently  no  difficulty  in  holding  that  the  decree  of  his 
Honor,  the  Vice  Chancellor,  is  right  upon  the  grounds  on  which  he 
placed  it  in  the  court  below,  and  that  also  it  would  have  been  right 
if  he  had  considered  the  grounds  which  have  been  urged  before  me 
in  support  of  this  petition  of  rehearing.  I  therefore  affirm  the  decree 
and  dismiss  the  petition  of  rehearing. 


Tn  re  NEIL. 
HEMMING  V.  NEIL. 

(High  Court  of  Justice,  Cliancery  Division,  1890.     62  Law  Times  Reports,  649.) 

Adjourned  summons. 

James  Neil,  who  died  in  1888,  by  his  will  dated  November  8,  1875, 
devised  and  bequeathed  all  his  real  and  personal  estate  to  trustees  in 
trust  to  sell  and  convert  into  money  and  to  invest  the  proceeds  in  in- 
vestments therein  authorized  and__staiid^p_ossessed  of  one-seventh  part 
upon  trust  during  the  life  of  his  son  Philip  to  pay  and  apply  the 
whole  or  any  part  of  the  income  or  accumulations  of  income  for  the 
support,  maintenance,  or  education,  or  otherwise  for  the  benefit  of 
his  son  Philip,  his  wife  and  children,  in  such  manner  in  all  respects 
as  his  trustees  should  in  their  uncontrolled  discretion  think  fit  and  to 
accumulate  any  residue  of  the  income. 

By  indentures  dated  August  1,  1889,  and  August  14,  1889,  Philip 
Neil  mortgaged  his  interest  to  one  R.  C.  A.  Hemming  to  secure  two 
sums  of  sixty  pounds  each.  August  15,  1889,  the  trustees. were  noti- 
fied of  these  assignments.  The  trustees  continued  to  pay  Philip  week- 
ly sums  on  account  of  the  income  of  his  share. 

R.  C.  A.  Hemming  claimed  to  be  entitled  to  an  order  for  an  account 
.oi_the_JncQrae  of  the  share  of  PhiHp  Neil  since  August  15,  1889  and 
of_  all  payments  made  since  that  date,  and  that  they  be  ordered  to  re- 
coup him  the  aggregate  amount  of  all  such  payments. 

Kekevvich,  J.  Mr.  Renshaw  argued  that  the  intention  of  the  testa- 
tor was  that  there  should  be  an  application  of  a  competent  part  only  of 
the  income  of  the  son  Philip  Neil's  share  towards  his  support  and 
maintenance,  and  he  referred  to  Re  Sanderson's  Trust  (3  Kay  & 
Johns.  497).  I  have  looked  at  the  will  in  that  case,  and  I  find  that 
the  direction  was  every  year  during  the  life  of  the  testator's  brother 
to  pay  and  apply  the  whole  or  any  part  of  the  rents,  issues,  and  prof- 
its of  the  testator's  real  and  personal  estate  and  eflfects  for  and  to- 
wards   the    maintenance,    attendance,    and    comfort    of    the    brother. 


198  TRANSFEU    OF    UFSPKCTI VK    INTERESTS   OF    PARTIES.  (Ch.  3 

But  in  the  present  will  tlierc  is  a  direction  to  accumulate  all  the  resi- 
due of  the  income  not  applied  under  the  discretionary  trust  for 
maintenance. 

There  was  no  such  direction  in  the  will  in  Re  Sanderson's  Trust 
(ubi  sup.).  Accordinj^ly  my  mind  is  entirely  set  at  rest  as  regards 
that  objection.  There  is  a  distinct  statement  by  the  testator  that  the 
whole  or  any  part  of  the  income  or  accumulations  of  income  of  the 
share  of  his  son  Philip  Neil  may  be  applied  for  the  support,  mainte- 
nance, or  education,  or  otherwise,  for  the  benefit  of  that  son,  his  wife 
and  children,  in  such  manner  in  all  respects  as  the  trustees  shall  in 
their  uncontrolled  discretion  think  fit.  That  conclusively  shows  that 
the  trustees  may  exercise  discretion  whether  they  shall  apply  the  whole 
or  part  only  of  the  income.  On  that  part  of  the  case,  therefore,  my 
opinion  is  against  the  plaintiff.  Then  comes  the  second  point.  It 
ai)pears  that  some  moneys  have  been  paid  to  or  for  the  benefit  of 
Philip  Neil,  since  notice  of  the  assignments  of  his  interest  was  given 
to  the  solicitors  for  the  trustees  of  the  will,  and  the  plaintiff  seeks 
to  make  the  trustees  liable  in  respect  of  the  payments  so  made.  In 
determining  that  question  the  word  which  will  guide  me  is  the  word 
"benefit"  in  the  direction  to  the  trustees  to  pay  or  apply  the  whole  or 
any  part  of  the  income  of  his  share.  Philip  is  entitled  to  assign  noth- 
ing but  his  beneficial  interest  under  the  will  of  the  testator.  i\Ioney 
paid  to  him  or  to  any  person  on  his  behalf — excluding  such  a  special 
case  as  that  put  by  Cotton,  L.  J.,  in  Re  Coleman,  Henry  v.  Strong 
(60  L.  T.  Rep.  [N.  S.]  l-<!7,  39  Ch.  Div.  443)— is  necessarily  part  of 
his  beneficial  interest.  Mr.  MacSweeny  says  that  the  money  is  not 
his  until  it  is  actually  paid  to  him.  I  think  that  argument  is  more  in- 
genious than  sound.  I  think  that  it  must  be  assumed  that  money  paid 
by  the  trustees  to  him  or  to  any  person  in  his  behalf  was  his  in  their 
irrevocable  determination  immediately  before  the  jiayment.  At  that 
period  of  time  they  had  notice  and  were  affected  with  notice  of  the  as- 
signment. I  think,  therefore,  the  trustees  are  liable  to  pay  to  the 
plaintiff  all  moneys  which  have  been  paid  by  them  to  Philip  Neil 
or  to  any  person  on  his  behalf,  since  the  receipt  by  the  trustees  of 
the  notice  of  the  charge.  An  account  must  be  taken  of  moneys  so 
paid  unless  the  parties  can  agree  upon  the  amount. 


DIBBS  V.  GOREN. 

(In  Chanr-ory,  boforo  tho  Master  of  the  Rolls.  Lord  Lansdalo,  l,S4n.     11   Boa- 
van,  4S3.) 

In  1815,  the  testator  made  his  will,  giving  his  property  to  trustees 
on  certain  trusts  for  his  children  and  grandchildren.  He  died  in  1816 
and  the  trustees,  acting  on  their  own  notion  of  the  effect  of  the  trusts, 
proceeded  in  their  performance.  In  1836,  a  bill  was  filed  for  the  ad- 
ministration, and  it  was  then  found,  that  the  trustees  had  acted  under 


Sec.  1)  BY   ACT   OF  THE   PARTY.  199 

an  erroneous  view  of  the  effect  of  the  will;  and  it  was  so  declared 
by  the  decree  made  in  January,  1841. 

It  turned  out,  that  two  of  the  testator's  children,  Henrietta  and 
John,  had  each  received  from  the  trustees  the  sum  of  £111.,  part  of 
the  trust  property,  to  which  they  were  not  entitled,  and  that  two  oth- 
er children,  Charles  and  Robert,  had  also  received  £782.  to  which  they 
were  not,  under  the  will,  entitled. 

These  children  were  entitled  to  other  interests  under  the  will. 

In  1828,  John  had  assigned  his  interest  under  the  will  to  jXlac- 
dougal  for  valuable  consideration. 

Mr.  Turner  and  Mr.  Chandlcss  now  asked,  that  the  sums  so  er- 
roneously paid  might  be  repaid  out  of  the  other  funds  coming  to  the 
testator's  children,  and  for  a  lien.  They  cited  Priddy  v.  Rose  [3  Mer. 
8G]. 

Mr.  Sheffield,  for  Macdougal,  the  assignee  of  John,  argued  that  this 
equity  did  not  apply  to  the  assignee  of  John's  interest.  In  Priddy  v. 
Rose  no  notice  was  given  to  the  trustee  of  the  fund  and  Sir  W.  Grant 
relied  on  that  fact. 

The  Master  of  the  RoeIvS.^  Where  a  trustee  takes  on  himself  to 
act  upon  his  own  authority,  and  pays  to  the  parties  beneficially  inter- 
ested sums  to  which  they  are  not  entitled,  it  becomes  necessary  for 
this  court,  to  enforce  the  execution  of  the  trust,  by  recovering  back  the 
sum  thus  received  contrary  to  the  trusts.     *     *     =p 

Some  of  the  parties  have  received  a  portion  of  the  estate,  to  which 
they  are  not  entitled.     I  cannot  allow  them  to  retain  it. 

The  plaintiff  is  entitled  to  have  these  sums  deducted  from  the  shares 
of  John  and  his  assignee,  and  of  Henrietta  and  Charles,  with  a  declara- 
tion, that,  until  those  sums  have  been  recouped,  they  form  a  lien  on  the 
other  moneys  which  may  become  due  to  them  under  the  will. 


WILKINS  V.  SIBLEY. 

(In  Chancery,  before  Vice  Chancellor  Sir  John  Stuart,  1803.     4  Giffnrfl.  442.) 

By  a  settlement  dated  the  9th  and  10th  October,  1828,  executed  on 
the  marriage  of  Mr.  and  Mrs.  Draper,  a  sum  of  £2T00.  3  per  cent, 
bank  annuities  was  vested  in  Francis  and  Josepli  Wilkins,  upon  trust, 
after  marriage  to  pay  the  income  to  Mrs.  Draper  for  life;  after  her 
death  one  moiety  of  the  income  to  Mr.  Draper  for  life;  and,  if  no 
children  of  the  marriage,  to  pay  for  Mr.  Draper's  life  the  other  moiety 
of  the  income  to  Ann  Wilkins,  her  mother,  if  then  living,  and,  if  not, 
then  to  the  said  Francis  and  Joseph  Wilkins  for  their  own  use  in 
equal  shares ;  after  the  death  of  both  Mr.  and  Mrs.  Draper  the  whole 
income  to  Ann  Wilkins  for  life,  if  living,  or,  if  not,  to  the  said  Francis 
and  Joseph  Wilkins  for  their  own  use  in  equal  shares. 

1  Part  of  the  opinion  is  omitted. 


200  TRANSFER   OF  RESPECTIVE   INTERESTS   OF   PARTIES.  (Cll.  3 

Mrs.  Draper  died  in  July,  1845,  without  ever  having  had  issue. 
Joseph  Wilkins.  the  trustee,  died  in  November,  1846,  testate,  leaving 
four  infant  children  and  bequeathing  all  his  personal  estate  to  the  plain- 
tiffs, Letitia  Coles  Wilkins  and  John  Bailey,  whom  he  appointed  ex- 
ecutors and  trustees  upon  certain  trusts  for  his  wife  and  children. 

Ann  Wilkins  died  in  1818;  and  soon  after  her  death  Francis  Wil- 
kins sold  half  of  the  stock  and  divided  the  proceeds  between  himself 
and  the  plaintiffs,  leaving  £1350.  3  per  cent,  aimuities  standing  in  his 
name. 

In  January,  1855,  Francis  Wilkins  mortgaged  certain  real  estate 
to  the  defendant,  Robert  Sibley,  to  secure  £700.  and  interest,  and  in 
April,  1851,  he  assigned  to  Sibley  a  moiety  of  the  sum  of  £1350.  stock 
as  further  security  "for  the  £700.  and  a  further  advance  of  £350.  May 
X"l851,  Sibley  obtained  a  distringas  on  a  moiety  of  the  sum  of  £1350. 
'-  -■'.  bank  annuitie's.  Francis  Wilkins  in  July,  1852,  without  the  knowl- 
r  .  edge  of  plaintiffs  sold  out  the  sum  of  £(i7o.  and  applied  the  proceeds 

to  his  own  use  and  afterwards  absconded.    This  sum  was  subsequently 
,  reduced  by  pavment  of  costs  to  £(312.  3s. 

'^"^^^    '  Mr.  Draper  died  in  1860.     Plaintiffs  then  claimed  to  be  absolutely 

entitled  to  this  sum  of  £612.     The  defendant,  Robert  Sibley,  claimed 
the  stock  as  assignee  of  Francis  Wilkins. 
'-"V;       The  bill  was  filed  for  the  administration  of  the  trusts  of  the  settle- 
-  '  ^<>Wnent. 
-^^Ci  a<:t  >  '^^^^  '^^^^'-  CiiANCKij.OR.^     If  a  trustee  who  has  also  himself  an  in- 
^}  ^^•'"'terest  in  the  trust  fund  assigns  his  beneficial  interest  therein,  and  then 
t   V^     commits  a  breach  of  trust  by  abstracting  any  part  of  the  trust  fund, 
"^t.  X       the  other  cestuis  que  trust,  as  against  the  assignee  of  the  trustee's 
'''  '  beneficial  interest,  have  a  clear  equity  to  have  the  fund  under  the  con- 

trol of  the  Court  applied  to  make  good  that  breach  of  trust.     In  the 
p  p       case  of  Morris  v.  Livie  [1  Y.  &  C.  C.  C.  380]  that  principle  was  estab- 
'^^     lished,  and  it  is  a  doctrine  recognized  by  many  anterior  cases.     In  the 
case  of  Hopkins  v.  Gowar   [1  Moll.  5(;i]  the  same  question  occurred. 
The  question  there  was  as  to  a  devastavit.     Sir  A.  Hart  says:     "If 
an  executor  assigns  his  legacy  and  afterwards  is  guilty  of  a  devastavit, 
the   Court  will  lay  its  hand  on  the  legacy,  disregarding  the  assign- 
,^  nient.     Even  if  he  was  a  stranger,  the  assignee  of  such  a  legatee  takes 

d  '-^'  only  what  the  decree  shall  adjudge  to  him;    and  if  an  executor  mis- 

'  conducts  himself  so  that  when  the  accounts  are  finally  wound  up  he 
is  subject  to  costs,  the  assignee  of  his  legacy  must  bear  the  conse- 
quence." 

According  to  that  view  of  the  law,  at  the  time  when  the  defendant 
Sibley  proceeded  to  put  a  distringas  on  the  stock,  the  slock  upon  which 
he  was  going  to  apply  the  distringas  was  subject  to  the  equity  claimed 
by  the  bill.  That  proposition  cannot  be  questioned.  But  the  argument 
here  has  turned  principally  upon  the  effect  of  the  distringas.     I  have 

1  I'art  of  the  opinion  is  omitted. 


Sec.  2)  BY  DEATH.  201 

been  unable  to  see  upon  what  possible  ground  the  distringas  in  any 
degree  relieved  the  fund  on  which  it  was  placed  from  the  equity 
which   attached   to   it   before   the    distringas    was   issued.     *     *     * 

The  purpose  of  a  distringas  is  to  prevent  a  fund  being  dealt  with 
without  the  person  who  issued  it  having  an  opportunity  of  asserting 
his  claim.  Here,  then,  it  seems  to  me  the  fund  in  question  was  clear- 
ly liable  to  the  equity  of  the  plaintiff  at  the  time  when  the  defendant 
Sibley  went  to  the  bank  with  this  distringas. 

It  has  been  said  that  the  effect  of  a  distringas  is  precisely  the  same 
as  if  this  fund  had  been  taken  out  of  the  name  of  one  trustee  and  put 
into  the  name  of  another  trustee.  If  that  had  been  really  done,  other 
considerations  would  arise;  but,  practically,  the  distringas  had  no  such 
effect ;  the  effect  was  to  give  to  Sibley  an  opportunity  to  establish  his 
right  to  the  fund  in  a  Court  of  Equity. 

It  was  the  duty  of  the  defendant  Sibley  to  see,  he  being  entitled  to 
half  the  fund,  that  he  took  his  assignment  subject  to  the  equity  of  the 
plaintiff.  A  distringas  has  no  effect  whatever  as  against  the  assignor, 
but  the  party  must  take  subject  to  the  same  equity  as  before.  The 
assignment  can  only  be  taken  as  operating  like  other  deeds  between 
assignor  and  assignee. 

On  a  full  view  of  the  whole  case  I  must  hold  that  the  effect  of  a 
distringas  was  not  to  take  away  the  equity  which  so  existed  in  another 
person,  in  respect,  not  of  that  share,  but  of  the  other  share. 


SECTION  2.— BY  DEATH. 
I.  Death  of  Trustee. 


FITZHERBERT'S  ABRIDGAIENT,  SUBPCENA,  pi.  8,  14. 

Note.  Choke  said  that  he  had  once  sued  a  subpoena  against  the  heir 
of  feoffee  and  the  matter  was  long  debated ;  and  the  opinion  of  the 
chancellor  and  all  the  justices  was  that  it  did  not  lie  against  the  heir, 
and  so  he  sued  a  bill  to  Parliament  for  it.  Quaere  if  against  the  execu- 
tor.   Trinity,  8  Edw.  IV,  fol.  6. 

Note  that  a  subpoena  lies  against  the  heir  of  the  feoffee  who  sur- 
vives.    ]\Iichaelmas,  14  Edw.  IV'.^ 

1  See  Y.  B.  22  Edw.  tV,  fol.  G,  pi.  18. 

"For  if  he  [the  feoffee]  makes  a  feoffment  over  the  feoffor  has  no  remedy 
ajrainst  the  feoffee.  The  law  is  the  same  if  he  dies.  The  heir  of  the  feoffee  is 
seised,  as  it  seems  to  me,  to  his  own  use;  for  tiie  confidence  which  the  feoffor 
puts  in  the  person  of  his  feoffee  cannot  descend  to  his  heir,  nor  pass  to  the 
feoffee  of  the  feoffee ;  but  he  is  feoffee  to  his  own  use  as  the  law  was  taken 


202  TRANSFEU   OF   UESl'ECTIVK    INTERESTS   OF   I'AUTIES.  (Cll.  3 

WESTON  V.  DAWKRS. 

(In  rii.-incory,  ir)S4.     Tolh.   lo."..) 

The  lieir  is  not  in  eciuity  bound  to  assure  land,  which  his  father  bar- 
gained and  took  money  for. 


GFXL  V.  VERMEDUN. 

(Tu  Chancory,  lOM.     Froeni.  Cli.  109.) 

The  defendant's  ancestor,  to  whom  he  is  heir,  articled  in  his  life- 
time for  the  sale  of  certain  lands,  which  by  the  articles  he  covenanted 
to  convey,  but  did  not  covenant  for  him  and  his  heirs:  and  the  ques- 
tion was  whether  the  heir  should  be  bound  to  perform  this  agreement. 
And  held  that  he  should,  inasmuch  as  his  ancestor,  after  the  sealing 


till  llic  tiino  of  lion.  IV.  But  if  the  second  fooffoe  has  notice  of  the  use,  those 
ill  I  lie  rliancery  will  at  this  day  reform  tins  by  sul)p(i>na,  and  tlie  lieir  of  the 
feoffee  upon  conlidenee  was  seised  to  his  own  use  till  the  coniniencenient  of 
Edw.  IV  and  tlien  Iieuan  the  suliixena  ajiainst  tlie  heir  and  against  the  feoffee 
of  the  feoffee." — Kcilwey.  4().  Frowike,  J. 

At  the  present  day.  when  the  subject-matter  of  the  trust  is  real  estate  and 
the  trustee  dies  intestate  leaving  an  heir,  the  heir  takes  the  title  subject  to 
the  trust.  Zabriskie  v.  Morris  &  Essex  R.  IL  Co..  '.VA  N.  J.  Eq.  22  (1S,SU)  ;  Aji- 
I)eal  of  Carlisle  and  Means.  9  Watts  (Pa.)  ."'.ai  (1S40)  ;  I'.aird's  Ai)i)eal.  8  Watts 
&  S.  (Pa.)  4r)9  (1842);  WatkiTis  v.  Specht,  7  Cold.  (Tenn.)  585  (1870);  Abbott, 
Adm'r,  Petitioner.  55  Me.  .580  (18(18). 

When  the  subject  of  the  trust  is  personal  property,  tlie  title  passes  to  the 
legal  representative  of  the  trustee  subjc^'t  to  the  trust.  WluMitley  v.  Purr,  1 
Keen.  .551  (18:i7) ;  Veil  v.  Adm'rs  of  Mitchel,  4  AVash.  C.  C.  105,  Fed.  Cas.  No. 
1(;,!K)8  (1821)  :  Boone  v.  Citizens'  Bank,  84  N.  Y.  83,  38  Am.  Rep.  498  (1881) ; 
Dick  V.  Pitchford,  21  N.  C.  480  (l.s:57). 

When  tli«>re  are  two  or  more  trustees,  they  hold  the  title  as  joint  tenants, 
and  on  tbe  death  of  one  it  survives  to  the  others.  Eane  v.  Debenham,  11  Hare, 
188  (185.'J)  ;  Saunders  v.  Schmaelzle,  49  Cal.  59  (1874)  ;  Gutman  v.  Buckler,  09 
Md.  7,  13  Atl.  »;:i5  (18S8). 

To-day,  in  England,  real  estate  on  the  death  of  a  sole  trustee  vests  in  his 
persomil  representative  as  if  i,t  were  a  chattel  real.  Land  Transfer  Act  1897 
(St.  00  eS:  (;i  Vict.  c.  (>.5)  §  1,  suhsee.  1.  Subsection  4  of  section  1  excludes  land 
of  copyhold  tenure  or  cu.stomary  freehold  in  any  case  in  whieh  an  admittance 
or  any  act  of  the  lord  of  tbe  manor  is  necessary  to  perfect  the  title  of  a  pur- 
chaser from  a  customary  tenant. 

In  some  jurisdictions,  where  a  sole  trustee  dies,  tbe  trust  vests  in  the  court. 
McDougald's  Adiifr  v.  Carey,  38  Ala.  320  (1802)  ;  Read  v.  Rowan,  107  Ala.  .3(;(>, 
18  South.  211  (1895);  Collier  v.  Blake,  14  Kan.  250  (1875).  In  New  York  this 
rule  was  formerly  limited  to  trusts  of  real  estate.  1  Rev.  St.  (1st  Ed.)  p.  730, 
pt.  2,  c.  1,  tit.  2,  §  08;  Bucklin  v.  Bucklin,  1  Abb.  Dec.  242  (1804);  Bunn  v. 
Vaughn.  1  Abb.  Dec.  253  (180)7).  It  is  now  extended  to  trusts  of  pers()na!tv. 
Laws  l'.X)2,  1).  423.  c.  150. 

In  some  jurisdictions  the  law  of  primogt'iiiture  still  applies  to  land  held  in 
trust;  tbe  alHiliiion  by  sta(ute  of  tbe  law  of  primogeniture  aiiplying  only  to 
buids  held  beneticially.  Boston  P'raukliuite  Co.  v.  Condit,  19  N.  J.  Eq.  394 
(180'.()  ;  .leiiks  v.  Backhouse,  1  Bin.  (Pa.)  91  (1803);  Martin  v.  Price,  2  Rich.  Eq. 
(S.  C.)  412,  470  (1840). 


Sec.  2)  BY   DEATH. 


20.3 


of  the  said  articles,  was  in  the  nature  of  a  trustee  for  the  plaintiff  of 
those  lands,  which  trust  with  the  said  lands  descended  to  the  heir; 
and  decreed  accordingly.^ 


STEPHEXS  V.  BATLY. 

(In  Chancery,  before  Tyrrill,  J.,  KKi."..     Xels.  10C>.) 

lessee  for  another  man's  life  contracts  with  the  plaintiff  for  a  sum 
Qf  money  to  convey  an  estate  to  him,  but  dies  before  the  conveyance 
was  perfected. 

The  defendant,  being  the  heir  of  the  lessee  per  autcr  vie,  enters,  and 
holds  the  land  as  special  occupant;  and,  a  bill  being  brought  against 
him  to  perfect  the  assurance,  he  demurred  to  it,  and  it  was  insisted  for 
him  that  he  was  in  possession  as  an  occupant,  and  so  was  not  privy 
to  his  father,  who  made  the  contract. 

But  it  being  referred  to  Justice  Tyrrill,  he  certified  that,  having  ad- 
vised with  the  judges,  he  was  of  opinion  that  the  defendant  ought  to 
answer;   and  so  it  was  ordered. 


ANONYAIOUS. 

(In  Cliancery,  1672.     Freem.  Ch.  155.) 

Tenant  of  frank  tenement  descendible  agrees  to  sell  to  B.,  and  B. 
pays  him  part  of  the  purchase  money;  the  vendor  dies,  and  his  heir 
enters ;  the  vendee  exhibits  his  bill  against  him  to  have  his  contract 
executed.  Resolved,  by  the  Lord  Keeper  Bridgman  and  others,  that 
the  plaintiff  shall  not  be  relieved ;  for  the  heir  is  but  special  occui)ant, 
and  does  not  claim  under  his  father,  and  therefore  the  covenant  or 
agreement  of  his  father  shall  not  oblige  him  to  a  conveyance  of  the 
land.^ 


HIX  V.  ATTORNEY  GENERAL  and  Another. 
(In  Exchequer,  16(?1.     Hardre?,  37G.) 

Upon  English  bill  the  case  was  that  Sir  William  Hix  put  £100.  out 
at  interest  to  the  defendant,  and  took  bond  in  the  name  of  one  Toomes, 
who  afterwards  became  a  felo  de  se;  and  now  the  plaintiff  was  re- 
lieved against  the  King  upon  this  trust  in  equity,  upon  St.  33  lien. 
VIII,  c.  39.     Sed  quaere  whether  that  statute  extends  to  any  equity 

2  A  portion  of  the  case  is  omitted. 

:s  An  occupant  shall  not  be  seised  to  any  use:  per  Brudnell,  J.  Brooke's 
Abr.  Feoffments  al  Uses,  pi.  10. 


204  TRANSFER   OF   RESPECTIVE   INTERESTS   OF   PARTIES.  (Ch.  3 

against  the  King  otherwise  than  in  case  of  pleas  by  way  of  discharc^e. 
But  it  was  hkewise  (Iccrced  in  this  cause  that  the  plaintiff  should  be 
saved  harmless  from  all  others. 


ATTORNEY  GENERAL  v.  DUKE  OF  LEEDS. 

(In  Chancery,  before  the  Master  of  the  Rolls,  Sir  John  Leach,  1833.     2  Mylne 

&  K.  343.) 

In  the  year  1807  Benjamin  Clarkson  purchased  of  Lord  Lowther 
a  copyhold  estate,  held  of  the  manor  of  Wakefield,  for  the  sum  of 
£3,240.  ;  but,  being  unable  to  pay  the  whole  of  the  purchase  money, 
he  borrowed  of  John  Crosse  a  sum  of  £1,150.,  and  paid  the  full  price 
to  Lord  Lowther.  The  copyhold  estate  was  surrendered  to  Crosse 
and  his  heirs ;  and  Crosse  was  thereupon  duly  admitted.  Crosse 
died  in  the  year  181G,  having  by  his  will  given  all  the  residue  of  his 
personal  property  of  what  kind  or  nature  soever,  whether  in  the  funds, 
on  mortgage,  or  other  securities,  to  the  plaintiff  George  Buxton,  whom 
he  appointed  his  executor,  upon  trust  to  sell  out  such  part  of  his  prop- 
erty as  consisted  of  stock,  and  expend  the  produce,  together  with  all 
his  other  property,  in  furthering  and  promoting  the  cause  of  true  re- 
ligion among  the  inhabitants  of  Great  Britain  and  Ireland.  This  de- 
vise being,  as  far  as  it  affected  his  interest  in  the  copyhold  estate, 
void  by  the  statute  of  mortmain,  and  Crosse  having  been  illegitimate, 
the  Crowm  claimed  to  be  entitled  to  the  il,loO,  which  Crosse  had  ad- 
vanced to  Clarkson  upon  the  security  of  the  copyhold  estate. 

A  bill  w^as  filed  by  the  executor  of  Crosse  against  the  Attorney  Gen- 
eral for  an  account  of  the  testator's  personal  estate ;  and,  by  an  or- 
der made  in  that  cause,  it  was  declared  that  so  much  of  the  testator's 
estate  as  was  placed  out  on,  or  arose  from  mortgages,  belonged  to 
the  Crown,  and  that  the  residue  thereof  was  given  to  charitable  uses ; 
and  by  a  subsequent  order  the  court  directed  that  the  Attorney  Gen- 
eral should  be  at  lil)erty  to  institute  a  suit  for  the  purpose  of  establish- 
ing the  title  of  the  Crown  to  the  said  mortgages,  and  to  use  the  name 
of  the  executor  of  Crosse  as  a  coplaintiff  in  such  suit. 

The  present  suit,  by  way  of  information  and  bill,  was  accordingly 
instituted  by  the  Attorney  General  and  the  executor  of  Crosse  against 
the  Duke  of  Leeds,  who  claimed  to  be  entitled  by  escheat  to  the  copy- 
hold premises  in  question  as  lord  of  the  manor,  against  Sarah  Clark- 
son, the  widow  and  executrix  of  Benjamin  Clarkson,  to  whom  the 
Duke  of  Leeds  had  made  a  regrant  of  the  copyhold  premises,  and 
against  Alfred  Clarkson,  the  infant  son  and  customary  heir  of  the 
mortgagor.  The  information  and  bill  prayed  that  the  defendants  Sar- 
ah Clarkson  and  Alfred  Clarkson  might  be  decreed  to  pay  to  the  At- 
torney General  and  the  plaintiff  the  mortgage  money  and  interest, 
or  concur  in  a  sale  of  the  premises  for  the  payment  of  the  same,  and 


Sec.  2)  BY  DEAxn.  20r» 

that  the  Duke  of  Leeds  might  be  declared  to  be  a  trustee  for  his  Maj- 
esty and  for  the  person  or  persons  entitled  to  the  equity  of  redemp- 
tion in  the  mortgaged  premises. 

The  Attorney  General  and  oMr.  Wray,  in  support  of  the  informa- 
tion and  bill. 

The  ;Mastkr  of  the  Rolls  considered  the  case  too  clear  to  re- 
quire any  argument  in  support  of  the  title  of  the  lord  of  the  manor 
for  whom  Mr.  Pemberton  appeared. 

The  Attorney  General  declined  making  any  further  observations  in 
support  of  the  information. 

The  Master  of  the  Rolls.  Upon  the  facts  of  this  case  it 
appears  that  Crosse  was,  by  the  efifect  of  the  surrender  to  him,  a 
trustee  of  the  copyhold  estate  for  himself  to  the  extent  of  £1,150., 
and  for  Clarkson  and  his  heirs  after  satisfying  that  sum.  It  was  set- 
tled by  the  case  of  Burgess  v.  Wheate,  1  W.  Bl.  123,  that  a  cestui  que 
trust  has  no  title  as  against  the  lord  wdio  claims  by  escheat  upon  the 
death  of  a  trustee  without  an  heir.  The  decision  in  Burgess  v.  Wheate 
proceeded  upon  the  principle,  derived  from  the  old  feudal  notion,  that 
nontenant  can  be  imposed  upon  the  lord  without  his  consent ;  and  if 
a  trust  of  a  copyhold  could  be  created  as  against  the  lord,  it  must 
necessarily  follow  that  the  lord  might  be  entirely  ignorant  who  was 
in  truth  the  actual  and  beneficial  tenant  of  the  copyhold.  It  is  for 
this  reason  that,  in  all  mortgages  of  copyhold  property,  the  surrender 
is  upon  the  court  roll  expressed  to  be  conditional,  and  to  determine 
upon  the  repayment  of  the  mortgage  money.  In  this  case  the  sur- 
render was  absolute.  There  w^as  nothing  upon  the  court  roll  to  give 
the  lord  notice  of  a  condition,  nor  is  there  any  proof  that  the  steward 
or  deputy  steward  was  aware  of  the  real  nature  of  the  transaction. 

The  Duke  of  Leeds  was  therefore  well  entitled  to  enter  upon  the 
copyhold  as  an  escheat  upon  the  death  of  Crosse  the  apparent  tenant 
to  the  lord  without  an  heir. 

Information  and  bill  dismissed,  but  without  costs.* 

4  "A  feoffee  upon  a  trust  at  this  day  commits  treason  or  felony ;  the  land  is 
lost  and  escheats,  and  the  trust  is  extinct ;  for  the  Kiuf?  or  lord  by  esclieat 
cannot  be  seised  to  an  use  or  trust ;  for  they  are  in  the  post,  and  are  para- 
mount the  confidence.'" — Jenkins,  Fourth  Century,  c.  92.  See,  also,  Jenkins. 
Fifth  Century,  c.  1,  and  Sixth  Century,  c.  30. 

"When  a  sole  trustee  of  real  estate  dies  in  England  to-day.  the  legal  title  does 
not  escheat,  but  vests  in  his  personal  representative  as  if  it  were  a  <hattel 
real.  T.and  Transfer  Act  1897  (St.  60  &  (51  Vict.  c.  (>.^>)  §  1.  Subsection  4  oT 
section  1  excepts  lands  of  copyhold  tenure  and  customary  freehold  in  certain 
capes. 

Uses. — The  King  or  lord,  taking  by  escheat  for  failure  of  heirs  of  a 
feoffee  to  uses,  was  not  bound  by  the  use.  Bi-ooke's  Abr.  Feoffments  nl 
Uses.  pi.  10,  40;  Dillam  v.  Frain,  1  And.  ;J09,  314;  Y.  B.  14  Hen.  Vlll,  fol. 
4,  pi.  5. 

In  Chudleigh's  Case,  Coke,  122a  (1589-9.")).  Lord  Coke  said:  "The  lord  by 
escheat,  or  lord  of  a  villain,  or  who  enters  for  mortmain,  or  who  recovers  in  a 
cessavit,  etc.,  shall  not  stand  seised  to  an  use.  because  ho  is  in  by  title  para- 
mount to  the  use,  se.  by  force  of  a  condition  in  law  tacitly  annexeil  to  the  land 
at  the  time  of  the  creation  of  the  seignory,  and  the  tenancy  came  in  lieu  of 


206  TltANSFEK   OF   liESl'ECTIVE   INTEUESTS   OF   PARTIES.  (Cll.  3 


II.  Death  of  Cestui  que  Tklst. 

If  a  man  enfeoff  A.  to  his  use  and  declare  his  will  and  then  A.  sells 
to  R.  and  enfeoffs  him,  still,  if  A.  gives  notice  to  R.  of  the  intent  of 
the  first  feoffment,  he  shall  be  forced  by  subpoena  to  perform  the  will. 
If  a  tenant  in  borough  English  enfeoff  two  to  the  use  of  himself  and 
his  heirs,  the  younger  son  shall  have  the  subpcxMia  and  not  the  eldest. 
If  a  man  make  a  feoffment  in  trust  of  land  descended  to  him  on  the 
part  of  his  mother  and  dies  without  issue  without  declaring  his  will, 
the  heir  on  the  part  of  the  mother  shall  have  the  subprena.  But  if 
tenant  in  tail  make  a  feoffment  to  his  own  use  and  die  without  issue 
without  declaring  his  will,  he  in  the  reversion  shall  have  the  subpoena; 
but  if  tenant  in  tail,  remainder  over,  make  a  feoffment  in  trust  with- 
out declaring  his  will  and  die  without  issue,  he  in  the  remainder  shall 
have  the  use.  Quaere.  But  if  husband  and  wife  are  seised  in 
right  of  the  wife  and  the  husband  make  a  feoffment  without  declar- 
ing his  will,  the  wife  shall  not  have  the  subpcena.  The  reason  seems 
to  be  that  when  a  man  makes  a  feoffment  without  consideration  and 
expresses  no  use,  the  feoffment  is  by  the  law  intended  to  be  to  the 
use  of  the  feoffor  and  his  heirs;  so  it  seems  to  me  that  the  cestui  que 
in  the  reversion  and  in  the  remainder  supra  shall  not  have  a  subpoena, 
but  a  formedon  and  the  wife  a  cui  in  vita. — Brooke's  Abr.  Feoft'ment 
al  Uses,  33,  citing  5  Edw.  IV,  7.^ 

his  seitrnnry  which  lie  hnd  to  his  own  nse;  and  the  writ  of  esoheat  saith,  and 
which  ad  ipsuni  revorti  dohent  tanqu'  escaeta  sua.  And  also  they  are  not  in 
in  the  i)er,  that  is  to  say.  in  privity  of  the  estate  to  which  the  use  was  annexed, 
hut  in  the  post."  Pophani,  C.  J.,  at  page  13!>h,  said:  "The  reason  why  the 
lord  hy  escheat,  or  the  lord  of  a  villain,  should  not  stand  seised  to  an  use,  i.s 
because  the  title  of  the  lord  is  hy  reason  of  his  elder  title,  and  that  ^rows, 
either  hy  reason  of  the  seit^nory  of  the  lord,  or  of  the  villain,  which  title 
is  hifjher  and  elder  than  the  use  or  conhdeuee  is ;  and  therefore  should  not 
be  suli.ject  to  it." 

^'  See  Y.  B.  5  Edw.  IV,  fol.  7,  pi.  IG;  Y.  B.  21  Edw.  IV,  fol.  24,  pi.  10:  Y. 
B.  27  Hen.   VIII.  fol.  9,  pi.  22. 

A  husitand,  entitled  hy  statute  to  the  personal  i)roperty  of  his  wife  dying 
intestate,  is  entitled  "to  her  equitahle  jiersonal  estate  in  the  same  manner  as 
her  legal  personal  estate.'"— Burtlett  v.  Bartlett,  137  Mass.  I.jG  (1.SS4). 

"If,  by  a  custom  of  a  manor,  land  in  fee  ought  to  descend  to  the  eldest 
daughter  only,  e.x eluding  the  other  daughters,  there  lieing  no  son.  and  a 
trust  in  (Mpiity  descends  to  the  heir,  this  shall  go  to  the  eldest  daughter  only, 
to  he  relieved  tliereup<in  in  e(piity,  according  to  the  custom  for  the  land.  P. 
10  Car,  II,  B,  between  .Tones  and  Lady  Ileusbie.  The  said  custom  found  in 
B.  R.  by  a  jury  at  bar.  and  thereupon  the  same  term  <lecreed  in  chancery  that 
the  trust  shall  go  to  the  eldest  daughter  alone." — 22  Vin.  Abr.  Uses  (D),  pi.  7. 

"The  i)ossessio  fratris  of  an  use  follows  the  analogy  of  descents  at  law. 
And  so  if  a  man.  seised  in  fee  of  an  use,  had  issue  a  son  and  a  daughter 
by  one  venter,  and  a  son  hy  another  venter,  and  devises  it  for  years,  and 
dies  during  the  term,  the  daughter  shall  have  it,  and  not  the  son  ;  otherwise, 
it  had  been  if  he  had  devised  it  for  life." — 22  Vin.  Abr.  Uses  (D)  pi.  8. 


Sec.  2)  BY   DEATH.  207 

ASTON  and  Another  v.  SMALLMAN  and  Another. 
(In   ('liancory,    before   Lord   Keeper    C<)\v|km-,    17(I<).     2    Vera.    n.jO.) 

John  Smith,  being  possessed  of  a  lease  for  years  which  he  held  of 
the  Lord  Kilnmrry.  died  intestate,  leaving  two  daughters  Eleanor  and 
Mary.  Tonna.  their  grandfather,  and  Dodd,  the  administrator  of 
John  Smith,  surrender  the  old  lease,  and  take  a  new  one  from  the 
Lady  Kilmurry  to  Tonna,  the  grandfather,  and  Dodd,  the  administra- 
tor, for  ninety-nine  years,  if  the  two  daughters  and  one  John  Leach, 
any  or  either  of  them,  should  so  long  live ;  but  in  trust,  nevertheless, 
for  the  two  daughters.  Eleanor  married  Bradburne  and  died,  and 
left  three  children.  The  defendant  Smallman  claimed  under  Elean- 
or in  a  course  of  administration,  and  had  also  got  an  assignment  of 
the  lease  from  the  executor  of  Tonna,  the  surviving  trustee.  The 
plaintiffs  claimed  under  Alary  as  administrators  de  bonis  non  to  her, 
who  survived  her  sister  Eleanor,  and  brought  their  bill  to  compel  the 
defendant  Smallman  to  account  for  profits,  and  to  assign  the  term  to 
them. 

The  question  was,  Whether  Mary,  as  joint  tenant  with  her  sister 
Eleanor,  and  surviving  her,  became  entitled  to  the  whole  term  by  sur- 
vivorship. 

For  the  defendant  it  was  insisted  that,  in  this  case,  there  ought  not 
to  be  any  survivorship  allowed  in  equity ;  and  as  authorities  cited 
the  cases  of  Cox  and  Quaintock,  2  Ch.  Cas.  238,  and  of  Billingsley  and 
Shore,  1  Vern.  482,  and  Draper's  case,  2  Par.  Chanc.  Rep.  G4. 

Lord  Keeper.  A  trust  of  a  term  must  go  as  the  term  at  law 
would  have  done  by  the  like  limitations;  and  as  survivorship  would 
have  taken  place  at  law,  it  must  do  so  in  equity ;  and  decreed  the  de- 
fendant to  account  for  profits  from  the  death  of  Eleanor,  and  to  as- 
sign the  term  to  the  plaintiffs,  or  as  they  should  appoint. 


BROOKE'S  ABRIDGAIENT,  FEOFFMENTS  AL  USES,  pi.  34. 

There  are  landlord  and  tenant;  the  tenant  enfeoffs  J.  S.  without 
declaring  his  will ;  the  cestui  que  use  commits  a  felony  and  is  attaint- 
ed. The  lord  shall  not  have  a  subpoena  to  have  the  land,  and  it  seems 
the  heir  shall  not  have  it,  for  there  is  a  corruption  of  the  blood  and, 
therefore,  it  seems  that  the  feoffees  shall  keep  it  to  their  own  use. — 
5  Edw.  IV,  7.^ 

6  See  Countess  de  Bedford,  2  And.  200 ;  Jenkins,  Fourtli  Century,  c.  92 ; 
Sixth  Century,  c.  30. 


208  TRANSFER   OF   RESPECTIVE   INTERESTS   OF   PARTIES.  (Ch.  3 

THE  KIXG  V.  EXECUTORS  OF  SIR  JOHN  DACCOMBE. 

(In  ExchtHiuer,  lOlS.     Cro.  Jac.  512.) 

King  James  made  a  lease  to  Sir  John  Daccombe  and  others  of  the 
provision  of  wines  for  his  ^Majesty's  house  for  ten  years,  in  trust  for 
the  Earl  of  Somerset.  They  made  a  lease  for  all  the  term  except  one 
month,  rendering  nine  hundred  j^ounds  a  year.  The  l\arl  of  Somerset 
being  afterwards  attainted  of  felony,  the  question  was,  whether  the 
trust  which  was  for  the  said  Earl  was  forfeited  to  the  King  by  this 
attainder.  And  it  was  referred  to  all  the  justices  of  England,  by 
command  from  the  King,  to  be  considered  of,  and  to  certify  their 
opinions. 

Tanfield  Chief  Baron,  now  delivered  all  their  opinions  to  be  that 
this  trust  was  forfeited  to  the  King,  and  that  the  executor  shall  be 
compelled  in  equity  to  assign  the  residue  of  the  term  and  the  rent  to 
the  King.  And  he  cited  a  case  to  be  adjudged,  24  Eliz.,  where  one 
Birket  had  given  bond  in  another's  name,  and  was  afterwards  out- 
lawed, that  the  King  should  have  this  bond ;  and  that  in  24  Eliz.  one 
Armstrong,  being  lessee  for  years,  assigned  the  lease  to  another  in 
trust  for  himself,  and,  being  attainted  of  felony,  this  trust  was  for- 
feited to  the  King.  But  he  said  they  all  held,  and  so  it  was  resolved 
in  another  case,  that  a  trust  in  a  freehold  was  not  forfeited  upon  at- 
tainder of  treason. 

Note.  This  case  I  had  from  the  report  of  Humphrey  Davenport, 
who  was  of  counsel  in  this  case. 


KING'S  ATTORNEY  v.  SIR  GEORGE  SANDS. 

(In  Exclu'qner,   1GG9.     Freem.   Cb.   129.) 

Sir  Ralph  Freeman  purchased  a  lease  for  years  of  several  manors; 
afterwards  he  purchased  the  inheritance  thereof,  in  the  name  of  Sir 
George  Sands,  being  his  son-in-law,  in  trust  for  Sir  Ralph  and  his 
heirs;  afterwards  Sir  Ralph  made  his  will,  and  made  Mr.  Freeman 
his  executor,  and  appointed  that  his  said  executor  and  Sir  George 
Sands  should  convey  part  to  Freeman  Sands,  and  part  to  George 
Sands,  the  two  sons  of  Sir  George  Sands,  and  their  heirs ;  the  resi- 
due to  all  the  sons  of  Sir  George  Sands,  by  his  then  lady  (Sir  Ralph's 
daughter),  and  their  heirs,  who  should  be  living  at  the  time  of  his 
death,  and  then  died.  Sir  George  Sands,  at  the  time  of  the  death 
of  Sir  Ralph,  had  only  Freeman  Sands  (who  soon  after  died  without 
issue)  and  the  said  George  Sands ;  but  afterwards  Sir  George  had 
issue  another  son,  called  Freeman  Sands.  Mr.  Freeman,  the  execu- 
tor, refused  the  execvitorship,  whereupon  administration  was  grant- 
ed to  Sir  George  Sands ;  afterwards,  no  conveyance  being  made  ei- 
ther of  the  lease  or  of  the  reversion  by  Sir  George  Sands,  who  had 


Sec.  2)  BY   DEATH.  •  209 

both  in  trust,  according  to  the  will,  Freeman  Sands  killed  George, 
his  brother,  and  was  afterwards  attainted  of  murder. 

The  question  was,  whether  any  of  those  trusts,  either  of  the  lease 
or  of  the  reversion,  that  were  so  in  Sir  George,  in  trust  as  aforesaid, 
were  forfeited  to  the  King,  of  whom  the  lands  were  holden,  by  this 
felony  and  attainder;  who,  by  the  King's  attorney  sued  Sir  George 
on  the  equity  side  of  the  Exchequer  to  answer  the  profits  to  the  King, 
supposing  those  trusts  to  be  forfeited  by  the  felony  and  attainder. 

The  case  was  several  times  argued  at  the  bar,  and  this  term  Chief 
Baron  HalE  and  Baron  Turnkr  (Rainsford  being  removed  into 
the  King's  Bench,  and  Atkins  disabled  by  age)  both  agreed  that  this 
trust  was  not  forfeited. 

In  their  arguments  it  was  agreed,  cestui  que  trust  in  fee,  or  fee 
tail,  forfeit  the  same  by  attainder  of  treason,  and  the  estate  to  be  exe- 
cuted to  the  King  in  a  court  of  equity,  by  27  Hen.  VIII,  10,  and  33 
Hen.  VIII. 

2.  An  alien  cestui  que  trust  of  any  estate,  the  estate  belongs  to 
the  King;  which,  the  Chief  Baron  said,  was  the  opinion  of  the  judg- 
es in  Holland's  Case  [Aleyn,  14],  23  Car.  I;  and  that  an  alien  can- 
not purchase  but  for  the  King's  use,  and  that  he  was  of  counsel  in 
the  case.     See  the  case  reported  in  Style,  20,  40. 

3.  As  to  the  King's  debt,  by  the  common  law.  and  by  the  practice 
of  this  court,  w^hich  is  of  the  common  law,  cestui  que  trust  being  in- 
debted to  the  King,  the  King  shall  have  execution  of  his  debt  on  this 
trust;  for  before  the  statute  made,  4  Hen.  VII,  17,  and  19  Hen.  VII, 
5,  in  the  time  of  Hen.  VI,  there  be  precedents  in  this  court,  that  the 
writ  of  extendi  fac.  for  the  levying  of  the  King's  debt,  was  of  the 
debtors  land,  or  of  any  other  land  of  which  any  other  person  was 
seised  to  his  use,  and  this  was  the  reason  of  Sir  Edward  Cooke's  Case 
[2  Rolle,  294],  where  the  interest  of  the  King's  debt  did  attach  upon 
the  power  of  the  King's  debtor  to  revoke  a  settlement  made  of  his 
estate ;  and  Pasch.  4  Jac.  Ford's  security,  taken  in  trust  for  a  recu- 
sant, was  liable  to  the  King's  debt  of  £20.  per  North;  so  that  where 
the  King's  debtor  hath  the  profitable  part  of  the  estate,  the  King  shall 
not  lose  his  debt  by  any  fiction. 

4.  It  was  agreed  that  the  trust  of  the  reversion  would  not  be  for- 
feited for  felony;  which  the  court  held  clear,  and  cited  for  authori- 
ties Marquis  of  Winchester's  Case  [3  Coke,  1]  ;  Ford  &  Sheldon's 
Case,  12  Coke  1,  2;  5  Edw.  IV,  7;  Lord  Darcy's  Case.  2  Cro.  513; 
St.  33  Hen.  VIII.  And  if  the  inheritance  be  forfeited  for  felony,  it 
must  be  to  the  lord  by  escheat,  which  cannot  be,  because  he  hath  ces- 
tui que  estate  for  his  tenant ;  and  that  no  trust  of  an  heir  is  forfeited 
for  felony,  appears  by  27  Hen.  VIII,  10,  and  there  is  no  wrong  to 
the  lord  as  long  as  he  hath  a  tenant,  and  therefore  till  the  statute  of 
19  Hen.  VII,  15,  the  lord  could  not  seize  the  lands  of  which  his  vil- 

Ken.Tr.— 14 


210  TUANSFER   OF   RESPECTIVE   INTERESTS   OP   PARTIES.  (Ch.  3 

lein  was  cestui  que  trust;  and  if  it  be  demanded  what  shall  become 
of  his  trust,  as  if  tenant  in  fee  of  a  rent  charge  dieth  without  heir, 
it  is  answered,  the  land  shall  be  discharged  of  this  trust,  as  if  tenant 
in  fee  of  a  rent  charge  die  without  heir,  or  be  attainted,  the  land  is 
discharged. 

Trust  of  a  lease  for  years  in  gross  may  be  forfeited  by  felony,  or 
outlawry  in  a  personal  action.  Earl  of  Somerset's  Case ;  Dacomb's 
Case,  3  Cro.  Jac.  512;    Balington's  Case. 

Lease  for  years,  if  it  be  of  never  so  long  continuance,  if  it  be  as- 
signed in  trust  for  J.  S.  and  his  heirs,  yet  it  shall  go  to  his  executors; 
yet  trusts  are  ruled  according  to  the  style  and  course  of  courts  of 
equity. 

A  real  chattel  in  law  survives  to  the  husband,  but  not  the  trust 
[Freem.  C.  C.  c.  32,  p.  29,  note  3]  of  a  chattel  real.  Co.  Lit.  Cap. 
Remit.  351. 

Cestui  que  trust  of  an  inheritance  binds  himself  and  his  heirs  in  a 
bond,  this  trust  is  not  assets  to  the  heir ;  though  it  hath  since  been 
questioned  in  the  Lord  Chancellor  Hyde's  time :  but  clearly  the  trust 
of  a  lease  for  years  is  assets  to  charge  an  executor  in  equity. 

So  a  trust  assigned  over  to  wait  upon  the  inheritance,  though  of  a 
term  shall  go  to  the  heirs,  and  heirs  of  the  body,  because  a  shadow 
kept  on  foot  for  a  special  purpose ;  and  this  hath  a  great  resemblance 
to  the  case  of  charters,  which  go  with  the  inheritance  to  the  heir, 
but  if  granted  over,  the  parchment  and  wax  shall  go  to  the  grantee 
and  his  executors.     4  Hen.  VII,  10. 

And  in  the  present  case  no  trust  of  the  chattel  is  forfeited  to  the 
King,  because  the  lease  for  years  was  not  in  Freeman,  who  was  at- 
tainted of  felony,  nor  the  trust  in  him  as  a  chattel,  for  that  he  must 
have  been  executor  and  administrator  of  George,  the  son. 

And  here  it  was  Sir  Ralph's  intent  that  the  lease  and  inheritance 
should  be  confounded,  and  not  kept  separate ;  and,  again,  Freeman 
could  have  this  trust  but  as  heir  to  George,  and  as  long  as  he  hath 
the  inheritance  in  him,  and  no  longer,  but  it  shall  go  to  the  heir  as 
charters,  nomine  poenas,  patronage  by  foundership,  etc. ;  and  the  mis- 
chief otherwise  would  be  great,  to  have  such  waiting  terms  forfeited 
by  outlawry.    And  so  judgment  was  given  against  the  king's  attorney. 


BURGESS  V.  WIIEATE. 

(In  Cliancery,  before  Lord  Kwper  Henley,  ItOI-cI  Oliief  Justice  Mansfield,  and 
die  Master  of  the  Rolls,  !Sir  Thomas  Clarke,  1750.     1  W.  Bl.  V2:^.) 

Lord  Keeper.'^  *  *  *  j_  pji-si;  j  shall  take  notice  of  the  claim 
of  the  Crown,  because  several  of  the  arguments  I  shall  make  use  of 

7  The  opinion  of  the  Tx)rd  Keeper  is  mnch  abridjied,  and  the  concurring  opin- 
ion of  the  Master  of  the  Rolls,  Sir  Thomas  Clarke,  and  the  dissenting  opinion 
of  Lord  Chief  Justice  Mansfield  are  omitted. 


Sec.  2)  BY   DEATH.  211 

on  that,  will  tend  to  support  the  opinion  I  shall  give  on  the  other 
claims.  The  question  on  the  information  is,  whether  the  cestui  que 
trust  dying-  without  heirs,  the  trust  is  escheated  to  the  Crown,  so  that 
the  lands  may  be  recovered  in  a  court  of  equity  by  the  Crown,  or  wheth- 
er the  trustee  shall  hold  them  for  his  own  benefit.  [States  the  case.] 
On  11  January,  1718,  Mrs.  liarding  conveys  to  trustees  (of  whom 
Sir  F.  Page  was  the  survivor)  the  lands  in  question,  in  trust  for  Mrs. 
Harding,  her  heirs  and  assigns,  to  the  intent  that  she  should  appoint 
such  estates  thereout,  and  to  such  [persons]  as  she  should  think  prop- 
er. Mrs  Harding  dies  without  making  any  ap])ointmcnt,  and  with- 
out heirs  ex  parte  paterna.  The  infomiation  charges,  that  the  trus- 
tee took  no  benefit,  but  only  for  Elizabeth  Harding,  and  to  be  sub- 
ject to  her  appointment ;  and  that  she  being  dead  sans  heirs  on  the 
father's  side,  and  having  made  no  disposition  of  the  estate,  that  Sir 
F.  Page  could  take  no  estate  for  his  own  benefit  by  the  deed  or  the 
fine,  but  takes  it  for  the  benefit  of  his  Majesty,  who  stands  in  the  place 
of  the  heir,  and  that  the  premises  are  escheated  to  his  Majesty.  The 
question,  therefore,  is  entirely  a  question  of  tenure,  and  not  of  for- 
feiture. 

I  shall  consider,  first,  the  right  of  lords  to  escheat  at  law ;  second- 
ly, whether  they  have  received  a  dififerent  modification  in  a  court 
of  equity;  thirdly,  the  arguments  used  in  support  of  the  information; 
and  from  the  whole  draw  this  conclusion,  that  the  Crown  has  in  this 
case  no  equity. 

1.  I  shall  consider  the  law  of  escheat,  as  settled  by  the  municipal 
writers  in  the  law,  and  reporters,  and  shall  not  regard  what  the  law 
was  in  other  countries ;  as  they  seem  founded  and  calculated  for  em- 
pire and  vassalage,  to  which  I  hope  in  this  country  we  shall  never 
be  subject.  *  *  *  The  legal  right  of  escheat  with  us  arises  from 
the  law  of  in  feoffment  to  the  tenant  and  his  heirs,  and  then  it  return- 
ed to  the  lord,  if  the  tenant  died  without  heirs.  The  extension  of 
the  feoffment  from  the  person  of  the  tenant  to  the  heirs  special  of 
his  body,  and  then  to  his  heirs  and  assigns,  is  accurately  traced  in  a 
treatise  of  tenures  by  a  learned  hand  [Sir  M.  Wright].  This  reduces 
the  condition  of  the  reversion  to  this  single  event,  viz.  Ob  defectum 
tenentis  de  jure.  F.  N.  B.  337,  A  writ  of  escheat  lies  where  the  ten- 
ant in  fee  of  any  lands  or  tenements  holds  them  of  another,  and  tenant 
dies  seised  without  heirs  general  or  special,  the  lord  shall  have  the 
land :  because  he  shall  have  it  in  lieu  of  his  services.  The  books  are 
uniform,  that  in  the  case  only  of  tenants,  dying  without  heir,  the  es- 
cheat took  place.  As  long  as  tenant  or  his  heir,  or,  by  his  implied 
assent,  another  continued  in  possession  by  title,  that  prevented  es- 
cheat. The  law  had  no  regard  to  the  tenant's  right  to  the  land,  but 
in  right  of  his  seisin.  All  these  instances  show,  that  where  there  was 
a  tenant  actually  seised,  though  he  had  no  right  to  the  tenements, 
and  though  the  person  who  had  the  right  died  without  heirs,  yet  the 


212  TUANSFEU   or   UKSI'KCTIVE   INTKRKSTS   OF   PAKTIKS.  (Cll.  3 

escheat  was  prevented.  For  if  the  lord  has  a  tenant  to  perform  the 
services,  the  land  cannot  revert  in  demesne.     *     *     * 

2.  The  next  consideration  is,  whether  a  court  of  equity  can  con- 
sider it  in  a  different  light.  Now.  when  the  tenant  did  not  die  seis- 
ed, and  a  proper  legal  tenant  by  title  continued,  and  consequently,  ths 
lord's  seignory  and  services  continued ;  can  this  court  say  to  the  lord, 
"Your  seignory  is  extinguished,"  and  to  the  tenant,  "Your  tenancy 
is  so,  too,"  though  both  are  legal  rights  now  subsisting  at  law  ?  In 
consideration  of  uses  with  regard  to  escheats,  equity  has  proceeded 
on  the  same  principle  as  the  law,  where  there  was  a  tenant  of  the 
land  that  performed  the  services.  And  I  don't  find  this  court  had 
any  regard  to  the  merum  jus  of  the  tenant.  Now,  the  reason  why 
there  was  no  escheat  on  the  death  of  cestui  que  use  in  equity  seems 
to  be  this  (and  it  is  a  reason  equally  applicable  to  uses  and  trusts), 
that  the  court  had  nothing  to  issue  a  subpoena  upon,  no  equity,  noth- 
ing to  decree  upon  ;  and  every  person  must  bring  an  equity  with  him 
for  the  court  to  found  its  jurisdiction  upon.  It  seems  to  me  he  could 
have  no  e(]uity  in  the  case  of  a  use,  or  as  owner  of  a  trust,  for  this 
plain  reason :  An  use  before  the  statute  could  not  be  extended  far- 
ther than  the  interest  in  the  estate  which  the  creator  of  the  use  could 
have  enjoyed;  as  if  the  creator  of  the  use  had  a  fee  simple  in  the 
land,  he  could  take  back  no  more  interest  in  the  use,  either  declared 
or  resulting,  than  he  had  in  the  land ;  if  he  makes  a  feoffment,  and 
declares  no  uses,  it  results  to  him  in  fee,  which  is  to  him,  his  heirs 
and  assigns.  The  consequence  is,  that  the  moment  he  dies  without 
heirs  or  assigns,  there  was  no  use  remaining.  How,  then,  can  you 
come  here  for  a  subpoena  (whether  he  took  back  the  same  or  a  differ- 
ent use)  to  execute  a  use  or  trust  which  was  absolutely  extinct?  That 
seems  to  me  the  plain  and  substantial  reason  why,  in  this  case  (wheth- 
er you  call  it  a  use  or  a  trust),  there  was  no  basis  on  which  to  found 
a  subpoena.     *     *     * 

My  objection  to  the  claim  in  the  information  is,  not  that  it  is  to  have 
a  trust  executed  as  if  it  were  land,  but  it  is  to  claim  the  execution  of 
a  trust,  that  does  not  exist.  If  there  was  a  trust,  T  should  consider 
it  merely  as  an  estate,  and  determine  accordingly,  ilut  the  creation  of 
a  trust  can  never  affect  the  right  of  a  third  person.  The  trustee  has 
the  burden  and  the  legal  privilege.  Can  this  court  say  it  is  a  nulli- 
ty? and  yet  it  must  be  so  said,  to  take  it  from  the  trustee.  Servetur 
ad  imum.  But  it  cannot  be  said  it  is  a  nullity  in  that  respect,  as  to  a 
trust  accepted.  The  conveyance  shall  subject  the  trustee  to  all  the 
fruits  of  tenure.  Though  he  has  continued  subject  to  all  burdens 
when  the  trust  subsisted,  yet  now  it  is  said,  as  Airs.  Harding  is  dead, 
you  shall  be  considered  so  no  longer.  As  between  trustee  and  ces- 
tui que  trust,  to  say  it  is  a  nullity  must  be  with  this  restriction,  that 
he  shall  take  no  beneficial  interest  that  the  cestui  que  trust  can  en- 
joy.    But  any  other  he  may.     And  therefore  in  respect  to  members, 


Sec.  2)  BY   DEATH.  213 

sheriffs,  coroners,  the  trustee  was  the  person  who  had  the  right  to 
exercise  it;  and  the  Legislature  was  forced  to  interpose,  before  the 
cestui  que  trust  could  have  or  enjoy  that  valuable  privilege.  [vSt.  7 
&  8  Wm.  Ill,  c.  25, '§  7.]      *     *     - 

Now  it  appears  to  me  that  at  law  there  can  be  no  escheat,  while  there 
is  a  tenant  de  jure.  In  equity  there  could  be  none,  while  trusts  were 
called  uses,  and  a  trust  and  a  use  are  exactly  the  same.  How,  then, 
can  I  say  the  lord  shall  lose  his  escheat,  when  any  man  for  his  own 
convenience  puts  his  estate  in  trust?  It  seems,  if  I  were  to  do  so, 
that  I  should  give  law  and  equity,  and  not  pronounce  upon  law  and 
equity.     *     *     * 

Original  bill  dismissed  as  to  all  the  rest,  and  the  information  on  the 
part  of  the  crown  dismissed  totally.^ 


TAYLOR  V.  HAYGARTH. 

(In  Chancery,  before  Vice  Chancellor  Sir  Lancelot  Shadwell,  1844.     14  Sun.  8.) 

Sarah  Whittell,  the  testatrix  in  the  cause,  by  her  will,  dated  in  Au- 
gust, 1837,  after  giving  £100.  to  each  of  her  executors,  and  legacies 
of  different  amounts  to  other  persons,  gave  all  the  rest  of  her  prop- 
erty, real  as  well  as  personal,  to  the  defendants,  Haygarth,  Dobson 
and  Watson,  their  heirs,  executors,  etc.,  in  trust  to  sell  the  same,  ab- 
solutely, immediately  after  her  death ;  and,  for  that  purpose,  to  make 
contracts,  transfers  and  conveyances,  and  to  give  discharges  for  the 
purchase  money ;  and  to  invest  the  surplus,  after  paying  the  expenses 
of  the  sale,  in  their  names,  in  the  usual  securities,  and,  out  of  the  in- 
come, to  pay  certain  annuities;  and,  subject  thereto,  to  stand  posses- 
sed of  the  capital  in  trust  for  such  person  or  per+^ons  as  she  should  di- 
rect by  any  codicil  to  her  will;  and  she  empowered  the  trustees  to 
lease  her  real  estates,  from  time  to  time,  until  they  should  be  sold,  for 
twenty-one  years,  if  they  should  think  fit  so  to  do;  and  she  appoint- 
ed Haygarth,  Dobson  and  Watson  to  be  the  executors  of  her  will. 

The  testatrix  died  in  January,  1838,  seised  and  possessed  of  free- 
hold, copyhold  and  personal  estate,  but  without  having  made  any  codi- 
cil ;  'and,  as  she  was  illegitimate  and  never  had  married,  she  left  nei- 
ther heir  nor  next  of  kin. 

Her  personal  estate  was  more  than  sufficient  to  pay  her  funeral  and 
testamentary  expenses,  debts  and  legacies,  and  to  provide  funds  for 
payment  of  the  annuities  given  by  her  will:  the  trustees,  however, 
sold  her  real  estate,  and  invested  the  greater  part  of  the  proceeds  in 
the  purchase  of  stock  in  their  own  names, 

8  Bv  the  Intestates'  Estates  Act  1884  (St.  47  &  48  Vict.  c.  71)  §  4,  trust  estates 
In  Enghuid  were  for  the  first  time  made  subject  to  escheat. 


214  rRAXSTKU    OF    Ui:.srECTIVE    INTEKESTS    OF    rAUTIES.  (Cll.  3 

At  the  hearing  of  the  cause  for  further  directions,  the  question  was 
'■-'.C  <t.'  whether  the  residue  of  the  personal  estate  and  the  proceeds  ©rsale 
of  the  real  estate,  belonged  to  the  Crown  or  to  the  trustees. 

Mr.  Walker  and  ]\lr.  E.  E.  Montague  appeared  for  the  plaintiff. 

Mr.  Twiss  and  Mr.  Wray  appeared  for  the  Attorney  General. 

Mr,  Teed  and  Mr.  F.  II.  Hall  appeared  for  Haygarth  and  Dob- 
son,  and  Mr.  Koe  and  Mr.  Chandlcss  for  Watson. 

Mr.  Cooke  appeared  for  another  defendant. 

On  Air.  Wray  rising  to  reply, 

The  Vice  Chancellor  said :  I  will  not  trouble  you  to  address  any 
argument  to  me  respecting  that  part  of  the  testatrix's  property  which 
was  personalty  at  her  death. 

The  three  executors  not  only  have  legacies  of  equal  amount  given 
to  them ;  but  the  personal  property  is  bequeathed  to  them  in  trust ; 
and,  as  it  is  so  bequeathed,  they  are  precluded  "from  claiming  it  for 
their  own  benefit,  notwithstanding  no  trust  is  declared. 

Lord  Thurlow  concludes  his  judgment  in  Middleton  v.  Spicer  [1 
Bro.  C.  C.  201]  in  the  following  words:  "The  executors  being  ex- 
cluded and  no  relations  to  be  found,  I  consider  the  executors  as  much 
trustees  for  the  Crown,  as  they  would  have  been  for  any  of  the  next 
^^-£.'\^4v.v<.<f.iof  kin,  if  these  could  have  been  discovered."  Those  words  are  strict- 
ly applicable  to  the  present  case;  and,  therefore,  I  am  of  opinion  that 
the  Crown  is  entitled  to  the  testatrix's  undisposed-of  personal  estate. 

That  being  my  clear  opinion,  I  will  thank  you  to  confine  yourself, 
in  your  reply,  to  that  portion  of  the  testatrix's  property  wdiich  was 
real  estate  at  her  death  ;  and  to  which  the  position  laid  down  by  Lord 
Loughborough  in  Walker  v.  Denne  [2  Ves.  Jr.  185]  seems  to  be  ap- 
plicable, namely,  that  the  Crown  comes  under  no  head  of  equity. 

[The  argument  of  Mr.  Wray  in  reply  is  omitted.] 

The  Vice  CHAXcri/LOR.  This  case  has  been  argued  for  three  days; 
so  that  I  have  had  time  to  consider  it  and  the  authorities  that  bear 
upon  it,  wdiich,  in  fact,  are  not  numerous,  but  lie  in  a  very  small  com- 
pass. 

The  construction  of  the  will  seems  to  be  exceedingly  simple  and 
clear;  and  I  have  not  the  slightest  doubt  that,  if  any  person  had  been 
named  in  a  codicil,  as  an  object  of  the  trust  created  by  the  will,  that 
person  would  have  had  a  right  to  call  for  a  conversion  of  the  estate ; 
and  it  would  have  been  a  mere  matter  of  course  for  this  court  to  de- 
cree the  estate  to  be  sold;  my  opinion  being  that  the  whole  legal  fee 
simple  is  vested  in  the  devisees  in  trust;  and  that  what  is  called  the 
power  of  leasing  was  intended  only  to  be  used  from  time  to  time,  un- 
til, in  the  ojjinion  of  the  devisees  in  trust,  a  proper  occasion  had  aris- 
en for  selling  the  estate. 

It  turns  out  that  the  testatrix  did  not  make  any  codicil,  and  that 
she  left  neither  next  of  kin  nor  licir;  and  I  have  already  expressed 
an  opinion,  which,  I  think,  is  fully  warranted  by  Middleton  v.  Spi- 


Sec.  2)  BY   DEATU. 


215 


cer,  that  the  Crown  is  entitled  to  that  part  of  the  testatrix's  property 
which  was  personal  estate  at  the  time  of  her  death. 

The  only  question  that  remains  to  be  disposed  of  relates  to  the  real 
estate.  Now,  whatever  opinion  might  have  been  originally  entertain- 
ed about  Burgess  v.  Wheate,  1  W.  Bl.  123,  it  has  remained  unreversed 
for  more  than  eighty  years;  and,  consequently,  it  must  be  considered 
as  binding  upon  the  court.  It  is  observable  it  was  not  the  decision 
of  one  judge  against  another;  but  of  Lord  Keeper  Henley  and  Sir 
Thomas  Clarke,  M.  R.,  against  the  opinion  of  Lord  Mansfield.  The 
Master  of  the  Rolls  and  the  Lord  Keeper  argued  upon  a  point  of 
equity  against  the  Chief  Justice  of  the  King's  Bench.  The  case  was 
nothing  more  than  this.  A  legal  estate  was  vested  in  a  trustee,  in 
trust  for  A.  who  died  without  an  heir;  and  it  was  held  that  the  trus- 
tee might  hold  for  his  own  benefit;  the  Crown  having  no  equity  to 
claim  ^qnihe  ground  of  escheat.  That  was  held  by  the  Lord  Keeper 
Henley 'and  Sir  Thomas  Clarke  against  the  opinion  of  Lord  ^lansfield; 
and,  in  deciding  the  present  case,  I  must  take  it  to  be  the  law. 

Now  it  was  said  that,  inasmuch  as  there  was,  clearly,  a  direction, 
in  the  will,  that  the  real  estate  should  be  sold,  therefore  the  Crown  is 
entitled  to  the  money  that  might  have  arisen  from  the  sale.  Upon  that 
point  I  referred  to  Walker  v.  Denne  not  so  much  for  the  decision  as 
for  the  sake  of  the  positive  proposition  which  is  laid  down  by  Lord 
Loughborough  in  that  case.  His  lordship  says:  "Then  is  there  any 
reason  to  raise  an  equity  to  convert  the  money  into  a  different  species 
of  property  in  order  to  create  a  different  effect?  There  is  no  person 
claiming  under  the  will  of  the  testator  appearing  to  insist  that  it  shall 
be  considered  as  that  which  de  facto  it  is  not.  The  Crown  comes  un- 
der no  head  of  equity.  I  think  it  would  be  a  great  stretch  even  if  that 
circumstance  of  the  option  was  wanting ;  but,  with  that  circumstance, 
to  convert  it  for  the  Crown  is  too  extraordinary  for  a  court  of  equi- 
ty." Therefore  the  broad  proposition  is  that  the  Crown  comes  under 
no  head  of  equity. 

The  distinction  between  the  case  of  Middleton  v.  Spicer  and  the 
case  now  before  me  is  that  in  the  case  of  Middleton  v.  Spicer  the  sub- 
ject of  dispute  was  personal  estate.  It  was  a  mere  chattel  real;  and 
there  is  no  doubt  that,  by  the  law  of  the  land,  the  Crown  is  entitled 
to  the  undisposed-of  personal  estate  of  any  person  who  happens  to 
die  without  next  of  kin.  There  the  property  at  the  death  of  the  tes- 
tatrix did  not  require  that  there  should  be  any  act  of  a  court  of  equi- 
ty to  give  a  foundation  to  the  right  of  the  Crown ;  but  the  Crown's 
right  was  independent  of  a  court  of  equity.  But  here,  in  order  to  give 
a  right  to  the  Crown,  it  is  absolutely  necessary  that  the  equity  should 
be  enforceci,'6r"at  least  enforceable,  for  the  purpose  of  converting  the 
freehold  estate  in  fee  simple  into  property  of  the  description  of  per- 
soiialty^; .and  the  real  question  is  whether,  attending  to  the  authorities, 
there  is  an  equity  to  compel  the  conversion  for  the  Crown.     Now  I 


; 


21 G  TRANSFER   OF   RKSI'KCTIVE   INTERESTS   OF   PARTIES.  (Ch.  3 

have  the  authority  of  the  opinion  expressed  by  Lord  Loughborough 
against  tJie  existence  of  any  such  equity ;  and,  without  assuming  to 
myself  the  jurisdiction  of  the  House  of  Lords,  and  entering  into  the 
question  wliether  the  decision  of  Lord  Chancellor  Jirougham  in  Hench- 
man V.  The  Attorney  General  [2  Sim.  &  S.  1!)S|  is  right  or  wrong,  it 
is  quite  sufficient  for  me  to  say  that,  in  making  the  decision  which 
he  did.  he  evidently  referred  to  and  relied  upon  the  opinion  express- 
ed in  the  case  of  Walker  v.  Denne. 

Then,  as  far  as  the  question  about  the  legal  estate  goes,  I  have  the 
decision  of  a  court  of  equity  that  the  Crown  shall  not  take  by  escheat. 
And  I  have  the  opinion  of  two  Lord  Chancellors  in  succession  that 
there  is  no  equity  for  the  Crown  to  call  for  a  conversion  of  the  land, 
in  order  that  it  may  take  the  produce  of  it.  I  admit  that,  if  there 
had  been  any  next  of  kin  of  this  lady  living  at  her  death,  who  after- 
wards died  without  next  of  kin,  then  the  principle  of  Middleton  v. 
Spicer  would  directly  have  applied.  Because  the  Crown  would  have 
come  in,  in  the  place  of  the  next  of  kin  of  an  individual,  who  had  a 
clear  right,  in  equity,  to  call  for  the  conversion  of  the  real  estate. 

The  point  seems  to  me  to  be  so  clear  upon  the  authorities  that  I 
have  thought  it  my  duty  to  give  my  opinion  upon  it  without  delay; 
and,  having  regard  to  what  was  said  by  Lord  Loughborough  in  Walk- 
er v.  Denne,  and  by  Lord  Brougham,  in  reference  to  it,  in  Henchman 
V.  The  Attorney  General,  my  opinion  is  that  the  Crown  has  no  equi- 
ty to  take,  from  the  devisees,  the  produce  of  the  real  estate  which  they 
have  sold  of  their  own  authority. 

The  result  is  that,  after  ])roviding  for  the  payment  of  the  annuities 
given  by  the  will  and  for  the  costs  of  the  parties,  out  of  the  personal 
estate  and  the  proceeds  of  the  sale  of  the  real  estate,  pro  rata,  the 
remainder  of  the  personal  estate  will  belong  to  Her  Majesty  by  vir- 
tue of  her  prerogative,  and  must  be  paid  to  such  person  as  Her  Maj- 
esty shall  appoint  under  her  sign  manual ;  and  the  remainder  of  the 
proceeds  of  the  sale  of  the  real  estate  will  belong  to  the  defendants 
Ilaygarth,  Dobsoii  and  Watson,  and  must  be  paid  to  them  in  equal 
third  parts. 


SECTION  3.— BY  FORFEITURE.  ' 


PAWLETT  v.  ATTORNEY  GENERAL. 

(Ill  ExcliCMiuor,  1(!<')7.     Ilardres,  4G5.) 

In  a  bill  to  redeem  a  mortgage,  the  case  appeared  to  be  thus,  viz. : 
The  plaintiff  had  mortgaged  lands  in  fee  to  one  Ludlow  for  security 
of  i3,000.  with  interest,  and  bound  himself  in  a  statute  and  recog- 


Sec.  3)  BY   FORFEITUUE.  217 

nizance  to  perform  the  covenants  of  the  mortgage,  and  to  pay  the 
money  with  interest  at  a  certain  day.  The  day  past,  the  money  un- 
paid. The  mortgagee  by  his  will  devised  all  his  goods,  chattels,  debts, 
and  personal  estate,  his  debts  and  legacies  being  paid,  to  his  exec- 
utor, and  dies.  Edmund  Ludlow,  son  and  heir  of  the  mortgagee,  is 
attainted  of  high  treason  by  the  new  act  of  12  Car.  II.  The  King 
seizes;  and  the  executor  extends  the  plaintiff's  lands  upon  the  re- 
cognizance, who  thereupon  exhibits  his  bill  against  the  King  and  the 
executor,  and  in  it  suggests  that  he  could  not  pay  the  money  at  the 
day  at  the  place  appointed,  viz.  in  the  Strand  in  ^Middlesex,  by  rea- 
son of  the  plague;  and  that  afterwards  the  mortgagee  accepted  the 
interest,  and  waived  the  forfeiture.  And  the  question  now  upon  a 
demurrer  to  the  bill  was,  whether  or  no  the  plaintiff  could  have  any 
remedy  against  the  King,  to  have  a  redemption  ? 

Hale,  Chief  Baron.  This  is  a  case  of  great  concern,  and  deserves 
great  consideration.  It  was  made  a  question  in  this  present  Parlia- 
ment in  the  House  of  Lords,  in  the  Earl  of  Cleveland's  Case,  first, 
whether  or  no  there  be  a  right  of  redemption  in  this  case  against  the 
King?  And,  secondly,  if  there  be,  what  remedy  must  be  taken?  And 
I  answered,  as  I  take  the  law  to  be,  that  in  natural  justice  redemption 
of  a  mortgage  lies  against  the  King.  But  to  the  other  question  I  made 
no  answer ;  because  I  took  it  to  be  a  point  of  great  importance.  But 
I  am  of  opinion,  that  the  King  cannot  be  compelled  to  reconvey ;  but 
that  an  amoveas  manum  only  lies  in  such  case.  And  this  is  all  that 
can  be  done,  if  a  trustee  forfeit  the  estate.  And  it  is  to  be  considered 
here,  whether  or  no  there  be  a  right  of  redemption  against  the  lord 
bv  escheat  (for  so  the  King  is  in  here,  and  not  by  his  prerogative), 
and  how  the  course  of  chancery  is  in  case  of  the  redemption  of 
mortgages,  who  shall  redeem,  and  against  whom.  I  agree  the  case 
of  a  statute  merchant,  for  he  comes  in  merely  by  the  party,  viz.  by 
the  act  of  the  party,  and  the  remedy  that  the  law  gives  thereupon ; 
and  it  is  worth  inquiring  how  the  precedents  are,  where  a  trustee  for 
years  is  outlawed,  and  the  lands  seized,  what  remedy  the  cestui  que 
trust  has  there?  But  admitting  that  case,  yet  it  may  be  otherwise  in 
case  of  a  fee  simple ;  as  cestui  que  trust  for  years  may  forfeit  his 
interest  for  felony ;  but  cestui  que  trust  in  fee  cannot ;  and  I  agree 
the  case  in  3  Edw.  III.  And  I  conceive  that  a  mortgage  is  not  mere- 
ly a  trust,  but  a  title  in  equity.  And  the  matter  of  redemption,  it 
seems,  is  not  the  main  business  in  the  case ;  for  Mr.  Attorney  Gen- 
eral offers  to  give  way  to  a  redemption,  upon  payment  of  the  mon- 
ey; but  the  point  is,  who  shall  have  the  money,  whether  the  executor 
and  devisee,  or  the  King?  for  both  contend  for  it. 

And  the  Chief  Baron  further  said:  If  the  condition  of  a  mortgage 
be  to  re-enter  upon  payment  of  the  money  to  the  executors  or  admin- 
istrators, there  without  doubt  the  heir  should  not  have  the  money 
after  forfeiture;   because  the  mortgagee  looked  upon  it  only  as  a  chat- 


218  TRANSFER   OF   RF.SPIX'TI VK    INTKRKSTS   OF   PARTIES.  (Ch.  3 

tel ;  though  if  the  word  '"heirs"  were  inserted  into  the  condition,  it 
would  be  more  a  question.  lUit  he  said,  he  took  the  law  to  be  the 
same  in  both  cases.  Yet  he  delivered  no  opinion  in  the  principal  case, 
but  ordered  a  case  to  be  made  of  it.     And  the  cause  was  adjourned. 

Afterwards  in  Hilary  term,  in  annis  1!)  &  20  Car.  II,  it  was  argued 
again  by  counsel  on  both  sides ;  and  much  to  the  same  effect  as  be- 
fore. And  again  the  king's  counsel  insisted,  that  a  mortgagor  was 
not  relievable  against  the  King  in  equity : 

First,  because  the  King  is  not  liable  to  a  trust ;  and  a  mortgage  for- 
feited is  of  the  same  nature. 

Secondly,  because  by  the  escheat  the  ancient  right  and  tenure  is 
destroyed,  and  the  King  is  in  jure  coronge. 

Thirdly,  estates  in  dower,  frank  bank,  tenancies  by  the  curtesy, 
and  of  disseisors,  are  not  liable  to  trusts,  because  they  are  in  the  post ; 
otherwise  of  occupancies. 

Fourthly,  the  chancer^'  has  no  jurisdiction  over  the  King's  con- 
science, but  over  the  consciences  of  subjects  only ;  for  that  it  is  a  pow- 
er delegated  by  the  King  to  the  Chancellor,  to  exercise  the  King's 
equitable  authority  betwixt  subject  and  subject.  Nor  is  it  within  the 
statute  of  33  Hen.  \'III,  c.  39,  for  equity  against  the  king  in  the  Ex- 
chequer. And  they  cited  Abbot  of  Bury  v.  Bokcnham,  1  Dyer,  8  ;  King 
V.  Boys,  3  Dyer,  283;  Wikes'  Case,  Lane,  o-t;  Lathbury  v.  Humfry, 
Yelv.  115;   Bowie's  Case,  11  Cok-e,  79. 

Hale,  Chief  Baron.  There  is  a  diversity  betwixt  a  trust  and  a  pow- 
er of  redemption ;  for  a  trust  is  created  by  the  contract  of  the  party, 
and  he  may  direct  it  as  he  pleaseth;  and  he  may  provide  for  the  exe- 
cution of  it,  and  therefore  one  that  comes  in  in  the  post  shall  not  be 
liable  to  it  without  express  mention  made  by  the  party ;  and  the  rules 
for  executing  a  trust  have  often  varied,  and  therefore  they  only  are 
bound  by  it,  who  come  in  in  privity  of  estate.  A  tenant  in  dower  is 
bound  by  it,  because  she  is  in  in  the  per,  but  not  a  tenant  by  the  cur- 
tesy, who  is  in  the  post.  So  all  who  come  in  in  privity  of  estate,  or 
with  notice,  or  without  a  consideration.  Ikit  a  power  of  redemption 
is  an  equitable  right  inherent  in  the  land,  and  binds  all  persons  in  the 
post,  or  otherwise.  Because  it  is  an  ancient  right,  which  the  party 
is  entitled  to  in  equity.  And  although  by  the  escheat  the  tenure  is 
extinguished,  that  will  be  nothing  to  the  purpose,  because  the  party 
may  be  recompensed  for  that  by  the  court,  by  a  decree  for  rent,  or 
part  of  the  land  itself,  or  some  other  satisfaction.  And  it  is  of  such 
consideration  in  the  eye  of  the  law,  that  the  law  takes  notice  of  it, 
and  makes  it  assignable  and  devisable. 

But  the  most  considerable  things  in  the  case  are: 

First,  that  the  King  is  in  actual  possession,  and  cannot  be  removed 
in  equity  by  an  amoveas  manum.  as  he  may  at  law. 

Secondly,  whether  there  will  not  be  a  diversity  betwixt  the  estate  of 
a  ward  and  an  escheat :  for  in  cases  of  wardships,  the  Court  of  Wards 


Sec.  4)  BY  DissKisiN.  21!) 

had  jurisdiction  by  the  33  of  Ilcn.  VIII,  but  in  this  case  here  is  an 
actual  inlicritancc  in  the  Kinj:,'. 

Thirdly,  the  statute  of  33  Hen.  VIII,  c.  39.  is  to  be  considered,  which 
gives  relief  in  equity  against  the  King.  And  I  conceive  clearly,  that  in 
this  case  the  executor  would  be  relieved  against  the  heir  for  the  money ; 
because  in  common  estimation  it  is  but  a  personal  estate. 

P)Ut  B.\ROX  Atkyns  was  strongly  of  opinion  that  the  party  ought 
in  this  case  to  be  relieved  against  the  King,  because  the  King  is  the 
fountain  and  head  of  justice  and  equity;  and  it  shall  not  be  presum- 
ed that  he  will  be  defective  in  either.  And  it  would  derogate  from 
the  King's  honor  to  imagine,  that  what  is  equity  against  a  common 
person,  should  not  be  equity  against  him. 


SECTION  4.— BY  DISSEISIN. 


LORD  COMPTON'S  CASE. 

(Common  Bench,  1.587.    2  Leon.  211.) 

Note  by  Anderson,  Chief  Justice,  that  if  cestui  que  use.  after  the 
statute  of  1  Rich.  Ill,  leaseth  for  years  and  afterwards  the  feoffees 
release  unto  the  lessee  and  his  heirs,  having  notice  of  the  use,  that 
this  release  is  unto  the  first  use.  But  where  the  feofifees  are  disseis- 
ed and  they  release  unto  the  disseisor,  although  they  (he?)  have  no- 
tice of  the  use,  the  same  is  to  the  use  of  the  disseisor,  and  that  no  sub- 
poena lieth  against  such  a  disseisor.     See  11  Edw.  IV,  8.* 


If  one  disseise  a  feoffee  to  use,  the  disseisor  will  not  be  seised  to 
the  use,  though  he  have  notice. — Dillam  v.  Frain,  1  And.  309,  314. 


First,  that  if  there  were  any  disseisin,  that  nothing  passed  to  the 
plaintiff  either  in  right  or  equity,  for  the  disseisor  was  subject  to  no 
trust,  nor  any  subpoena  was  maintainable  against  him,  not  only  be- 
cause he  was  in  the  post,  but  because  the  right  of  inheritance  or  free- 
hold was  determinable  at  the  common  law  and  not  in  the  chancery, 
neither  had  cestui  que  use  (while  he  had  his  being)  any  remedy  in 
that  case. — First  Resolution  of  the  Judges  in  Earl  of  Worcester  v. 
Finch.  4  Inst.  85. 

»  Same  Case,  3  Leon.  19(3. 


220  TltAXSFER   OF   RKSrKCTIVE   INTERESTS   OF   PARTIES.  (Ch.  3 

COLBURX  and  Others  v.   BROUGHTON  an<l   Others. 
(Supreme  Court  of  Alaliaina.  1S4('>.     9  Ala.  Dril.) 

A\'rit  of  Error  to  the  Court  of  Cliaiicery  for  the  Fifth  District. 

Martha  J.  is  the  wife  of  James  F.  Colburn,  and  the  other  complain- 
ants are  her  children  by  him.  December  25,  1829,  John  B.  Bradford, 
the  father  of  Mrs.  Colburn,  conveyed  certain  real  estate  to  W'ilHam 
C.  Coolidge  in  trust  for  the  separate  use  of  jMrs.  Colburn  for  life, 
and,  should  James  1'.  Colburn  die  in  her  lifetime,  then  to  convey  the 
same  to  her  for  life  and  to  the  heirs  of  her  body,  by  said  James,  in 
remainder.  December  30,  1829,  Bradford  conveyed  to  Coolidge  cer- 
tain slaves  in  trust  for  the  separate  use  of  Mrs.  Colburn  for  her  life, 
antl  after  her  decease  to  be  the  absolute  property  of  her  children  by 
J.  B.  Colburn. 

December  25,  1839,  Colburn,  the  husband,  conveyed  to  Coolidge 
certain  other  slaves  in  trust  for  the  separate  use  of  Mrs.  Colburn  dur- 
ing her  life  and  to  the  heirs  of  the  bodies  of  James  B.  and  Martha, 
in  remainder,  and,  should  they  die  without  heirs,  then  the  trustee  to 
convey  to  the  right  heirs  of  the  husband,  in  such  manner  as  he  should 
by  last  will  appoint. 

At  the  October  term,  1835,  one  Smith  was  appointed  as  trustee  in 
place  of  Coolidge.  Smith  resigned  in  November,  1838,  and  on  No- 
vember 30th  Thomas  Gaillard  was  appointed  to  act  till  the  ensuing 
term  of  the  circuit  court  of  Monroe  county,  when  the  appointment 
might  be  confirmed  or  otherwise.  Previous  to  the  sitting  of  that  court 
the  Legislature  divested  it  of  jurisdiction,  and  the  appointment,  be- 
ing temporary,  expired,  leaving  Mrs.  Colburn  without  a  legal  trus- 
tee to  manage  the  trust  property. 

Edward  S.  Broughton,  sherifif  of  Monroe  county,  by  virtue  of  his 
office,  became  administrator  de  bonis  non  of  the  estate  of  William  C. 
Coolidge,  and  obtained  judgment  against  Colburn  at  the  July  term, 
1839,  for  upwards  of  $10,000,  execution  upon  which  issued  July  K), 
1839,  under  color  of  which  the  coroner  forcibly  took  possession  of  the 
slaves  and  other  personal  property  of  the  trust  estate  and  evicted  ]\Ir. 
Gaillard  the  then  acting  trustee.  The  property  was  sold  and  the  sev- 
eral persons  named  as  defendants,  became  the  purchasers  and  pos- 
session was  delivered  to  them. 

The  bill  prayed  that  the  several  deeds  of  trust  be  established  and 
the  trusts  carried  into  execution,  and  an  account  taken  of  the  trust 
estate  that  came  to  the  hands  of  Coolidge,  in  his  lifetime,  and  into 
that  of  the  defendant.  Broughton,  Colburn  and  the  purchasers  at 
the  sheriff's  sale  were  ma<le  parties  defendant. 

The  chancellor  dismissed  the  bill,  and  his  decree  was  assigned  as 
error. 


Sec.  4)  BY   DISSKISIN.  221 

GoLDTHWAiTE,  J.^"  *  *  *  3  jyy^^  there  is  a  more  serious  ob- 
jection yet  to  the  bill,  so  far  as  the  individual  purchasers  at  the  cor- 
oner's sale  are  connected  with  it.  We  readily  concede  that  a  pur- 
chaser of  trust  property  from  or  under  the  trustee,  with  notice  of  the 
trust,  is  himself  chari^cablc  in  equity  as  a  trustee.  But  here  there  is 
nothing  to  connect  these  individuals  with  the  trustee,  and  they  claim 
adversely  to  him;  it  is  not  his  title  which  they  held,  or  one  derived 
through  him,  but  their  claim  if  good  at  all  is  so  entirely  independent 
of  the  trust  deed.  To  insist  that  equity  can  take  jurisdiction  of  a 
title  thus  disputed  would  invest  it  with  cognizance  of  all  disputes  con- 
cerning property  upon  which  a  trust  had  ever  been  created. 

It  is  entirely  evident  that  the  property  held  in  trust  is  as  much  the 
subject  of  inquiry  as  that  which  is  not,  but  it  is  too  common  a  mistake 
to  suppose  the  creation  of  a  trust  carries  the  property  itself  into  equi- 
ty. The  law  usually  provides  a  different  and  more  appropriate  for- 
um to  determine  conflicting  and  adverse  titles  to  the  property.  We 
fully  recognize  the  rule  that  a  purchaser  of  trust  property  from  or  un- 
der the  trustee,  with  notice  of  the  trust,  is  himself  chargeable  in  equi- 
ty as  a  trustee.  [Williamson  v.  Bank,  7  Ala.  900.  42  Am.  Dec.  617.] 
But,  according  to  the  allegations  of  the  bill,  Broughton  never  had  pos- 
session of  the  property  sold,  as  the  administrator  of  Coolidge,  and  was 
not  therefore  affected  by  the  obligations  which  his  intestate  had  as- 
sumed with  relation  to  it.  He  obtains  a  judgment  against  Colburn, 
and  directs  a  levy  upon  property  which  that  person  is  supposed  to  own. 
In  doing  this,  we  apprehend  he  stands  as  any  other  plaintiff  who 
wrongfully  directs  a  levy,  and  is  responsible  to  the  injured  party  in 
trespass  or  trover.  The  title  sold  under  his  execution  was  not  the  title 
of  Coolidge,  the  trustee,  but  that  of  a  third  person,  which,  if  defec- 
tive, invests  the  purchaser  with  one  that  is  of  the  same  nature.  What- 
ever may  be  the  merits  of  this  title,  the  purchaser,  it  is  evident,  does 
not  derive  it  from  the  trustee,  either  mediately  or  immediately,  and 
in  no  sense  can  be  said  to  be  in  collusion  with  or  hoUling  under  him. 
In  point  of  fact,  the  whole  case,  as  to  these  purchasers,  makes  it  a])- 
parent  they  claim  adversely  to  the  trust  estate,  and  in  spite  of  it.  It 
is  then,  as  to  all  the  defendants  except  the  husband,  an  attempt  to  lit- 
igate the  title  to  personal  property  in  a  court  of  equity.  We  know  of 
no  condition  of  facts  under  which  a  court  of  this  description  can  de- 
termine such  a  question.  Doubtless  a  cestui  que  trust  may  go  into 
equity  to  prevent  a  sale  of  the  trust  estate,  until  the  right  can  be  as- 
serted elsewhere.  To  this  effect  is  Calhoim  v.  Cozens,  3  Ala.  408, 
where  an  injunction  was  sustained  by  a  feme  covert  to  restrain  a  hus- 
band's creditor  from  selling  her  separate  estate.  Here,  however,  the 
property  has  already  been  converted,  and  the  suit  is  to  regain  or  have 
satisfaction  for  it,  from  persons  who  neither  claim  under  nor  are  in 
privity  with  the  trustee. 

10  I'art  of  the  opinion  is  omitted. 


222  TRANSFER   OF   RKSFECTIVE   INTERESTS   OF   PARTIES.  (Cll.  .■> 

4.  The  mere  circumstance  that  a  trust  is  created  upon  certain  prop- 
erty does  not  invest  a  court  of  chancery  with  jurisdiction  to  determine 
the  disputes  which  may  arise  with  respect  to  the  title  to  that  proper- 
ty. If  it  was  so,  every  cestui  que  trust  might  sue  in  equity,  instead  of 
his  trustee  at  law  for  injuries  done  to  it.  Lord  Redesdale  said  a  ces- 
tui que  trust  is  always  barred  by  length  of  time  operating  against  the 
trustee.  If  the  latter  does  not  enter,  and  the  cestui  que  trust  does  not 
compel  him  to  enter  as  to  the  person  claiming  paramount,  the  cestui 
que  trust  is  barred.  [Ilovenden  v.  Lord  Annesly,  2  Sch.  &  L.  G29.] 
And  Lord  of  Hardwicke  had  before  held  the  rule  applied  only  as  be- 
tween cestui  que  trust  and  trustee,  and  not  between  them  on  the  one 
side  and  a  stranger  on  the  other.  [Lewellen  v.  Mackworlh,  2  Eq.  Cas. 
Abr.  579.]  In  Finch's  Case,  4  Inst.  85,  so  long  ago  as  the  reign  of 
Elizabeth,  it  was  resolved  by  all  the  judges  that  a  disseisor  was  sub- 
ject to  no  trust,  nor  any  subpoena  was  maintainable  against  him ;  not 
only  because  he  was  in  the  post,  but  because  the  right  of  inheritance 
or  freehold  was  determinable  at  the  common  law,  and  not  in  chancery ; 
neither  had  the  cestui  que  trust  any  remedy  in  that  case.  To  the  same 
effect  is  Mr.  Sugden,  in  his  edition  of  Gilbert  on  Uses,  429,  note  G, 
who  there  says  that  persons  claiming  the  legal  estate  by  an  actual  dis- 
seisin, without  collusion  with  the  trustee,  will  not  be  bound  by  the 
trust.  Therefore,  if  J.  oust  A.,  who  is  a  trustee  for  B.,  and  the  claim 
is  not  made  in  due  time,  A.  will  be  barred,  and  his  cestui  que  trust  with 
him,  although  J.  had  notice  of  the  trust.  These  citations  seem  con- 
clusive to  show  that  the  creation  of  a  trust  has  no  effect  to  draw  the 
contests  with  respect  to  the  title  of  the  property  to  a  court  of  chan- 
cery, and  that  it  is  only  persons  who  are  trustees,  or  who  claim  un- 
der such,  or  by  collusion  with  them,  who  are  accountable  to  the  ces- 
tui que  trust. 

Decree  affirmed. ^^ 

11  Uses.— In  Cluulleigli's  Case,  1  Coke.  11.11),  at  13!>h  (1580  0."),  Popliam. 
C.  J.,  said:  "Ami  the  reason  why  a  dissi'isor  should  not  stand  seised  to  a 
use  was  liocanse  cestni  que  use  had  no  remedy  liy  the  conmion  law  for  any 
use,  but  his  remedy  was  only  in  chancery,  and,  because  the  right  of  a  free- 
hold or  inheritance  could  not  be  determined  in  chancery,  his  title  should  not 
l)e  drawn  into  examination  there;  and  for  this  reason  a  disseisor  shall  not  be 
compelled  in  t'.ie  chancery  to  execute  an  estate  to  cestui  que  use,  but  cestui 
que  use  shall  compel  his  feoffees  in  the  court  of  chancery  to  enter  upon  th<> 
disseisor,  or  to  recover  the  land  against  him  at  the  common  law,  and  then 
the  chancery  will  conqjel  the  feoft'cH'S  to  execute  the  estate  according  to  the 
use,  and  the  chancellor  ought  to  direct  uses  according  to  the  rules  of  the 
common  law." 


Sec.  5)  BY   MAUUIAGE. 

SECTION  5.— BY  ArARRIAGE. 
I.  Marriage  of  the  Trustee. 


223 


NASH  V.  TRESTON. 

(King's  Bench,  1631.    4  Cro.  Car.  190.) 

A  bill  in  chancery  was  referred  to  Jones,  Justice,  and  myself,  to  con- 
sider  whether  one  should  be  relieved  against  dower  demanded,  etc. 

The  case  appeared  to  be,  that  J.  S.  being  seised  in  fee,  by  indenture 
inrolled  bargains  and  sells  to  the  husband  for  one  hundred  and  twenty 
pounds,  in  consideration,  that  he  shall  redemise  it  to  him  and  his  wife 
for  their  lives,  rendering  a  peppercorn ;  and  with  a  condition,  that  if 
he  paid  the  one  hundred  and  twenty  pounds  at  the  end  of  twenty  years, 
the  bargain  and  sale  shall  be  void.  He  redemiseth  it  accordingly  and 
dies ;   his  wife  brings  dower. 

The  question  was,  whether  the  plaintiff  shall  be  relieved  against  this 
title  of  dower? 

We  conceived  it  to  be  against  equity,  and  the  agreement  of  the  hus- 
band at  the  time  of  the  purchase,  that  she  should  have  it  against  the 
lessees;  for  it  was  intended  that  they  should  haveit  redemised  imme- 
diately to  them,  as  soon  as  they  parted  with  it;  and  it  is  but  in  nature 
of  a  mortgage:  and  upon  a  mortgage,  if  land  be  redeemed,  the  wife  of 
the  mortgagee  shall  not  have  dower.  And  if  a  husband  take  a  fine 
sur  cognizance  de  droit  come  ceo,  and  render  arrear,  although  it  was 
once  the  husband's,  yet  his  wife  shall  not  have  dower ;  for  it  is  in  him 
and  out  of  him  quasi  uno  flatu,  and  by  one  and  the  same  act.  Yet  in 
this  case  we  conceived,  that  by  the  law  she  is  to  have  dower ;  for, 
by  the  bargain  and  sale,  the  land  is  vested  in  the  husband,  and  thereby 
his  wife  entitled  to  have  dower;  and  when  he  redemises  it  upon  the 
former  agreement,  yet  the  lessees  are  to  receive  it  subject  to  this  title 
of  dower;  and  it  was  his  folly  that  he  did  not  conjoin  another  with  the 
bargainee,  as  is  the  ancient  course  in  mortgages.  And  when  she  is 
dowable  by  act  or  rule  in  law,  a  court  of  equity  shall  not  bar  her  to 
claim  her  dower ;  for  it  is  against  the  rule  of  law,  viz. :  "Where  no 
fraud  or  covin  is,  a  court  of  equity  will  not  relieve."  And  upon  con- 
ference with  other  the  Justices  at  Sergeants  Inn  upon  this  question, 
who  were  of  the  same  judgment,  we  certified  our  opinion  to  the  Court 
of  Chancery,  that  the  wife  of  the  bargainee  was  to  have  dower,  and 
that  a  court  of  equity  ought  not  to  preclude  her  thereof. 


224  TKANSFEU   OF   KESPECTIVE   INTEUESTS   OF   PAUTIES.  (Cll.  3 

NOEL  V.  JEVON. 

(In    Chancery,   boforo   Lord    Chancellor   Xottin^'hani,   1078.      Frcom.    Ch.   43.) 

The  bill  was  to  be  relieved  against  the  defendant's  dower,  her  hus- 
band being  only  a  trustee ;  and  it  appearing  that  the  husband  was  but 
a  trustee,  the  defendant  was  barred  of  her  dower,  contrary  to  the  opin- 
ion of  Nash  V.  Preston  [4  Cro.  Car.  190]  ;  and  so  it  was  said  is  the 
constant  practice  of  the  court  now.^- 


II.  Marriage  of  the  Cestui  que  Trust — Rights  of  Wife. 
COLT  V.  COLT. 

(In  Chancery,  ICCA.  ItiO.-).     1  Ch.  K.  2.14.) 

The  plaintiff  claims  a  third  part  of  the  said  trust  for  her  dower. 
This  court,  to  so  much  of  the  plaintiff's  bill  as  relates  to  the  dower  of 
the  plaintiff  Elizabeth  claimed  by  her  out  of  the  said  trust,  ordered  that 
the  said  bill  be  dismissed. ^^ 

12  See  Bevant  v.  Tope,  Freem.  Ch.  71  (1081);  Ilinton  v.  ITinton.  2  Ves.  Sr. 
031  (17.^.j)  ;  Dean's  Heirs  v.  Mitchell's  Heirs.  4  J.  J.  Marsh.  (Ky.)  4.J1  (ISJO)  ; 
Firestone  v.  Firestone,  2  Ohio  St.  41.1  (18.j3)  ;    Bopp  v.  Fox.  03  111.  540  (1872). 

A  wife  has  no  homestead  interest  in  land  held  by  a  husband  as  trustee. 
Osborn  v.  Strachan.  .32  Kan.  52,  3  Pac.  707  (1884). 

Curtesy. — A  husband  is  not  entitled  to  curtesy  in  lands  held  by  his  wife  in 
trust.  King  v.  Bushnell.  121  111.  050,  13  N.  E.  245  (1887) ;  Chew  v.  Commis- 
sioners, 5  Rawle  (Pa.)  100  (183.5). 

I'SKS. — The  wife  of  a  feoffee  to  uses  was  entitled  to  dower.  T.  B.  14  Hen. 
VIII.  fol.  4,  pi.  5;  Brooke's  Abr.  Feoffments  al  Uses,  pi.  10,  40.  The  husband 
of  the  feoffee  to  uses  was  entitled  to  curtesy.  Brooke's  Abr.  Feoffments  al 
Uses,  pi.  10,  40. 

13  The  wife  had  no  dower  in  an  equity  of  redemption.  Dixon  v.  Saville,  1 
Bro.  G.  C.  320  (178.3).  Tlie  wife  had  no  customary  dower  in  a  copyhold  held 
in  trust  by  her  husband.  Godwin  v.  Wlnsmore,  2  Atk.  525  (1742).  Tlie  widow 
of  a  cestui  que  trust  of  a  copyhold  was  not  entitled  to  freebench.  Forder  v. 
Wade.  4  Bro.  C.  C.  .521  (17113). 

To-day  in  most  jurisdictions  dower  in  equibiblo  interests  is  allowed  by  stat- 
ute. The  former  rule  still  ])revails  in  Delaware.  Massachusetts,  and  New 
Hanqjshire.  Cornoj;  v.  Cornofj;,  3  Del.  Ch.  407  (180i)) ;  Seaman  v.  Harmon,  192 
Mass.  5,  78  N.  E.  301  (liXJO)  ;  Ilallett  v.  Parker,  GO  N.  II.  1.34,  30  Atl.  583 
(1S'.)7).  Frecpiently  dower  is  allowed  in  an  eipiity  of  redenq)tion,  though  not 
in  other  e<iuitable  interests,  ("ornog  v.  Cornog,  3  Del.  Ch.  407  (1809);  Lobdell 
V.  Hayes,  4  Allen  (Mass.)  187  (1802).  No  dower  in  an  equity  of  redenq)tion 
is  allowetl  in  the  District  of  Columbia.  In  re  Thonqison's  Estate,  0  Mackey 
(D.  C.)  530  (1888).  In  New  York  dower  is  allowed  in  such  e^piitable  interests 
only  as  the  husband  retains  at  his  death.  Hawley  v.  James,  5  Paige,  318,  453, 
4.54  (1835) ;    In  re  Ransom  (D.  C.)  17  Fed.  331  (1883). 


Sec.  5)  BY   MAURIAGE.  225 

CHAPLIN   V.   CHAPLIN. 
(In  Chancery,  before  Lord  Chancellor  Talbot,  1733.    3  P.  Wins.  220) 

The  legal  estate  of  a  rent  in  fee  was  in  trustees,,  in  trust  for  Por- 
ter Chaplin  in  tail  male;  on  his  dying,  the  trust  of  this  estate  tail 
descended  to  his  only  son  Sir  John  Chaplin  in  tail,  the  husband  of 
the  plaintiff  the  Lady  Chaplin,  who  (inter  alia)  brought  her  bill  for 
her  dower  of  this  rent. 

Loud  Chancellor  Talrot.  By  the  preamble  of  the  statute  of 
uses  it  is  recited  that  by  means  of  these  uses  the  wife  was  defeated 
of  her  dower,  by  which  it  appears  that  the  wife  of  cestuy  que  use 
was  not  dowable  at  common  law ;  and  if  so,  then,  as  at  common  law 
an  use  was  the  same  as  a  trust  is  now,  it  follows,  that  the  wife  can 
no  more  be  endowed  of  a  trust  now,  than  at  common  law.  and  be- 
fore the  statute,  she  could  be  endowed  of  a  use;  so  that  here  was 
the  opinion  of  the  whole  Parliament  in  the  point:  that  it  had  been 
the  common  practice  of  conveyancers,  agreeable  hereto,  to  place  the 
legal  estate  in  trustees  on  purpose  to  prevent  dower;  wherefore  it 
would  be  of  the  most  dangerous  consequence  to  titles,  and  throw 
things  into  confusion,  contrary  to  former  opinions,  and  the  advice 
of  so  many  eminent  and  learned  men,  to  let  in  the  claim  of  dower 
upon  trust  estates;  that  he  took  it  to  be  settled,  that  the  husband 
should  be  tenant  by  the  curtesy  of  a  trust,  though  the  wife  could 
not  have  dower  thereof ;  for  which  diversity,  as  he  could  see  no  rea- 
son, so  neither  should  he  have  made  it;  but  since  it  had  prevailed, 
he  would  not  alter  it;  that  there  did  not  appear  to  be  so  much  as 
one  single  case,  where  abstracting  from  all  other  circumstances, 
it  had  been  determined  there  should  be  dower  of  a  trust.  For  which 
reason,  his  lordship  dismissed  the  bill  as  to  such  part  of  it  as  claim- 
ed dower  of  the  trust  of  this  rent.^* 


WATTS  et  al.  v.  BALL  et  al. 

(Tn  Chancery,  before  Lord  Chancellor  Cowper.  ITOS.     1  P.  Wms.   1C\R.) 

The  case  in  effect  was:  One  seized  of  lands  in  fee  had  two 
daughters,  and  devised  his  lands  to  trustees  in  fee,  in  trust  to  pay 
his  debts,  and  to  convey  the  surplus  to  his  daughters  equally. 

14  See  D'Arcy  v.  Blake,  2  Sch.  &  L.  387  (ISO.j). 

The  widow  of  a  cestui  que  use  was  not  entitled  to  dower.  T.  B.  13  Tien. 
VIL  fol.  7.  1)1.  3;  Crumwel  v.  Andros.  2  And.  CO.  75  (1.597):  Dillam  v.  Frain. 
1  And.  309.  321;  Perkins.  349;  Doctor  &  Student,  Dial.  II.  c.  22;  Vernon's 
Case,  4  Coke,  1  a,  1  b  (1572);  Preamble  to  Statute  of  Uses,  27  Hen.  VIII, 
c.  10. 

Ken.Tr.— 15 


226  TRANSFER   OF   RESPECTIVE   INTERESTS   OF   PARTIES.  (Cll.  3 

The  younger  daughter  married  and  died,  leaving  an  infant  son 
and    her   husband    surviving. 

The  eldest  daughter  brought  a  bill  for  a  partition ;  and  the  only 
question  was,  whether  the  husband  of  the  younger  daughter  should 
have  an  estate  for  life  conveyed  to  him,  as  tenant  by  the  curtesy? 

The  husband  in  his  answer  had  sworn  that  he  married  the  young- 
er daughter,  upon  a  presumption  that  she  was  seized  in  fee  of  a  le- 
gal estate  in  the  moiety;  that  at  the  time  of  the  marriage  she  was 
in  the  actual  receipt  of  the  profits  of  such  moiety;  and  it  was  admit- 
ted that  this  trust  was  not  discovered  until  after  the  death  of  the 
younger  daughter,  nor  until  it  was  agreed  that  a  partition  should  be 
made. 

Decreed  by  Lord  Chancellor  that  trust  estates  were  to  be  gov- 
erned by  the  same  rules,  and  were  within  the  same  reason,  as  legal 
estates;  and  as  the  husband  should  have  been  tenant  by  the  cur- 
tesy, had  it  been  a  legal  estate,  so  should  he  be  of  this  trust  estate ; 
and  if  there  were  not  the  same  rules  of  property  in  all  courts,  all 
things  would  be,  as  it  were,  at  sea,  and  under  the  greatest  incertainty. 

His  lordship  added  that,  this  being  a  case  of  some  difficulty,  he 
could  have  wished  it  had  not  come  before  him  as  a  cause  by  con- 
sent; but  his  opinion  was  that  the  husband  ought  to  be  tenant  by 
the  curtesy,  and  the  rather  because  it  appeared  that  he,  upon  his 
marriage  did  conceive  and  presume  his  wife  to  be  seized  of  a  le- 
gal estate  in  the  moiety,  and  had  reason  to  think  so,  she  being  in  pos- 
session thereof. 

Wherefore  it  was  decreed  that  an  estate  for  life  in  a  moiety  in 
severalty  should  be  conveyed  by  the  trustees  to  the  husband,  with 
remainder  in  fee  to  his  son. 

In  this  cause  Mr.  How  (who  was  for  the  husband)  cited  the  case 
of  Sweetapple  v.  Bindon,  2  Vern.  536,  where  money  was  devised 
to  be  laid  out  for  the  benefit  of  a  feme  sole  in  the  purchase  of  lands 
in  fee;  the  feme  married,  and  had  issue,  and^died,  the  husband  sur- 
viving; and  decreed  in  equity  that  though  the  money  was  not  in- 
vested in  a  purchase  during  the  life  of  the  wife,  yet  in  regard,  in 
this  case,  if  it  had  been  so  laid  out  the  husband  would  have  been 
tenant  by  the  curtesy,  and  that  this  was  as  land  in  equity,  therefore 
the   husband  was  equally  entitled.^* 

ISA  husl)aii(l  of  a  cestui  que  use  was  not  entitled  to  curtesy.  Brooke's 
Abr.  Feoffments  al  Uses,  pi.  10,  40;  Doctor  and  Student  Dial.  II,  Cb.  22; 
Perkins,  457.  4(J3;    Preamble  to  Statute  of  Uses,  27  H.  VIII,  c.  10. 


Sec.  5)  BY  MARRIAGE.  227 


III.  Marriagic  of  Cestui  que  Trust— Rights  of  Hushand. 
MORGAN   V.   MORGAN. 

(In  Chancorj',  before  Vice  Chancellor  Sir  John  Leach.  1820.    r>  !\ra(lfl.  408.) 

This  was  a  bill  filed  by  a  son  against  his  father,  to  avoid  a  con- 
tract made  between  them,  for  the  division  of  the  price  of  lands  to  be 
sold,  upon  the  ground  that  the  contract  proceeded  upon  the  notion  that 
the  father  was  tenant  for  life  of  the  lands,  and  the  son  tenant  in 
fee  in  remainder,  though  in  truth  the  son,  the  plaintiff,  was  tenant 
in  fee  in  possession. 

The  lands  in  question  had  been  the  estate  of  the  mother. 

By  a  settlement  made  previous  to  the  marriage  of  the  father  with 
the  mother,  the  estate  of  the  mother  was  conveyed  to  trustees  in 
fee  upon  trust,  for  the  sole  and  separate  use  of  the  mother  for  life, 
with  power  to  the  mother  to  appoint  the  fee  by  deed  or  will,  and, 
for  want  of  appointment,  in  trust  for  the  mother,  her  heirs  and  as- 
signs. The  question  was,  whether  the  father,  who  survived  the  "  j 
mother,  was  entitled  to  be  tenant  by  the  curtesy  against  the  son, 
the  mother  having  made  no  api)ointment. 

Mr.  Hart  and  Mr.  Daniel,  for  the. plaintiff,  admitted  the  general 
rule  was,  that  a  husband  was  entitled  to  curtesy  in  the  equitable 
estate  of  his  wife,  but  contended,  that  the  rule  did  not  apply  in  this 
case,  by  reason,  that  during  the  life  of  the  wife,  the  profits  were 
to  be  paid  to  her  separate  use,  and  they  cited  the  case  of  Herle  v. 
Greenbank    [3  Atk.   715]    as  directly   in  point. 

Mr.  Beames,  for  the  defendant. 

It  will  be  conceded  that  courts  of  equity  give  the  husband  a  ten- 
ancy by  the  curtesy  of  a  trust.  Such  courts  have  likewise  held  that 
there  should  be  curtesy  of  an  ecjuity  of  redemption,  though  the 
mortgage  was  in  fee,  Cashbourn  v.  Scarf e  and  English  [1  Atk.  003]  ; 
and  where  there  was  a  bequest  of  i300.  to  be  laid  out  in  land,  and 
settled  to  the  only  use  of  M.  and  her  children,  the  husband  of  M. 
was  held  entitled  to  curtesy,  Sweetapple  v.  Bindon  [2  Vern.  53(5]  ; 
so,  where  there  was  a  devise  to  pay  debts,  and  the  surplus  to  be 
conveyed  to  a  feme,  the  husband  was  held  entitled  to  a  curtesy  in 
the  surplus,  Watts  v.  Ball  [1  P.  Wms.  107].  But  it  is  contended 
that,  though  the  husband  is  entitled  to  a  tenancy  by  curtesy  of  a 
trust,  the  present  is  the  excepted  case,  namely,  where  the  property 
is  settled  to  the  separate  use  of  the  wife;  and  for  this  they  rely 
on  Herle  v.  Greenbank  [3  Atk.  715].  That  case,  however,  stands 
alone,    and    is    not   to   be    reconciled    to   Lord    Hardwicke's    general 


/■ 


228  TRANSFER   OF   RESTKCTIVE    INTERESTS   OF   PARTIES.  (Ch.  3 

doctrine  in  Roberts  v.  Dixwell  [1  Atk.  G07],  where  he  says  a  de- 
vise to  the  separate  use  would  not  bar  the  husband,  because  there 
was,  as  here,  a  sort  of  seisin  in  the  wife ;  nor  is  Herle  v.  Green- 
bank  to  be  reconciled  to  the  doctrine  of  Cashbourn  v.  Scarfe,  and 
Sweetapplc  v.  Bindon,  and  Watts  v.  Ball.  If  Ilerle  v.  Grcenbank 
be  questionable,  then  there  was  in  the  removal  of  doubt  a  suffi- 
cient consideration  for  the  agreement  of  the  1-ith  September,  1812, 
and  that  agreement  is  good,  as  a  family  compromise,  as  in  Stock- 
ley  V.  Stocklcy  [1  Ves.  Si  B.  30]  and  in  Stapilton  v.  Stapilton  [1 
Atk.  2],  Cann  v.  Cann  [1  P.  Wms.  723]  and  other  cases  cited  in 
Stockley   v.    Stockley. 

The  Vice  Chancellor.^*'  It  must  be  admitted  that  the  two 
cases  of  Herle  v.  Grcenbank  and  Roberts  v.  Dixwell  cannot  be 
reconciled,  and  between  the  conflicting  opinions  of  Lord  Hardwicke 
recourse  must  be  had  to  principle  and  analog}\  At  law  the  husband 
is  entitled  to  curtesy,  wherever  the  wife,  during  the  coverture,  is 
seised  of  an  estate  of  inheritance,  and  has  issue  by  the  husband  ca- 
pable of  that   inheritance. 

Equity  follows  the  law,  in  the  quality  of  estates,  and  it  is  to  be 
stated  generally  that  a  husband  will  become  tenant  by  the  curtesy, 
wherever  the  wife,  during  the  coverture,  is  in  possession  of  an  equi- 
table estate  of  inheritance,  and  has  issue  by  the  husband  capable 
of  that  inheritance.  There  is  no  doubt  here  that  the  wife  had  an 
equitable  estate  of  inheritance,  notwithstanding  the  rents  and  prof- 
its were  to  be  paid  to  her  separate  use  for  life.  *  *  *  The  wife 
was  in  possession  of  this  equitable  estate  by  receipt  of  the  rents 
and  profits  during  the  coverture,  and,  there  being  issue  capable  of 
inlieritance,  the  husband,  according  to  the  rule  stated,  must  be  en- 
titled to  the  curtesy,  unless  it  can  be  held  that  the  direction  that  the 
wife  shall  take  the  profits  to  her  separate  use  amounts  to  an  ex- 
press intention  to  exclude  him.  At  law,  the  husband  cannot  be 
excluded  from  the  enjoyment  of  property  given  to  or  settled  upon 
the  wife ;  but  in  equity  he  may,  and  this  not  only  partially,  as  by  a  di- 
rection to  pay  the  rents  and  profits  to  the  separate  use  of  the  wife 
during  coverture,  but  wholly,  by  a  direction  that,  upon  the  death 
of  the  wife,  the  inheritance  shall  descend  to  the  heir  of  the  wife, 
and  that  the  husband  shall  not  be  entitled  to  be  tenant  by  the  cur- 
tesy. Such  a  provision  was  actually  made  in  the  case  of  Bennett 
v.  Davis  [3  P.  Wms.  316],  and  was  acted  upon  by  this  court.  Here 
the  husband  is  partially,  and  not  wholly,  excluded  from  the  enjoy- 
ment of  his  wife's  property.  This  court  would,  according  to  the  in- 
tention of  the  settlement,  have  restrained  him  from  all  interfer- 
ence with  the  rents  and  profits  during  the  life  of  the  wife,  but  there 
being   no    further   exclusion   expressed   in   the    settlement,    the   court 

16  I'art  of  the  oi)inion  is  omitted. 


Sec.  5)  BY   MARRIAGE.  229 

can  have  no  authority  to  restrain  him  from  enjoying  his  general 
right  as  tenant  by  the  curtesy  in  the  equitable  inheritance  of  his 
wife.     Bill  dismissed. ^^ 


CLAUSSEN  V.  LA  FRANZ. 

(Supreme  Court  of  Iowa,  18.T).     1  Iowa.  220.) 

Action  of  right  by  plaintiff  as  the  guardian  of  the  minor  chil- 
dren of  Peter  C.  Burmeister,  deceased,  against  La  Franz,  to  recov- 
er the  possession,  and  rents  and  profits,  of  certain  real  estate.  In 
1847  Burmeister  agreed  to  buy  a  lot  in  the  city  of  Davenport  and 
paid  of  the  purchase  money  $100.  He  lived  in  the  house  on  said 
lot  till  his  death,  September  5,  1847,  at  which  time  no  deed  had 
been  executed  by  the  vendor.  Before  Burmeister's  death,  with  $400 
furnished  by  him,  Cook  &  Sargent  bought  from  the  United  States 
two  quarter  sections  of  land  and  took  title  in  the  same  of  George 
B.  Sargent.  Sargent,  after  Burmeister's  death,  conveyed  this  land 
to  his  widow,  Maria  E.  Burmeister.  She  also,  out  of  Burmeis- 
ter's estate,  paid  $1,900,  the  balance  of  the  purchase  price  of  the 
lot  and  took  a  deed  in  her  own  name.  Soon  after  obtaining  the 
deeds  for  the  land  and  lot  she  married  defendant,  and  he  thereup- 
on took  possession  of  said  premises  and  has  ever  since  continued 
in  possession  and  received  the  rents  and  profit.  Shortly  after  her 
marriage  with  defendant  the  said  Alaria  E.  on  July  6,  1853,  made 
her  declaration  of  trust  in  behalf  of  said  infant  children  and  on 
September  12,  1853,  conveyed  all  of  said  premises  to  said  children. 

Defendant  by  his  answer  alleged  that  the  premises  were  the  prop- 
erty of  his  wife,  who  was,  at  the  time  of  their  intermarriage,  seised 
of  an  estate  of  inheritance  in  fee  simple,  and  that  he  had  the  right 
to  the  rents  and  profits  arising  out  of  the  same. 

A  replication  was  filed  stating  that  the  said  Maria  E.,  at  the  time 
of   said  intermarriage  and   at  the   time  of   said   declaration  of  trust 

17  See  Follett  v.  Tyrer,  14  Sim.  125  (1844);  Gushing  v.  Blake,  30  N.  J. 
Eq.  08!)  (1S71»). 

The  husband  may  be  dejirived  of  curtesy  by  an  alienation  of  her  inheritance 
by  the  wife  by  deed  or  will.  Cooper  v.  McDonald,  L.  II.  7  Ch.  Div.  2SS  (1877)  ; 
Pool  V.  P.iakie,  53  111.  495  (1870) ;  unless  prevented  by  statute,  as  in  Soltan 
V.  Soltan.  93  Mo.  307.  6  S.  W.  95  (1887). 

The  notion  advanced  by  Sir  John  Leach  that  the  creator  of  a  trust  for  the 
separate  use  of  the  wife  may  exclude  the  husband  from  curtesy  has  been 
approved  bv  the  courts  of  Kentuckv  and  Pennsylvania.  Kautenbusch  v.  Don- 
aldson (Ky.)  18  S.  \V.  530  (1892) ;  Cochran  v.  O'llern,  4  Watts  &  S.  95.  39  Am. 
Dec.  00  (1842) ;  Ri.cler  v.  Cloud,  14  Pa.  301  (1850).  There  are  dicta  in  other 
jurisdictions  to  the  same  effect.  Cushins  v.  Blake.  .30  N.  J.  Eq.  (kS9.  097  (1879)  ; 
Tillimrhast  v.  Co^'-eshall.  7  R.  I.  383,  394  (1803) ;  leaker  v.  Ileiskell.  1  Cold. 
(Tenn.)  041.  043  (1800)  ;  Dugger  v.  Dugger,  S4  \a.  i:iO,  144.  4  S.  E.  171  (1887). 
This  dictum,  however,  seems  fully  answered  by  what  is  said  in  Lewin's  Law 
of  Trusts  (11th  Eng.  Ed.)  pp.  925,  920. 


230  TRANSFER   OF   RKSFECTIVE    INTERESTS   OF    PARTIES.  (Ch.  3 

and  said  conveyance  to  said  heirs  of  Burmeister,  held  the  said  le- 
gal title  in  trust  for  said  heirs,  and  that  by  said  conveyance  the  said 
legal  title  passed  to  the  wards  of  plaintiff.  Verdict  and  judgment 
for  plaintiff.     Defendant  appealed. 

Woodward,  J.^*  *  *  *  These  facts  and  allegations  constitute 
the  cause  which  we  are  to  decide.  And  the  facts  may  be  thus  brief- 
ly stated.  Ijurmeister,  in  his  lifetime,  contracted  for  the  lot  four, 
paid  part  of  the  money,  and  took  possession.  After  his  death,  the 
widow  paid  the  remainder  of  the  money,  and  took  a  deed  in  her 
own  name.  She  also  paid  $400  for  the  land,  and  took  a  deed  in 
her  own  name.  In  both  cases,  the  money  she  paid  was  money  of 
her  husband.  She  then  married,  and  afterwards  declared,  by  deed, 
that  she  held  the  projierty  in  trust  for  the  plaintiff's  wards,  and  then 
conveyed  it  to  them,  her  husband,  La  Franz,  not  joining  in  the  deeds. 

The  defendant,  her  husband,  now  claims,  that  by  virtue  of  the 
marriage,  he  has  a  life  interest  in  the  property,  wdiich  neither  her 
act,  nor  the  law,  can  take  away.  He  claims  that  at  the  time  of  the 
marriage,  she  was  seised  in  fee  of  this  realty,  and  upon  the  mar- 
riage, he  became  seised  of  a  freehold  estate,  a  vested  estate,  in  the 
wife's   land. 

Has  the  counsel  for  defendant  overlooked  one  simple,  but  lead- 
ing question:  Was  she  seised  in  her  own  right?  He  has  not  no- 
ticed this,  but  has  seemed  to  assume,  that  the  husband's  marital 
right  overrides  this  consideration,  and  ousts  every  one  else,  if  the 
wife  only  held  the  legal  title.  But  this  question  lies  at  the  foun- 
dation. The  husband  cannot  get,  by  the  marriage,  more  estate,  nor 
a  better  estate,  than  the  wife  had.  If  she  had  obtained  it  by  fraud, 
would  the  marriage  heal  the  difficulty?  If  she  held  in  trust,  does 
the  marriage  discharge  the  trust,  or  defeat  it?  If  the  title  was  de- 
fective, doees  the  marriage  perfect  it?  But  it  is  said,  that  it  is  the 
homestead.  This  does  not  make  the  title  better.  If  your  title  to  the 
property  is  not  good,  your  fixing  the  homestead  there,  will  not  mend 
it.  You  may  fix  your  homestead  on  a  good  title,  but  fixing  it  there, 
will  not  make  a  good  title.  Thus  all  the  rights  of  La  Franz  de- 
pend entirely  upon  what  his  wife  had  at  the  time  of  the  marriage. 
Xow,  let  us  inquire,  whether  she  did  or  did  not  hold  as  a  trustee. 
*     *     * 

Mrs.  Burmeister,  then,  being  only  a  trustee,  and  holding  the  ti- 
tle for  others,  what  arc  the  rights  of  her  husband  ?  They  cannot 
be  greater  than  hers.  He  cannot  have  a  more  absolute  estate,  than 
that  on  which  his  own  hangs.  His  rights  are  exactly  measured  by 
hers.  He  cannot  be  regarded  as  a  bona  fide  purchaser  for  a  con- 
sideration, without  notice.  This  is  not  like  the  English  cases,  in 
which  the  chancellor  has  set  aside  an  antenuptial  conveyance  of  the 
proposed  wife,  as  a  fraud  on  the  husband.     In  those  cases,  she  is 

18  Part  of  the  opinion  is  omitted. 


Sec.  5)  BY   MARRIAGE. 


231 


supposed  to  be  the  real  and  actual  owner  of  the  estate.  Whether 
with  or  without  notice,  his  rights  are  in  that  only  which  his  wife 
held  as  her  own;  in  other  words,  his  rights  are  in  her  property, 
and  not  in  another's.  He  says,  that  upon  marriage  he  became  seised 
of  a  freehold,  was  entitled  to  receive  the  rents  and  profits  in  the 
right  of  his  wife,  that  she  cannot  convey  without  his  joining  her. 
He  applies  to  this  case,  the  common  law  doctrine  concerning  the 
husband's  rights  in  the  wife's  own  lands.  Here  is  his  error.  *  *  * 
Judgment  affirmed. 


WYTHAM  V.  WATERHOUSE. 

(Queen's  Bench,  1.596.     1  Cro.  Eliz.  406.) 

A  lease  for  years  was  granted  to  the  defendant  to  the  use  of  the 
grantor's  [grantee's?]  sister,  whom  he  afterwards  should  marry; 
and  he  married  her  accordingly,  and  then  died.  The  feme  takes  the 
plaintifif  to  husband,  and  afterward  she  died.  The  defendant  takes 
administration  of  the  plaintiff's  wife's  goods.  The  plaintiff  sued  the 
defendant  in  chancery  to  have  this  term.  And  it  was  there  decreed, 
by  the  advice  of  all  the  justices  of  England,  that  neither  the  term  nor 
jthe  use  thereof  appertained  to  the  plaintiff.^^ 


PALE  V.  MICHELL. 

(In  Chancery,  before  Lord  Chancellor  Cowper,   1710.     2  Eq.  Cas.   Abr.  138.) 

A  term  for  99  years  determinable  upon  three  lives  is  assigned  to 
A.  and  B.  in  trust  for  C,  who  married,  and  died.  The  question  was, 
whether  this  trust  of  a  term  goes  to  the  husband  who  sur\'ived, 
or  to  the  wife's  administrator? 

Lord  Chancellor  held,  clearly,  that  the  trust  of  a  term  as  well 
as  the  term  itself  survives  to  the  husband,  and  that  he  need  not  take 
out  administration. 


TUDOR  v.    SAMYNE. 

(In  Cliancery,  before  Lord  Commissioners  Trevor,  Rawlinson,  Hutchins,  1692. 

2  Vern.  270.) 

Dr.  Sermon,  the  defendant's  first  husband,  being  possessed  for 
the  residue  of  a  term  of  thirty-one  years,  granted  by  Dr.  Lamplugh, 
in  the  year  1676,  conveyed  it  over  to  trustees  for  the  separate  use 
and  benefit  of  the  defendant  his  wife.     She  marries  Samyne  a  sec- 

18  Witham's  Case,  4  Inst.  87  (1590). 


232  TRANSFER   OF   RFSFECTIVE   INTERESTS   OF   PARTIES.  (Ch.  3 

end  husband,  who  first  mortgages  this  term  to  Vcnner,  and  he  and 
\'enner  assign  to  the  plaintiff. 

The  bill  was  against  the  wife  and  her  trustees,  to  compel  them  to 
assign  over  the  legal  estate  to  the  plaintiff.  And  decreed  according- 
ly ;  for  as  the  husband  may  dispose  of  a  term  for  years,  where  the 
legal  estate  was  in  his  wife;  so  he  may  of  the  trust  of  a  term,  with- 
out either  the  wife  or  the  trustees  joining;  and  Sir  Edward  Tur- 
ner's Case  [1  Vern.  7]  cited,  that  a  term  assigned  by  the  first  hus- 
band for  the  separate  use  of  the  wife,  may  be  sold  or  disposed  of 
by  the  second  husband. 


HORNSBY  V.   LKK  et  al. 

(In   Chancery,  befoi-e  the  Vice  Chancellor,   Sir  Thomas   Plumer,    ISIG.     2 

Madd.  10.) 

By  indenture,  1st  January,  1774,  between  Deacon  and  Collier,  as- 
signees of  Baptist  Darwin,  a  bankrupt  (the  father  of  the  plaintiff), 
of  the  first  part;  the  said  Baptist  Darwin  and  S.  Darwin,  his  wife 
(the  mother  of  the  plaintiff),  of  the  second  part;  and  Alary  Pet- 
ty, R.  Petty,  J.  Elliott,  and  G.  Hooper,  of  the  third  part;  Deacon 
and  Collier  granted  etc.  unto  the  said  M.  Petty,  R.  Petty,  J.  Elliott 
and  G.  Hooper,  £422.  6s.  3d.,  four  per  cents,  together  with  the  divi- 
dends, to  hold  the  same  upon  trust,  to  apply  the  dividends  for  the 
separate  use  of  S.  Darwin  during  her  life,  and,  after  her  death, 
to  a})ply  the  principal  and  dividends  among  all  and  every  child  and 
children  of  the  said  B.  Darwin,  by  the  said  S.  Darwin,  as  should 
be  then  living,  in  equal  shares,  payable  at  twenty-one;  but  if  ei- 
ther of  the  children  should  die  before  his  or  their  shares  should  be- 
come payable,  the  shares  of  him,  her  or  them  so  dying,  to  be  paid 
to  the  survivors;  and  if  only  one  child  wdio  should  live  to  attain 
twenty-one,  then  the  principal  sum  and  the  dividends  to  be  paid  to 
such  only  child.  By  the  same  indenture,  Deacon  and  Collier  granted 
etc.  to  the  said  M.  Petty,  R.  Petty,  J.  Elliott,  and  G,  Hooper,  cer- 
tain shares  in  a  messuage,  and  all  the  assignees'  right,  title,  and  inter- 
est in  and  to  the  real  estate  late  of  Richard  Petty  (the  father  of  the 
said  S.  Darwin),  and  the  moiety,  or  half  part  of  the  share  and  pro- 
portion of  them  the  said  assignees,  of,  in  and  to  a  certain  sum  of 
£2,7G2.  lis.  3d.  upon  the  same  trusts  as  were  declared  respecting 
the  £422.  6s.  3d.  four  per  cents. 

The  plaintiff  and  Anne  Mary  Darwin  were  the  only  issue  of  Bap- 
tist and  Sarah  Darwin.  Baptist  Darwin  died  in  1782.  In  1787  the 
plaintiff  maried  Nathaniel  Hornsby,  without  a  settlement,  and  in 
February,  1799,  the  plaintiff  and  her  husband  assigned  over  a  moiety 
of  their  interest  in  the  said  trust  funds  upon  the  contingency  of 
the  plaintiff  surviving  lur  niDther,  unto  the  defendant,  John  Park- 
er, as   a  collateral   security    for   the   due   payment  of  an   annuity   of 


Sec.  5)  BY  MARRIAGE.  233 

£30.  granted  by  the  plaintiff's  husband,  Hornsby,  to  Parker  during 
his  Hfe,  in  consideration  of  £200.  paid  to  Hornsby. 

In  1790  Anne  Mary  Darwin  married  John  Patten. 

In  1801  Thomas  Rolph  and  the  defendant,  George  Lee,  were  ap- 
pointed trustees,  and  the  trust  monies,  which  then  consisted  of  £1,453, 
15s.  6d.  three  per  cents  were  transferred  to  them. 

Anne  Mary  Patten  died  in  1807,  and  Sarah  Darwin  (the  motiier) 
died  early  in  February,   1814. 

The  plaintiff's  husband,  Hornsby,  was  confined  in  the  King's  Bench 
Prison  for  debt,  and  in  January,  1814,  was  discharged  under  the  in- 
solvent act,  and  his  estate  and  effects  vested  in  a  clerk  of  the  peace, 
and  the  same  were  by  him  assigned  to  the  defendant  John  Seton. 

Hornsby  afterv/ards,  16th  February,  1814,  died  without  having  in- 
stituted any  proceedings,  or  done  any  act  to  reduce  the  trust  fund 
into  possession  in  the  short  interval,  a  few  days  only,  between  the 
widow's   death   and  his  own. 

Thomas  Rolph  died  24th  March,    1814. 

The  bill,  stating  these  facts,  prayed  that  the  trust  funds,  with  the 
dividends,  might  be  transferred  to  the  plaintiff;  or,  if  the  court  should 
be  of  opinion  that  the  defendants  Parker  and  Seton,  or  either  of 
them,  were  entitled  to  them,  then  that  the  plaintiff  might  be  decreed 
to  have  a  settlement  out  of  the  same. 

The  defendant  Parker,  by  his  answer,  insisted,  that  the  dividends 
and  interest  of  the  moiety  of  the  trust  monies  assigned  to  him,  ought 
to  be  applied  pursuant  to  the  trusts  declared  as  to  the  same,  in  and 
by  the  indenture  of  the  26th  February,  1T99;  and  stated,  that  £314. 
3s.  6d.  was  due  to  him  for  ten  years  and  a  half  arrears  of  the  annuity, 
and  claimed  to  be  paid  the  same  out  of  the  trust  monies. 

The  defendant  Seton,  by  his  answer,  submitted,  that  the  trust 
funds  ought  to  be  transferred  to  him  as  the  assignee  of  the  estate 
and  effects  of  Hornsby,  for  the  benefit  of  himself  and  the  rest  of 
the  creditors. 

The  defendant  Lee,  the  trustee,  submitted  to  act  as  the  court  should 
direct. 

The;  Vice  Chancellor.  Independently  of  authority,  let  us  con- 
sider, upon  principle,  whether  the  husband's  assignment  of  his  wife's 
contingent  interest  is  good?  The  husband  has  a  right  to  his  wife's 
choses  in  action,  provided  he  reduces  them  into  possession.  Is  a 
deed,  assigning  a  reversionary  interest,  a  reduction  into  possession? 
It  is  impossible  actually  to  reduce  a  reversionary  interest  into  pos- 
session. Is  it  then  a  constructive  reduction  into  possession  ?  The 
assignment  puts  the  assignee  of  the  husband  in  the  same  situation 
as  the  husband ;  and  if  the  husband  survives  the  wife,  the  assignee 
is  entitled  to  the  property;  but  here  the  husband  died  before  the 
wife,  and  the  assignee  therefore  is  not  entitled  to  the  property. 
This   is  the  manner   in   which   this  case   strikes  me,   upon   principle. 


234  TRANSFER   OF   RF.SrKCTIVE    INTIOUKSTS   OF   PARTIES.  (Cll.  3 

According  to  T^Iitford  v.  Mitford  [9  Ves.  Jr.  87]  it  is  clear  that 
the  general  assignment  in  bankruptcy  does  not  pass  a  reversionary 
interest  in  the  wife,  she  surviving  her  husband.  It  must  be  the 
same  as  to  the  assignment  under  the  insolvent  debtors  act;  nor 
do  I  see  what  answer  can  be  given  to  the  observation  of  Mr.  Cooke, 
that  a  particular  assignee  cannot  be  in  a  better  situation  than  an  as- 
signee under  the  general  assignment  in  bankruptcy.  The  case  cit- 
ed of  Woollands  v.  Crowcher  [12  Ves.  Jr.  174]  is  strong  to  show 
the  insufficiency  of  the  assignment  to  bar  the  wife's  claim  in  case 
she  survives  her  husband.  On  principle  and  authority,  the  plaintiff 
is  entitled  to  this  money. 


BRADLEY  v.   HUGHES. 

(Tn  riinnrory.  before  Vice  Cluuicellor  Shadwell,  1S3G.     8  Sim.  140.) 

By  the  settlement  on  the  marriage  of  Moses  Lemon  w'ith  Maria 
Solomon,  the  lady's  father  conveyed  lands  in  Lancashire,  to  trus- 
tees, for  a  term  of  1.000  years  in  trust,  yearly,  during  the  life  of 
Maria  Solomon,  to  raise  £200.,  and  to  pay  the  same,  by  equal  half- 
yearly  payments,  on  the  1st  of  June  and  the  1st  of  January,  the 
first  payment  to  be  made  on  such  of  the  said  days  as  should  first 
or  next  happen  after  the  solemnization  of  the  marriage,  unto  such 
person  or  persons,  and  for  such  intents  and  purposes  only  as  Maria 
Solomon,  by  any  writing  or  writings  under  her  hand,  from  time  to 
time,  notwithstanding  her  coverture,  should  direct  or  appoint,  and, 
in  default  of  such  appointment,  to  pay  the  same  into  the  hands  of 
Maria  Solomon  for  her  sole  and  separate  use  and  benefit  (without 
the  same  being  subject  to  the  debts,  contracts,  engagements,  inter- 
meddling or  control  of  Closes  Lemon) ;  and  the  receipt  and  receipts 
in  writing  of  Maria  Solomon,  and  of  such  person  or  persons  as  she 
should,  from  time  to  time,  appoint  to  receive  all  or  any  part  of  the 
said  annual  sum,  should  from  time  to  time,  notwithstanding  her  cov- 
erture, be  good  and  effectual  releases  and  discharges  for  such  sums 
of  money,  as,  in  such  receipts  and  discharges,  should  be  expressed 
to  be  received. 

The  marriage  took  effect:  and,  afterwards,  Moses  Lemon  died. 
His  widow  then  married  J.  B.  Bradley,  who,  subsequently,  took  the 
benefit  of  the  insolvent  debtors  act. 

The  bill  was  filed  by  Mr.  and  Mrs.  Bradley  against  the  provision- 
al assignee  of  the  Insolvent  Debtors  Court,  insisting  that  the  defend- 
ant was  not  entitled  to  any  interest  in  the  annuity,  as  the  same  was 
granted  to  Mrs.  Bradley  by  her  father,  during  her  life,  notwith- 
standing her  coverture;  and  that  such  coverture  was  not  intended 
to  apply  to  her  marriage  with  Lemon  alone,  but  to  any  marriage 
she    might    subsequently   contract,    in    the    event    of   his    death;     and 


Sec.  5)  BY   MARRIAGE. 


235 


that  she  was  still  entitled  to  the  annuity,  for  her  separate  use  during 
her  life;  or  that  she  was  at  all  events,  entitled  to  some  settlement 
or  provision  out  of  the  annuity. 

The  Yict,  CiiAXCKLLOR.  I  remember  when  Benson  v.  Benson 
[6  Sim.  12G]  was  before  me  I  was  a  good  deal  pressed  with  what 
was  supposed  to  have  been  the  meaning  of  the  judgment  in  Mas- 
sey  V.  Parker  [2  Mylnc  &  K.  174].  But  it  appeared  to  me  that  I 
could  decide  the  case  then  before  me,  without  either  adopting  or 
controvening  what  was  supposed  to  be  the  meaning  of  the  Lord 
Chancellor  in  that  case;  and  I  decided  on  the  construction  of  the 
will.  The  language  that  fell  from  me  in  Knight  v.  Knight  [6  Sim. 
121]  was  used  in  consequence  of  what  was  stated  by  the  counsel 
for  the  defendant. 

It  is  now  settled,  by  Woodmeston  v.  Walker  [2  Russ.  &  M.  197], 
Brown  v.  Pocock  [6  Sim.  257],  and  other  cases,  that  property  may 
be  given  for  the  separate  use  of  a  woman  during  a  particular  cov- 
erture: but  if  it  is  meant  to  be  given  for  her  separate  use,  so  as  to 
prevent  her  from  alienating  it,  she  may,  before  her  marriage  and  if 
she  be  adult,  dispose  of  it.  But  if  she  be  covert,  then  it  will  oper- 
ate as  a  restriction  on  her  alienating  it  during  that  coverture,  but 
not  afterwards. 

The  other  question  is  whether,  by  the  death  of  the  first  husband, 
the  lady  did  not  become  entitled  to  the  annuity  of  £200.  for  her  own 
use.  And  it  appears  to  me  that  there  is  nothing,  in  the  words  of  this 
settlement,  wdiich  restrains  her  from  alienating  the  annuity.  Aft- 
er the  death  of  the  first  husband,  it  is  a  trust  for  her,  and  then  the 
marital  right  of  her  second  husband  intervenes,  and,  therefore,  the 
assignee  of  that  husband  is  entitled  to  the  annuity. 

I  can  conceive  that  words  might  be  used  which  would,  of  neces- 
sity, prevent  the  second  husband  from  having  any  right  to  his  wife's 
property,  as  for  instance,  if  the  fund  were  given  over  in  the  event 
of  payment  not  being  made  into  the  hands  of  the  w^oman.  In  that 
case  either  she  must  take  the  fund,  or  it  would  go  over.  The  words 
in  this  case  are  words  by  virtue  of  which  this  lady,  during  her  cov- 
erture with  Lemon,  had  the  annuity  for  her  separate  use,  and,  aft- 
er his  death,  it  w^as  held  in  trust  for  her. 

Declare  that  the  assignee  is  entitled  to  the  annuity,  subject  to  the 
wife's  equitable  right  to  have  a  provision  made  out  of  it  for  her  main- 
tenance. 


236  TRANSFER  OF  RESPECTIVE  INTERESTS  OF  PARTIES.  (Ch.  3 

SECTION  6.— BY  BANKRUPTCY.     "7^ 
I.  Bankruptcy  of  tiii;  Trustee. 


Ex  parte  GENNYS. 

In   re   ELFORD. 

(In  Bankruptoy,  before  Vice  Cliancellor  Sljadwell,  1S29.     1  Mont.  &  M.  258.) 

This  petition  prayed  that  the  assig-necs  might  be  directed  to  join 
in  conveyances  to  the  purchasers  of  certain  estates,  of  which  the  bank- 
rupt was  seised  as  trustee  for  the  vendor. 

The  Vice  Chancellor.  I  never  before  knew  that  under  this 
clause  [6  Geo.  IV,  c.  16,  §  79]  it  had  been  contended  that  a  mere 
trust  estate  becomes  vested  in  the  assignees ;  and  if  my  opinion  be 
now  required,  I  have  no  hesitation  in  stating,  that  according  to  my 
view  of  the  law,  both  before  and  since  the  late  act,  an  estate  of 
which  a  bankrupt  is  seised  as  a  bare  trustee  does  not  pass  to  his 
assignees.  No  case  had  been  made  out  which  calls  upon  the  court 
to  interfere.  If  it  had  been  suggested  that  the  bankrupt  had  any 
interest  in  the  property,  then  the  assignees  might  be  necessary  par- 
ties :  but  according  to  what  appears  at  present,  the  petition  was  not 
founded  upon  any  reasonable  doubt,  and  must  be  dismissed  with 
costs. ^'* 

20  See  Ex  parte  Chion,  3  P.  "Wms.  187  note  A  (1721). 

The  English  bankruptcy  act  of  18S3  (St.  40  &  47  Vict.  c.  52.  §  44)  excludes 
from  property  of  the  bankrupt  divisible  amongst  his  creditors,  "proiierty 
held  by  the  bankrupt  on  trust  for  any  other  person."  The  United  States 
bankruptcy  act  (Act  March  2,  ISCw,  c.  170,  §  14,  14  Stat.  522;  Rev.  St.  §  5053) 
provided  that  no  property  held  by  the  bankrupt  in  trust  should  pass  by  the 
assignment.  The  act  of  ISiJS  (Act  July  1.  IS'JS,  c.  541,  30  Stat.  544  [IJ.  S. 
Comp.  St.  1001,  p.  341.S1)  does  not  repeat  this  provision,  but  would  doubtless 
receive  the  same  construction. 

The  assignees  of  a  bankrupt  executor  do  not  take  the  legal  title  to  the 
assets  of  the  testator.  Ex  parte  Ellis,  1  Atk.  101  (1742);  Ex  parte  Butler,  1 
Atk.  210  (1740)  ;  note  by  Lord  Mansfield,  3  Burr.  i:>tiO.  So  the  assignees  of 
a  bankrupt  administrator  do  not  take  the  legal  title  to  the  assets  of  the 
intestate.     Ex  parte  Marsh,  1  x\.tk.  1.58  (1744). 

If  the  bankrupt,  holding  the  legal  title,  has  a  share  in  the  beneficial  inter- 
est, the  legal  title,  it  seems,  will  i)ass  to  the  assignee  in  liankruptcy.  Carvalho 
V.  Burn.  4  Barn.  &  Adol.  382  (1S;{3)  ;  Swepson  v.  Uduse,  (15  N.  C.  34,  0  Am. 
liep.  735  (1871).  This  rule  does  not  hold  when  the  bankrupt  is  an  express 
trustee.     Webster  v.  Scales,  4  Doug.  7  (17S4). 

It  need  hardly  lie  added  that  assignees  in  bankruptcy,  assignees  in  insolven- 
cy, and  assignees  for  the  benefit  of  creditors  are  not  purchasers  for  value, 
and,  therefore,  take  the  title  to  the  assigned  i)roperty  sui)ject  to  all  the  ecpii- 
ties  to  which  it  was  subject  in  the  hands  of  the  bankrupt,  the  insolvent,  and 
the  assignor,  respectively. 

Trust  proi>erty  in  ixissession  of  a  bankrupt  trustee  does  not  pass  to  his 
assignee  under  the  English  bankruptcy  act  as  property  left  in  the  order  and 


Sec,  6)  BY  BANKRUPTCY.  237 


II.  Bankruptcy  oj?  the  Cestui  que  Trust. ^^ 

JACKSON  V.  HOBHOUSE  et  al. 
(In  Chajicery,  before  Lord  Cliancellor  Eldon,   1S17.     2  Mer.  483.) 

The  defendant  Mary  Cox  being  entitled  to  the  sum  of  £G,000.  un- 
der the  will  of  Samuel  Neate  (her  late  husband),  of  which  will  the 
defendants  Hobhouse,  Moggridge,  and  Perkins  were  executors,  by 
a  settlement  made  subsequent  to  her  marriage  with  the  defendant 
George  C'dx,  this  sum  was  assigned  to  the  executors,  upon  trust  to 
permit  the  wife  to  receive  the  interest  during  her  life  to  her  separ- 
ate  use,  and  after  her  death,  in  case  her  husband  should  survive  her, 
upon  trust  to  pay  the  same  to  him  during  his  life,  and  after  the  de- 
cease of  the  survivor  in  trust  for  the  children  of  the  marriage,  and 
in  case  there  should  be  no  children,  then  for  the  survivor,  his  or 
her  executors,  etc.  The  settlement  contained  a  proviso  against  the 
wife  assigning  or  otherwise  disposing  of  the  interest  of  the  said  sum 
in  any  mode  of  anticipation. 

Cox  and  his  wife  being  afterwards  desirous  to  raise  money  by 
way  of  anriuity,  and  the  defendant  Leeke  having  agreed  to  purchase 
of  them  an  annuity,  to  be  secured  on  the  £6,000.  provided  some  per- 
son to  be  approved  of  by  him  would  join  with  him  in  covenanting 
for  the  payment,  they  applied  to  the  plaintiff,  who  agreed  to  join 
them  accordingly,  and  by.  indenture  dated  the  29th  of  July,  1813, 
to  which  the  plaintiff  was  a  party,  it  was  witnessed  that,  in  pursu- 
ance of  such  agreement,  and  for  the  considerations  therein  mention- 
ed. Cox  and  the  plaintiff  covenanted  with  Leeke  for  payment  to  him 
of  the  annuity  of  £153.  during  the  joint  lives  of  Cox  and  his  wife 
and  the  life  of  the  survivor,  Mary  Cox,  the  wife,  appointing  that  the 
defendants  (the  trustees  in  the  settlement)  should  pay  and  apply  the 
yearly  interest  of  the  £6,000.  during  her  life  to  Leeke,  upon  the  trusts 
thereinafter  mentioned.  And  Cox  and  his  wife  thereby  bargained  and 
sold  to  Leeke  the  said  yearly  interest  during  their  respective  lives, 
and  the  principal  sum  to  which  the  survivor  would  be  entitled  in  the 
event  of  there  being  no  issue  of  the  marriage ;  upon  trust,  in  the  first 
place,  to  pay  himself  (Leeke)  the  said  annuity,  and  subject  thereto  upon 
the  trusts  of  the  settlement. 


disposition  of  the  bankrupt  by  th«  consent  of  the  true  owner.  Copeman  v. 
Gallant,  1  P.  Wms.  314  (1716);  Great  Eastern  Rv.  Co.  v.  Turner,  L.  K.  8 
Ch.  App.  149  (1871). 

21  The  cases  in  this  subdivision  will  not  be  confined  to  bankruptcy,  but 
will  include  cases  involving  the  rights  of  creditors  proceeding  by  bills  for 
equitable  execution  and  cases  dealing  with  the  cestui  que  trust's  right  volun- 
tarily to  alienate,  as  one  principle  pervades  all. 


•id 


238 


TRANSPEU  OF  RESTECTIVE  INTERESTS  OF  PARTIES. 


(Ch.  3 


Notice  of  this  assignment  was  given  to  the  executors,  and  the  an- 
nuity was  paid  up  to  the  29th  of  October,  1813,  only,  since  which 
time  no  further  payments  were  made,  and  the  defendant  Leeke 
brought  his  action  against  the  plaintiff  upon  the  covenant,  and  re- 
covered against  him  the  sum  of  £356.  for  arrears  of  the  annuity  and 
costs. 

The  plaintiff  by  his  bill  representing  that  the  proviso  in  the  set- 
tlement against  assigning  by  way  of  anticipation  had  been  conceal- 
ed from  his  knowledge  previous  to  his  becoming  a  party  to  the  deed 
of  assignment  (he  having  been  induced  to  enter  into  the  covenant 
therein  contained  by  an  opinion  of  counsel  taken  upon  an  abstract 
in  which  no  mention  was  made  of  the  proviso,  and  the  deed  of  as- 
signment itself  omitting  to  state  it) ;  moreover  charging  the  defend- 
ant Mrs.  Cox  with  being  privy  to  such  fraudulent  misrepresenta- 
tion and  concealment;  prayed  an  account  of  what  had  accrued  due 
on  the  £6,000.  since  the  date  of  the  indenture  of  the  29th  of  Ju- 
ly, 1813,  and  that  the  defendant  Cox  and  his  wife,  (who  were  out 
of  the  jurisdiction,)  and  the  executors,  might  be  compelled  to  pay 
to  the  plaintiff  the  £356.  so  recovered  against  him  in  said  action, 
and  to  pay  to  the  defendant  Leeke  the  residue  of  the  interest  of 
the  £6,000.  upon  the  trusts  of  the  indenture,  and  an  jnj unction  to 
\  restrain  the  defendants  (the  executors)  from  parting  with,  or^jn 
any  manner  disposing  of,  the  said  principal  sum  of  £6,000.,  or  the 
interest  thereof,  and  from  making  any  payment  on  account  there- 
'  of  to  the  defendants  Cox  and  his  wife,  or  to  any  person  for  their  use. 

The  injunction  was  obtained  upon  an  affidavit  verifying  the  prin- 
cipal allegations  in  the  bill,  but  not  to  the  extent  of  charging  Mrs. 
Cox  as  a  party  to  the  fraud  committed ;  and  the  charge  was  posi- 
tively and  expressly  denied  by  her  answer  which  came  in  after- 
wards. A  motion  was  now  made,  on  behalf  of  Mrs.  Cox,  to  dis- 
solve  the   injunction. 

The  Lord  Chancellor.-^  For  many  years  after  I  entered  into 
the  profession,  no  such  thing  was  known  as  a  clause  of  restraint  up- 
on alienation  of  a  wife's  separate  property  by  way  of  anticipation. 
The  terms  of  the  power  in  Hulme  v.  Tenant  [1  15ro.  16]  will  be 
remembered ;  and  there  Lord  Thurlow  held,  that  the  bond  being 
executed,  the  creditor  was  entitled  to  the  benefit  of  its  execution. 
Yet  it  is  obvious  that  such  a  determination  must  defeat  the  in- 
tention with  which  the  power  was  given.  It  was  afterwards  at- 
tempted, in  cases  like  Pybus  v.  Smith  [3  Bro.  310]  to  be  establish- 
ed that  the  alienation  must  be  eo  modo  with  the  power  given ;  that 
the  circumstance  of  a  direction  to  pay  the  interest  from  time  to 
time  into  the  proper  hands  of  a  married  woman  was  enough  to  pre- 
vent her  from  having  any  absolute  disposing  power  over  the  proper- 
ty,  or   any   part,   before   the   time   of  her  own  proper   receipt  of   it. 


22  Part  of  tho  opinion  is  omitted. 


Sec.  6)  BY  BANKRUrTCY.  239 

But  this  attempt  also  was  overruled.  Lord  Thurlow  still  contin- 
ued to  struggle  hard  that  the  wife  might  be  brought  into  a  situation 
consistent  with  the  manifest  intention  of  the  settlor ;  but  he  thought 
the  decisions  too  strong  against  it.  At  last,  he  began  to  alter  his 
opinion,  first,  in  the  case  of  Miss  Watson,  where  he  reasoned  thus : 
A  feme  covert,  having  power  to  alien,  is  a  mere  creature  of  equity 
to  the  extent  to  which  the  settlement  constitutes  her  a  feme  sole, 
and  no  further ;  and  he  therefore  thought  that  the  court  might 
modify  the  power  of  alienation  by  such  a  clause  as  that  now  under 
consideration.  Lord  Alvanley,  who  followed,  thought  it  a  valid  clause 
[Sockett  V.  Wray,  4  Bro.  483],  and  so  it  has  been  considered  ever 
since.  It  is  too  late  now  to  contend  against  the  validity  of  a  clause 
in   restraint  of  anticipation. 

We  come  then  to  the  question  of  fraud.  *  *  *  The  charge 
of  fraud  is  not  established.  *  *  *  There  is,  therefore,  not  enough 
to  support  the  injunction. 

Injunction  dissolved. 


BARTON  v.   BRISCOE. 

(In  Chancery,  before  the  Master  of  the  Rolls,  Sir  Thomas  Plumer,  1S22. 

Jac.  603.) 

By  indentures  dated  in  August,  1811,  made  upon  the  occasion  of 
the  sale  of  certain  estates  belonging  to  James  Barton,  in  which  Ma- 
rian Barton  his  wife  joined  for  the  purpose  of  relinquishing  her  right 
of  dower,  two  sums  of  il4,000.  and  of  i5,833.  3  per  cent,  consols 
were  paid  and  transferred  to  trustees,  upon  trust  to  lay  out  the 
same  in  the  funds,  or  on  real  or  government  securities,  with  the  con- 
sent of  ]\Iarian  Barton,  signified  by  some  writing  signed  by  her,  not- 
withstanding her  coverture,  and  from  time  to  time,  with  her  consent, 
during  her  life  to  vary  the  securities,  and  upon  trust  to  pay  the  div- 
idends, interest,  and  annual  produce  to  such  person  or  persons, 
and  for  such  intents  and  purposes,  as  she  should  from  time  to  time, 
notwithstanding  her  coverture,  by  any  writing  or  writings  signed 
by  her  with  her  name,  in  her  own  handwriting,  appoint ;  but  not 
so  as  to  deprive  herself  of  the  intended  use  or  benefit  thereof  by 
sale,  mortgage,  charge,  or  otherwise,  in  the  way  of  anticipation; 
and  for  want  of  such  direction,  into  her  own  proper  hands  for  her 
own  separate  and  peculiar  use  and  benefit,  independently  and  ex- 
clusively of  the  said  James  Barton,  who  was  not  to  intermeddle 
therewith,  nor  was  the  same  to  be  liable  to  his  control,  debts,  or  in- 
terference ;  and  it  was  declared  that  her  receipts  for  the  dividends 
should,  notwithstanding  her  coverture,  be  sufficient  discharges ;  and 
after  her  death,  upon  trust  to  transfer  the  same  to  such  person  or 
persons,  etc.  as  the  said  Marian  Barton  by  her  will  or  codicil  signed 
by  her,  and  attested  by  two  witnesses,  should  appoint ;    and  in  de- 


240  TRANSFER   OF   RESPECTIVE   INTERESTS   OF   PARTIES.  (Ch.  3 

fault  of  such  appointment,  to  transfer  the  same  to  Marian  Milli- 
cent  Barton,  the  only  child  of  the  said  :Marian  Barton  and  her  hus- 
band, for  her  own  use  and  benefit. 

James  Barton  had  since  died.  INIarian  ]\Iillicent  Barton  had  at- 
tained twenty-one.  The  bill  was  filed  by  her  and  her  mother  Mar- 
ian Barton ;  stating  that  they  had  the  absolute  interest  in  the  funds, 
and  were  desirous  that  the  trusts  of  the  indentures  of  August,  1811, 
should  be  determined,  and  praying  that  the  funds  might  be  trans- 
ferred into  the  sole  name  of  jNIarian   Barton. 

The  Master  of  the  Rolls.  The  single  point  in  this  case  is, 
whether  upon  the  consent  of  the  plaintiffs,  the  mother  and  daugh- 
ter, a  transfer  of  the  fund  comprised  in  the  settlement  can  be  made, 
the  trustees  requiring  the  sanction  of  the  court  before  paying  it 
over  to  purposes  not  strictly  according  to  the  letter  of  the  deed. 
It  made  be  urged  against  it,  that  there  are  words  forbidding  anti- 
cipation, directing  that  the  mother  shall  not  deprive  herself  of  the 
use  of  the  fund,  and  that  she  shall  have  during  her  whole  life  the 
power  of  disposing  of  it  by  will  and  not  otherwise;  and  that  to 
transfer  it  now  would  be  directly  contrary  to  these  provisions.  I 
have  not  been  able  to  find  any  authority;  and  the  question  is,  there- 
fore, to  be  decided,  whether  a  clause  against  anticipation,  which  is 
considered  an  obligatory  and  valid  mode  of  preventing  a  married 
woman  from  depriving  herself  of  the  benefit  of  property  settled 
(for  it  is  too  late  to  argue  that  now),  becomes  of  no  effect  by  the 
coverture  being  determined,  and  the  parties  interested  consenting 
to  a  transfer. 

In  the  case  of  a  male,  a  similar  attempt  to  restrain  alienation  would 
be  of  no  effect;  that  was  decided  in  Brandon  v.  Robinson  [18  Ves. 
Jr.  429],  where  the  words  were  nearly  the  same  as  here.  The  tes- 
tator directed  the  interest  to  be  paid  to  his  son  for  life,  and  that 
he  should  not  have  power  to  anticipate  the  growing  payments;  but 
the  Lord  Chancellor  was  of  opinion,  that  the  son  taking  a  life  in- 
terest, it  followed  as  an  incident,  that  he  had  an  uncontrolled  pow- 
er of  disposition  over  it,  unless  it  was  given  over  upon  alienation, 
or  upon  an  attempt  to  alienate.  In  this  case  there  is  no  gift  over, 
no  other  person  having  any  interest ;  the  eciuitable  interest  is  abso- 
lute in  the  plaintiffs.  It  is  not  distinguishable  from  Brandon  v. 
Robinson,  except  by  the  sex  and  coverture;  and  it  cannot  be  said 
that  the  law  will  permit  restraints  upon  the  rights  of  property  in 
the  case  of  females  which  it  will  not  permit  in  the  case  of  males. 
It  is,  however,  to  be  considered,  that  this  is  a  case  of  separate  prop- 
erty;  and  that  restraints  may  be  imposed  on  the  alienation  of  sep- 
arate property  is  now  settled,  more  upon  authority  than  principle, 
beginning  with  what  was  done  by  Lord  Thurlow  in  the  case  of  Miss 
Watson's  settlement.  At  that  time,  however,  there  was  considerable 
doubt  about  it;    for  if  a  feme  covert  is  permitted  to  hold  separate 


Sec.  6)  BY   BANKRUPTCY.  241 

property  in  the  same  manner  as  if  she  were  a  feme  sole,  it  would 
seem  that  it  ought  in  equity  to  have  those  incidents  which  all  other 
property  has.  It  is  difficult  to  conceive  how  they  can  be  taken  away 
from  it,  particularly  when  it  is  remembered,  that  the  protection  which 
courts  of  equity  afford  to  married  women  with  respect  to  their  prop- 
erty not  in  settlement,  they  may  if  they  please  give  up.  Why,  then, 
should  a  larger  protection  be  extended  as  to  that  over  which  a  power 
of  disposition  is  given  them?  It  is,  however,  too  late  to  doubt  the 
validity  of  these  restraints :  the  question  is,  whether  they  must  not 
be  confined  to  the  coverture.  The  power  over  separate  property  being 
a  creature  of  equity,  it  is  said  that  equity  may  modify  that  power; 
that  reasoning,  however,  only  applies  during  the  coverture ;  when  the 
married  woman  becomes  discovert,  she  has  the  same  power  over  her 
property  as  other  persons.  The  restraint,  therefore,  ought  not  to  con- 
tinue. The  attempt  to  impose  upon  the  power  of  alienation  a  fetter 
unknown  to  the  common  law  of  England  may  be  permitted  to  the  ex- 
tent to  which  that  power  is  created  by  equity,  but  not  further ;  when 
the  coverture  is  gone,  the  reason  on  which  the  restraint  is  founded  no 
longer  exists. 

Supposing  that  to  be  so  generally,  is  it  not  pretty  plain  that  it  was 
in  this  case  the  intent  of  the  parties  so  to  confine  the  clause?  The 
object  was  to  exclude  the  power  of  the  husband ;  her  receipts  are, 
therefore,  to  be  discharges  during  the  coverture ;  it  is  not  to  be  liable 
to  his  debts ;  and  it  seems  as  if  all  the  anxiety  was  to  protect  her  from 
his  control,  which,  by  her  having  survived  him,  is  now  at  an  end. 

Another  point  to  be  considered  is  with  respect  to  the  power  the 
settlement  gives  to  the  mother  of  disposing  of  these  funds  by  will. 
The  question  is,  whether  she  can  now  deprive  herself  of  it,  and  ab- 
dicate it.  Now  the  case  of  Smith  v.  Death  [5  Madd.  371],  and  others 
of  that  kind,  have  decided  that  a  power  of  this  description  may  be 
parted  with ;  and  there  is,  therefore,  I  apprehend,  nothing  to  prevent 
her  from  now  releasing  it,  and  thereby  precluding  herself  from  the 
exercise  of  it. 


TULLETT  v.  ARMSTRONG. 

(In  Chancery,  before  Lord  Chancellor  Cottenhani,  1S40.    4  Mylne  &  C.  377.) 

Nathaniel  Bradford,  by  his  will,  dated  the  27th  of  March,  1820, 
gave,  devised,  and  bequeathed  unto  his  daughter,  Ann  Bradford,  ana 
William  Gates,  and  their  respective  heirs,  executors,  administrators, 
and  assigns,  all  and  every  his  freehold,  copyhold,  and  leasehold  es- 
tates, and  all  his  personal  estate ;  to  hold  the  same  unto  the  said  Ann 
Bradford  and  William  Gates,  their  heirs,  executors,  administrators  and 
Ken.Tb.— 16 


242  TRANSFER   OF    RESPECTIVE   INTERESTS    OF    PARTIES.  (Ch.  3 

assigns  respectively,   according  to  the  nature  thereof,  ui-on  trust,  to 
stand  seized  and  possessed  of  the  same  respectively,  during  the  life  of 
the  testator's  wife,  Ann   Bradford,  in  trust  for  her;    and  from  and 
immediately  after  her  decease,  upon  trust  for— and  the  said  testator 
thereby   gave   and    devised   unto   his    said    daughter,    Ann    Bradford, 
amongst  "other   things,   his    freehold   messuage  or  tenement,   and  the 
hereditaments  and  premises,  situated  in  Church   street,   I'.righton  ;    to 
hold  the  same,  with  the  appurtenances,  unto  his  said  daughter  Ann 
Bradford,  and  her  heirs  and  assigns.    And  from  and  immediately  after 
the  decease  of  the  said  testator's  said  wife,  upon  trust  for — and  he 
thereby  gave  and  devised  unto  and  equally  between  his  daughter,  Ann 
Bradford,  and  his  granddaughters  Georgianna  Pierpont  and  the  de- 
fendant Mrs.  Armstrong,  by  her  then  name  of  Mary  Augusta  Tilt,  a 
copyhold  messuage  and  premises,  situate  in  Brighton  Place ;    to  hold 
the  same  copyhold  premises,  and  the  appurtenances,  unto  and  equally 
between  his  said  daughter,  Ann  T.radford.  and  his  said  granddaughters 
Georgianna  Pierpont  and  ]\lary  Augusta  Tilt,  during  their  joint  and 
several  lives,  as  tenants  in  common ;    and  in  such  manner,  that  neither 
his  said  daughter,  nor  his  granddaughter,  should  anticipate,  sell,  as- 
sign, or  dispose  of  their  several  and  respective  life  estates,  so  devised 
to  them   in  the  said   copyhold   premises   and   the   rents   and   produce 
thereof ;   and  so  and  in  such  manner,  that  neither  any  husband  or  hus- 
bands of  his  said  daughter  or  granddaughters,  should  have  or  acquire 
any  right  in,  or  control  over,  the  life  estates  or  interest  of  his  said 
daughter  or  granddaughters  respectively ;    nor  should  the  same  be  lia- 
ble to  the  debts,  control,  forfeiture,  or  engagements  of  any  such  hus- 
band;   and   from  and  immediately  after  the  decease  of  the  survivor 
of  them,  his  said  daughter  and  granddaughters,  upon  the  trusts  therein 
mentioned.     And  from  and  immediately  after  the  decease  of  his  said 
wife,  upon  trust  for — and  the  said  testator  thereby  gave,  devised  and 
bequeathed  unto  the  said  Mary  Augusta  Tilt,  one  undivided  moiety  of 
a  copyhold  messuage  or  tenement,  hereditaments,  and  premises  in  East 
street,  Brighton ;   and  also  the  entirety  of  a  leasehold  coach-house  and 
stable  on  the  west  side  of  Jubilee  street,  then  in  the  occupation  of 
T'atrick  Conolly,  or  his  under  tenants,  erected  on  a  part  or  piece  of 
land  holden  by  the  said  testator,  under  lease  from  John  Paine,  for  a 
term  of  ninety-nine  years,  as  therein  mentioned ;    and  also  a  piece  or 
parcel  of  leasehold  land  then  used  as  a  garden,  and  in  the  said  tes- 
tator's  own   occupation,   situate   on   the  north   side  of   Jubilee   street 
aforesaid,  adjoining  to  the  said  coach-house  and  stable,  and  being  other 
part  of  the  ground  holden  by  the  said  testator,  under  lease  from  John 
Paine;    to  hold  the  same  last-mentioned  premises,  with  the  appurte- 
nances, to  and  to  the  use  of  the  said  Mary  Augusta  Tilt  and  her  as- 
signs, during  her  life,   subject  as  therein   mentioned,  and   with  such 
limitations  or  remainders  over  as  therein  mentioned;   and  after  some 


Sec.  6)  BY    BANKRUPTCY.  243 

Other  bequests,  the  said  testator  directed  and  declared  it  to  be  his 
will  and  intention,  that  the  devises  and  be([uests  thereinbefore  made  by 
him  to  his  granddaughters,  Georgianna  Pierpont  and  Mary  Augusta 
Tilt,  were  so  given  and  devised  to  them  free,  exonerated  from,  and 
not  subject  to  the  rights,  control,  interference,  debts,  contracts  and 
engagements  of  any  husband;  and  were  to  be  taken  and  received  by 
the  said  Georgianna  Pierpont  and  Mary  Augusta  Tilt,  as  if  they  were 
sole  and  unmarried;  and  so  to  be  holden  and  enjoyed  by  them  re- 
spectively. 

The  testator  died  in  1820,  leaving  his  wife  Ann  Bradford,  his 
daughter  Ann  Bradford,  and  his  granddaughter  Mary  Augusta  Tilt, 
who  was  then  unmarried,  him  surviving. 

On  the  25th  of  August,  1826,  Ann  Bradford  the  daughter,  made 
her  will,  and  thereby,  inter  alia,  gave  and  devised  unto  Nathaniel  Brad- 
ford and  Xenyon  Masters  Bradford,  therein  described,  from  and  after 
the  decease  of  the  said  testatrix's  mother,  Ann  Bradford,  all  that  the 
said  testatrix's  messuage  or  tenement  and  premises,  situate  in  Church 
street,  Brighton,  aforesaid ;  to  hold  the  same  unto  the  said  Nathaniel 
Bradford  and  N.  M.  Bradford,  their  heirs  and  assigns,  upon  trust, 
that  they  her  said  trustees,  or  the  survivor  of  them,  or  his  heirs,  should 
receive  and  take  the  rents,  issues,  and  profits  thereof,  and  pay  the  same 
unto  her  niece,  the  said  Mary  Augusta  Tilt,  during  her  natural  life, 
so  and  in  such  manner,  as  that  the  said  Mary  Augusta  Tilt  should  not 
sell  or  dispose  of  her  life  interest  therein,  or  any  part  thereof,  or  lease 
or  borrow  money  thereon,  by  anticipation,  mortgage,  or  otherwise ; 
and  so  and  in  such  manner  as  that  the  rents,  issues  and  profits  thereof 
should  not  be  subject  to  the  right,  control,  or  interference  of  any  hus- 
band whom  the  said  Mary  Augusta  Tilt  might  marry ;  nor  be  liable  to 
his  debts,  contracts,  forfeitures,  or  engagements ;  and  the  said  tes- 
tatrix declared,  that  the  receipt  or  receipts  of  her  said  niece  only, 
should  be  a  good  and  sufficient  discharge  and  discharges  to  her  said 
trustees  or  trustee,  for  the  time  being,  for  such  rents  and  profits,  or 
for  so  much  thereof  as  should  in  such  receipts  be  expressed  to  have 
been  received ;  and  that  any  sale  or  disposition  for  raising  money  by 
mortgage  or  otherwise,  of  or  upon  her  said  niece's  life  interest,  should 
be  from  time  to  time  null  and  void ;  and  from  and  immediately  after 
the  decease  of  the  said  Mary  xA.ugusta  Tilt,  upon  trust  for  the  children 
of  the  said  Mary  Augusta  Tilt,  in  the  manner  and  for  the  estate 
therein  mentioned. 

After  the  date  of  the  will,  and  on  the  23d  of  April,  1827.  the  leg- 
atee, Mary  Augusta  Tilt,  married  the  defendant,  William  Armstrong; 
and  two  days  afterwards,  on  the  25th  of  April,  the  testatrix  made  a 
codicil  to  her  will,  and  thereby  varied  one  devise  in  her  will,  but  in 
other  respects  confirmed  the  same;    and  she  died  in  1827. 

The  widow  of  Nathaniel  Bradford,  the  first  testator,  died  in  Janu- 


244  TRANSFER    OF    RESPECTIVE   INTERESTS    OF   PARTIES.  (Cll.  3 

ary,  1830;  and  then  the  gifts  to  Mary  Augusta  Tilt,  under  the  two 
wills,  took  effect  in  possession. 

By  an  indenture  dated  the  20th  of  March,  1832,  and  made  between 
William  Armstrong  and  Mary  Augusta,  his  wife,  of  the  one  part,  and 
the  plaintiff  of  the  other  part,  after  reciting  the  wills  of  Nathaniel 
Bradford  and  Ann  I'.radford,  in  consideration  of  £300.,  paid  by  the 
plaintiff  to  William  Armstrong,  they  the  said  William  Armstrong  and 
Mary  Augusta,  his  wife,  granted  to  the  plaintiff,  an  annuity  of  £31. 
17s.  during  the  life  of  Mary  Augusta  Armstrong;  and  Mary  Augusta 
Armstrong,  in  exercise  of  the  powders,  etc.,  given  to  her  by  the  wills 
of  Nathaniel  l^radford  and  Ann  Bradford,  appointed  the  copyhold 
messuage  in  Brighton  Place,  and  also  her  moiety  of  the  copyhold 
messuage  in  East  street,  and  the  leasehold  house  in  Jubilee  street,  and 
the  freehold  in  Church  street,  unto  the  plaintiff,  during  the  life  of 
Mary  Ann  Armstrong,  upon  certain  trusts,  for  securing  the  above- 
mentioned  annuity;  and  William  Armstrong  thereby  covenanted  that 
he  and  his  wife  would  surrender  the  copyholds  upon  the  trusts  afore- 
said, 

A  similar  deed  was  executed  in  September,  1832,  to  secure  to  the 
plaintiff  a  further  annuity.  In  January,  1835,  William  Armstrong 
took  the  benefit  of  the  insolvent  debtors  act,  and  the  annuities  being 
unpaid,  the  plaintiff  filed  his  bill  to  obtain  payment  thereof,  out  of 
the  properties  devised  and  bequeathed  by  the  wills  of  Mr.  and  Miss 
Bradford. 

At  the  hearing  the  Master  of  the  Rolls,  Lord  Langdale  made  a  de- 
cree for  the  plaintiff  and  the  defendants  appealed. 

Tiiiv  Lord  Chancellor.-''  The  question  raised  in  this  case  is  as 
to  the  clause  against  anticipation  ;  but  I  agree  w^ith  the  Master  of  the 
Rolls  in  thinking,  not  only  that  it  necessarily  involves  the  question  of 
separate  estate,  which  has  been  the  subject  of  much  discussion  in  the 
profession,  but  that  these  two  questions  are  identical  as  to  the  prin- 
ci])le  which  must  regulate  the  decision  upon  them ;  by  which  I  mean, 
that  if  the  case  be  of  a  separate  estate  without  power  of  anticipation, 
it  must  exist  with  that  qualification  or  fetter,  if  it  exist  at  all,  and  that 
there  is  no  principle  upon  which  it  can  be  held  that  the  separate  es- 
tate operates  during  a  coverture  subse(|uent  to  the  gift,  but  that  the 
provision  against  anticipation,  with  which  the  gift  was  qualified,  does 
not.  It  is  obvious  that  such  a  rule  would,  in  practice,  defeat  the  in- 
tention of  the  donor,  and  in  many  cases  render  the  provision  which 
he  had  made  for  the  protection  of  the  object  of  his  bounty  the  means 
and  instrument  of  depriving  her  of  it. 

When  once  it  was  established  that  the  separate  estate  of  a  mar- 
ried woman  was  to  be  so  far  enjoyed  by  her  as  a  feme  sole,  as  to 

2.1  The  stntoniont  of  facts  is  takeu  from  1  Beavau,  1.  A  portion  of  the 
opinion  is  omitted. 


Sec.  6)  BY  BANKRUPTCY.  245 

bring  with  it  all  the  incidents  of  property,  and  that  she  might  there- 
fore dispose  of  it  as  a  feme  sole  might  do,  it  was  found  that,  to  se- 
cure to  her  the  desired  protection  against  the  marital  rights,  it  was 
necessary  to  qualify  and  fetter  the  gift  of  the  separate  estate  by 
prohibiting  anticipation.  The  power  to  do  this  was  established  by 
authority,  not  now  to  be  questioned,  but  which  could  only  have  been 
founded  upon  the  power  of  this  court  to  model  and  qualify  an  inter- 
est in  property  which  it  had  itself  created,  without  regard  to  those 
rules  which  the  law  has  established  for  regulating  the  enjoyment  of 
property  in  other  cases. 

If  any  rule,  therefore,  were  now  to  be  adopted,  by  which  the  sep- 
arate estate  should,  in  any  cases,  be  divested  of  the  protection  of  the 
clause  against  anticipation,  it  would,  in  such  cases,  defeat  the  object 
of  the  power  so  assumed. 

A  feme  covert,  with  separate  estate,  not  protected  by  a  clause 
against  anticipation,  is,  in  most  cases,  in  a  less  secure  situation 
than  if  the  property  had  been  held  for  her  simply  upon  trust. 
In  the  latter  case,  this  court,  with  the  assistance  of  her  trustees, 
can  efifectually  protect  her ;  in  the  other,  her  sole  dependence  must 
be  upon  her  husband  not  exercising  that  influence  or  control,  which, 
if  exercised,  would,  in  all  probability,  procure  the  destruction  of  her 
separate  estate.  In  the  case  of  a  gift  of  separate  estate  with  a  clause 
against  anticipation,  the  author  of  the  gift  supposes  that  he  has  ef- 
fectually protected  the  wife  against  such  influence  or  control.  Up- 
on what  principle  can  it  be  that  this  court  should  subject  her  to  it,  and 
by  so  doing  defeat  his  purpose  and  completely  alter  the  character  and 
security  of  his  gift?  The  separate  estate  and  the  prohibition  of  an- 
ticipation are  equally  creatures  of  equity,  and  equally  inconsistent 
with  the  ordinary  rules  of  property.  The  one  is  only  a  restriction 
and  qualification  of  the  other.  The  two  must  stand  or  fall  togeth- 
er. Indeed,  I  do  not  find  any  allusion,  in  any  case,  to  the  possibility 
of  the  one  surviving  the  other,  until  after  the  discussion  as  to  the 
continuing  of  the  separate  estate  through  a  subsequent  coverture 
had  commenced.  In  the  consideration  of  the  cases  upon  which  I 
am  about  to  enter,  I  shall  assume  that  there  is  no  ground  whatever 
for  the  attempt  which  has  been  made  in  argument  to  separate  the 
two.  Every  authority,  therefore,  which  bears  upon  the  one,  will 
bear  equally  upon  the  other. 

In  a  case  of  so  much  importance,  and  which  has  excited  so  much 
interest,  I  have  thought  it  my  duty  not  only  to  consider  every  case 
which  has  been  referred  to  in  argument,  but  to  endeavor  to  obtain 
all  other  information  which  was  within  my  reach.  I  will  first  ex- 
amine the  cases  which  are  supposed  to  support  the  proposition, 
that  the  absolute  interest  of  the  woman  which  she  unquestionably 
possesses   in  property   given    for   her   separate   use,    though   with   a 


246  TRANSFER   OF   RKSrECTIVE    INTEUIOSTS   OF   PARTIES.  (Ch.  3 

prohibition  against  anticipation,  up  to  the  moment  of  her  subse- 
quent marriage,  becomes  subject  to  all  the  qualifications  and  restric- 
tions of  the  gift,   upon   such  marriage. 

[Here  follows  a  detailed  discussion  of  the  ca.ses.] 
Such  is  the  state  of  the  authorities  upon  t]li^  very  important  ciuestion. 
It  is  said  to  have  been  very  generally  understood  in  the  profession 
that  the  separate  estate  would  continue  to  operate  during  a  subse- 
quent coverture,  and  that  conveyancers  have  acted  so  extensively  up- 
on that  supposition,  that  very  many  families  are  interested  in  the 
decision  of  this  question.  That  circumstance  ought  to  have  very 
great  attention  paid  to  it.  For  the  future  it  would  not  probably  be 
found  difficult  to  obtain  the  desired  security  for  the  future  wife  by 
other  means,  consistent  with  the  well-established  rules  of  proper- 
ty; but  the  existing  arrangements  must  depend  upon  the  decision 
of  this  case. 

I  have  over  and  over  again  considered  this  subject,  with  a  great 
anxiety  to  find  some  principle  of  property  consistent  with  the  ex- 
isting decisions,  upon  which  the  preservation  of  the  separate  estate 
during  a  subsequent  coverture  could  be  supported.  I  have  been  anx- 
ious to  find-  means  of  preserving  it,  not  only  to  maintain  those  exist- 
ing arrangements  which  have  proceeded  upon  the  ground  of  its  val- 
idity, but  because  I  think  it  desirable  that  the  rule  should,  if  pos- 
sible, be  established  for  the  future,  believing,  as  I  do,  that  when  a 
marriage  takes  place,  the  wife  having  property  settled  to  her  separate 
use,  all  the  parties  in  general  suppose  that  it  will  so  continue  during  the 
coverture.  To  permit  the  husband,  therefore,  to  break  through  such 
a  settlement,  and  himself  to  receive  the  fund,  would,  in  general,  be 
contrary  to  the  intention  of  the  parties,  and  unjust  towards  the  wife. 
This  view  of  the  case  has  led  to  a  suggestion  which  has  often  been 
made  in  argument,  by  which  the  object  might  be  obtained  without 
violating  any  rule  of  property,  namely,  by  supposing  the  husband, 
marrying  a  woman  with  a  property  so  settled,  tacitly  to  assent  to 
such  settlement,  or  at  least  to  be  bound  by  an  equity  not  to  dispute 
it.  1  was  for  some  time  much  disposed  to  adopt  this  view  of  the  sub- 
ject; and  in  all  cases  in  which  the  husband  was  cognizant  of  the 
fact,  there  would  be  much  of  equitable  principle  to  sui:)port  the  gift 
or  settlement  against  him;  by  putting  the  title  of  the  wife  upon  such 
assent  of  the  husband  assumes  that,  but  for  such  assent,  it  would  not 
exist.  It  abandons  the  idea  of  the  old  separate  estate  continuing 
through  the  subsequent  coverture,  and  supposes  a  new  separate 
estate  to  arise  from  the  act  of  the  husband.  If  the  title  of  the  wife 
were  to  rest  upon  that  supposition,  I  fear  that  the  remedy  would  be 
very  inadeciuate,  and  that  question  would  constantly  arise  as  to  how  far 
the  circumstances  of  each  case  would  afford  evidence  of  assent,  or 
raise  this  equity  against  the  husband. 


Sec.  6)  BY   BANKRUPTCY.  247 

After  the  most  anxious  consideration,  I  have  come  to  the  concki- 
sion  that  the  jurisdiction  which  this  court  has  assumed  in  similar 
cases,  justifies  it  in  extending  it  to  the  protection  of  the  separate  es- 
tate, with  its  quaHfication  and  restrictions  attached  to  it,  throughout 
a  subsequent  coverture;  and  resting  such  jurisdiction  upon  the  broad- 
est foundation,  and  that  the  interests  of  society  require  that  this 
should  be  done.  When  this  court  first  established  the  separate  es- 
tate, it  violated  the  laws  of  property  as  between  husband  and  wife ; 
but  it  was  thought  beneficial,  and  it  prevailed.  It  being  once  set- 
tled that  a  wife  might  enjoy  separate  estate  as  a  feme  sole,  the  laws 
of  property  attached  to  this  new  estate ;  and  it  was  found,  as  part 
of  such  law,  that  the  power  of  alienation  belonged  to  the  wife,  and 
was  destructive  of  the  security  intended  for  it.  Equity  again  in- 
terfered, and  by  another  violation  of  the  laws  of  property  support- 
ed the   validity  of  the   prohibition   against   alienation. 

In  the  case  now  under  consideration,  if  the  aftertaken  husband 
be  permitted  to  interfere  with  the  property  given  or  settled  before 
the  marriage  to  the  separate  use  of  the  wife,  much  of  the  benefit 
and  security  of  the  rules  which  have  been  so  established  will  be  lost. 
Why  then  should  not  equity  in  this  case  also  interfere ;  and  if  it 
cannot  protect  the  wife  consistently  with  the  ordinary  rules  of  prop- 
erty, extend  its  own  rules  with  respect  to  the  separate  estate,  so  as 
to  secure  to  her  the  enjoyment  of  that  estate  which  has  been  so 
invented  for  her  benefit?  It  is,  no  doubt,  doing  violence  to  the  rules 
of  property,  to  say  that  property  which,  being  given  with  qualifi- 
cations and  restrictions  which  are  held  to  be  void,  belonged  abso- 
lutely to  the  woman  up  to  the  moment  of  her  marriage,  shall  not  be 
subject  to  the  ordinary  rules  of  law  as  to  the  interest  which  the 
husband  is  to  take  in  it  (and  that  is  the  sense,  and  the  only  sense, 
in  which  the  expression  used  in  Massey  v.  Parker,  2  Mylne  &  K. 
17-i,  'why  may  she  not  by  the  act  of  marriage  give  it  to  her  hus- 
band' is  to  be  understood) ;  but  it  is  not  a  stronger  act  to  prevent 
the  husband  from  interfering  with  such  property,  than  it  was  orig- 
inally to  establish  the  separate  estate,  or  to  maintain  the  prohibition 
against  alienation.  In  doing  this  I  feel  that  I  have  much  to  over- 
come, of  which  the  observations  thrown  out  by  myself,  in  Massey 
V.  Parker,  is  the  only  part  of  which  I  do  not  feel  the  important 
weight.  I  have  to  contend  with  Lord  Brougham's  observations  in 
Woodmeston  v.  Walker  [2  Russ.  &  ]\I.  19TJ,  and  the  Vice  Chan- 
cellor's decisions  in  Newton  v.  Reid  [4  Sim.  141],  Brown  v.  Pocock 
[2  Russ.  &  M.  210],  Malcolm  v.  O'Callahan  [5  L.  J.  N.  S.  137], 
Johnson  v.  Freeth  [5  L.  J.  N.  S.  143],  and  Davies  v.  Thornycroft 
[6  Sim.  420],  to  which  I  have  before  adverted,  and  the  doctrine  now 
established,  though  denied  by  Sir  John  Leach  in  Brown  v.  Pocock 
and  Woodmeston  v.  Walker,  that  before  marriage,  or  after  the  cov- 
erture has  determined  by  the  death  of  the  husband,  the  settlement 


248  TRANSFER   OF   RESrECTIVE   INTERESTS   OF  PARTIES.  (Cll.  3 

or  gift  to  the  separate  use,  and  the  prohibition  against  anticipation, 
are  wholly  inoperative  and  void. 

In  establishing  the  validity  of  the  separate  estate  with  its  qualifi- 
cation, which  constitutes  its  value,  that  is,  the  prohibition  against 
anticipation,  I  am  not  doing  more  than  my  predecessors  have  done 
for  similar  purposes,  and  I  have  much  satisfaction  in  finding  my- 
self justified,  upon  the  grounds  I  have  stated,  in  doing  what  in  me 
lies  to  dissipate  the  alarm  which  has  prevailed  lest  the  separate  es- 
tate should  be  held  not  to  exist  at  all  during  the  subsequent  cover- 
ture, or,  what  would  in  many  cases  be  a  greater  evil,  that  it  should 
exist  without  the  protection  of  the  clause  against  alienation. 

I  therefore  affirm  the  decree  appealed  from. 


GRAA^ES  V.  DOLPHIN. 

(In  Chancery,  before  the  Vice  Chancollor,  Sir  John  Leach,  182G.    1  Simons,  65.) 

The  testator,  I'enjamin  Graves,  gave  his  real  and  personal  estates 
to  trustees  upon  trust  (amongst  other  things)  to  ])ay  an  annuity  of 
£500.  to  his  son  John  Graves,  for  the  term  of  his  natural  life,  and  then 
proceeded  thus : 

"And  my  will  further  is,  and  I  do  direct  and  declare  that  the  said 
annuity,  or  yearly  sum  of  £500.,  by  me  given  to  my  son  John  Graves 
for  his  life  as  aforesaid,  is  by  me  intended  for  his  personal  main- 
tenance and  support  during  the  whole  term  of  his  natural  life,  and 
shall  not,  nor  shall  any  part  thereof,  on  any  account  or  pretence  what- 
soever, be  subject  or  liable  to  the  debts,  engagements,  charges  or  in- 
cumbrances of  him,  my  said  son ;  but  that  the  same  shall  be,  for  the 
purpose  aforesaid,  from  time  to  time,  as  and  when  same  shall  from 
time  to  time  become  due  and  payable,  be  paid  over  into  the  proper 
hands  of  him,  my  said  son,  only,  and  not  to  any  other  person  or  per- 
sons whomsoever;  and  1  do  further  direct  that  the  receipt  or  receipts 
of  him  my  said  son  only  for  such  annuity  shall  be  a  good  and  sufficient 
discharge,  and  several  good  and  sufficient  discharges  to  my  said  trus- 
tees for  the  same." 

John  Graves  having  become  a  bankrupt,  his  assignees  sold  the  an- 
nuity to  the  defendant  Freshfield :  and  the  question  in  the  cause  was 
whether  the  annuity  past  to  the  assignees  by  the  assignment  of  the 
commissioners. 

Mr.  Hart  and  Mr.  Wakefield,  for  John  Graves,  contended  that  the 
annuity  had  not  past  to  the  assignees.  They  relied  on  the  direction 
in  the  will  that  the  annuity  should  be  from  time  to  time  paid  into  the 
l)ropcr  hands  of  John  Graves,  and  that  his  receipts  should  be  a  suffi- 
cient discharge  for  the  same. 

The  Vice  Ciiancku.or.  The  testator  might,  if  he  had  thought  fit. 
have  made  the  annuity  determinable  b}'  the  bankruptcy  of   his  son; 


Sec.  6)  BY   BANKRUPTCY.  249 

but  the  policy  of  the  law  does  not  permit  property  to  be  so  limited  that 
it  shall  continue  in  the  enjoyment  of  the  bankrupt,  notwithstanding-  his 
bankruptcy.  Declare  that  the  defendant  Freshfield  is  well  entitled  to 
the  annuity  in  question.-* 


SMITH  8c  SON  V.  TOWERS,  Garnishee. 

(Court  of  Appeals  of  Maryland,  ISSS.     ^9  Md.  77,  14  Atl.  497,  9  Am.  St.  Rep. 

398.) 

On  the  15th  of  April,  1870,  the  appellant  recovered  jud,2;ment 
against  Robert  J.  W.  Garey  and  George  Millington,  trading  as  Garey 
&  Millington,  for  $1,188.51  and  interest  and  costs.  In  May,  1886, 
Thomas  F.  Garey,  the  father  of  Robert  J.  W.  Garey,  died  leaving  a 
will,  in  which  he  devised  certain  real  estate  to  one  John  Robert  Foun- 
tain as  trustee,  in  trust  for  the  following  purposes,  to  wit:  "That  he 
shall  pay,  or  cause  to  be  paid,  unto  my  dear  son,  Robert  J.  W.  Garey, 
as  the  same  may  accrue,  the  net  rents,  income  and  profits  arising  from 
said  farm  and  property,  after  deducting  such  sums  of  money  as  may 
be  necessary  to  satisfy  and  pay  taxes  and  assessments  levied  thereon, 
and  needful  repairs  to  buildings  and  fencing,  *  *  *  the  said  net 
rents,  income  and  profits  to  be  paid  to  the  said  Robert  J.  W.  Garey, 
(into  his  own  hands,  and  not  into  another,  whether  claiming  by  his  au- 
thority or  otherwise,)  so  long  as  he,  the  said  Robert  J.  W.  Garey,  shall 
live"  etc. ;  then  in  trust  convey  to  the  same  in  fee  simple  to  the  children 

24  Brandon  v.  Robinson,  18  Ves.  Jr.  429  (1811);  s.  c,  1  Rose,  197;  .Green 
V.  Spicer,  1  Russ.  &  Mvl.  895  (18.30) ;  s.  c.  Taiul.  39G ;  AVoodnieston  v.  AValker, 
2  Russ.  &  Myl.  197  (1831) ;  Jones  v.  Salter,  2  Russ.  &  Myl.  208  (1831) ;  Brown 
V.  Pocock,  2  Russ.  &  Myl.  210  (1831) :  Piercy  v.  Roberts,  1  Myl.  &  K.  4  (1832) ; 
Snowdon  v.  Dales,  6  Sim.  524  (1834) ;  Rippon  v.  Norton,  2  Beav.  63  (1839)  : 
Page  V.  Way,  3  Beav.  20  (1840) ;  Lord  v.  Bunn,  2  Y.  &  C.  C.  C.  98  (1843) ; 
Kearsley  v.  Woodcock,  3  Hare.  185  (1843) ;  Younsliusband  v.  Gisborne,  1 
Coll.  400  (1844)  ;  Rochford  v.  Hackman,  9  Hare,  475.  480  (1852) ;  Wallace  v. 
Anderson,  16  Beav.  5.33  (1853) ;  Rugely  v.  Robinson.  10  Ala.  702  (1846) ;  Rob- 
ertson v.  Johnston.  36  Ala.  197  (1860) ;  Smith  v.  jNLoore,  37  Ala.  327  (1861) ; 
Jones  V.  Reese,  65  Ala.  134  (1880) ;  Taylor  v.  Harwell,  65  Ala.  1  (1880) ;  Kemp- 
ton  v.  Hallowell,  24  Ga.  52,  71  Am.  Dec.  112  (1858)  ;  Bailie  v.  McWhorter,  56 
Ga.  183  (1876) ;    Samuel  v.  Salter,  3  ]Metc.  (Ky.)  259  (1860) ;    Knefler  v.  Shreve. 

78  Ky.  297  (1879)  ;  Woolley  v.  Preston,  82  Ky.  415  (1884) ;  Marshall's  Trustee 
V.  Rash,  87  Ky.  116,  7  S.  W.  879,  12  Am.  St.  Rep.  467  (1888) ;  Bland's  Adm'r  v. 
Bland,  90  Ky.  400. 14  S.  W.  423.  9  L.  R.  A.  599.  29  Am.  St.  Rep.  390  (1890) ;  Bull 
V.  Ky.  Nat.  Bk.,  90  Ky.  452,  14  S.  W.  425,  12  D.  R.  A.  37  (1890) ;  Hallet  v. 
Thompson,  5  Paige  (N.  Y.)  583  (1836) ;  Bryan  v.  Knickerbacker,  1  Barb.  Ch. 
(N.  Y.)  409  (1846)  ;  Havens  v.  Healy,  15  Barb.  (N.  Y.)  29(5  (18.5.3) ;  Bramhall  v. 
Ferris,  14  N.  Y.  41,  67  Am.  Dec.  113  (1856)  ;  Rome  Exeh.  Bk.  v.  Eames.  4  Abb. 
Dec.  (N.  Y.)  83,  99  (1864) ;  Dick  v.  Pitchford,  21  N.  C.  480  (1837)  ;  Bank  v.  i'or- 
nev.  37  N.  C.  181,  184  (1S42)  ;  INIebane  v.  Mebane.  39  N,  C.  131,  44  Am.  Dec.  102 
(1845) ;    Pace  v.  Pace,  73  N.  C.  119  (187.5)  ;    Wallace  v.  Smith,  2  Handy  (Ohio) 

79  (1855)  ;  Hobbs  v.  Smith,  15  Ohio  St.  419  (1864) ;  Stanley  v.  Thornton,  7  Ohio 
Cir.  Ct.  455  (189.3) ;  Tillinghast  v.  Bradford,  5  R.  I.  205  (1858) ;  Jastram  v.  Mc- 
Auslan,  26  R.  I.  320,  58  Atl.  9-52  (1904)  ;  Heath  v.  Bishop,  4  Rich.  Eq.  (S.  C.) 
46,  55  Am.  Dee.  654  (1851) ;  Wylie  v.  White.  10  Rich.  Eq.  (S.  C.)  294  (1858) ; 
Hutchinson  v.  Maxwell.  100  Va.  169,  40  S.  E.  655.  57  L.  R.  A.  384.  93  Am.  St. 
Rep.  944  (1902)  ;    Honaker  Sons  v.  Duff,  101  Va.  675,  44  S.  E.  900  (190.3). 


250  TRANSFER   OF   RESPECTIVE   INTERESTS   OF   TARTIES.  (Cll.  o 

or  descendants  of  said  Robert,  etc.  The  said  Fountain,  trustee,  being- 
dead,  under  proper  proceeding's  had  in  the  Circuit  Court  for  CaroHne 
County,  in  equity,  W'iUiam  F.  Towers  was,  by  the  decree  of  said  court, 
appointed  trustee  in  the  place  of  Fountain,  to  take  and  hold  said  farm 
and  property  in  trust,  and  discharge  said  trust;  and  he  duly  qualified 
as  such  trustee,  as  required  by  said  decree.  On  the  Sth  of  Jnne,  1887, 
an  attachment  was  issued  by  way  of  execution,  and  laid  in  the  hands 
of  William  F.  Towers,  trustee,  to  affect  funds  which  he  held  under  the 
will  of  Thomas  F.  Garey  in  trust  for  Robert  J.  W.  Garey,  one  of  the 
judgment  debtors.  An  agreed  statement  of  facts  was  filed  in  the  case. 
and  it  was  agreed  that  a  pro  forma  judgment  should  be  entered  for 
the  defendant,  with  the  right  of  appeal  reserved  to  the  plaintiff.  The 
plaintiff'  accordingly  took  this  appeal. 

Robinson,  J.,  delivered  the  opinion  of  the  court. -^ 

The  testator  devised  certain  real  estate  to  his  friend  John  R.  Foun- 
tain in  trust  to  collect  the  rents  and  profits,  and  to  pay  the  same  to  his 
son  Robert,  'into  his  own  hands,  and  not  into  another,  whether  claim- 
ing- by  his  authority,  or  otherwise,"  and  upon  his  death  to  convey  said 
real  estate  to  such  children  of  his  son  Robert  as  may  be  living  at  the 
time  of  his  death.         * 

Upon  the  construction  of  this  clause  of  the  testator's  will  two  ques- 
tions arise:  First,  did  the  testator  mean  to  give  the  income  of  the 
property  to  his  son  to  the  exclusion  of  his  creditors?  and  secondly,  if 
so  are  the  terms  and  provisions  of  the  will  effectual  to  carry  out  this 
intention?  There  can  be  no  difficulty  whatever  as  to  the  first  point. 
He  not  only  gives  the  legal  estate  to  the  trustee,  but  directs  in  express 
terms  that  he  shall  pay  the  income  into  the  hands  of  his  son  and  not 
into  the  hands  of  any  other  person,  whether  claiming  by  his  authority, 
or  in  any  other  capacity.  Here,  then,  is  an  express  provision,  that 
the  income  shall  be  paid  to  his  son,  and  an  express  prohibition  against 
paying  it  to  any  other  person.  If  the  income  in  the  hands  of  the  trus- 
tee is  liable  to  the  claims  of  creditors,  the  trustee  it  is  plain  could  not 
carry  out  the  trust.  So  construing  this  will  as  we  do,  and  it  is  not  we 
think  susceptible  of  any  other  construction,  the  testator  meant  beyond 
all  question  that  the  income  should  be  paid  into  the  hands  of  his  son, 
to  the  exclusion  of  all  other  persons,  whether  claiming  as  alienees  or 
as  creditors. 

The  next  point  is  one  of  more  than  ordinary  importance,  and  has 
not  heretofore  been  decided  by  this  Court.  A  great  deal  may  be  said 
on  both  sides,  and  the  question  is  not  free  of  difficulty.  In  England 
the  decisions  are  all  one  w^ay,  and  it  is  well  settled  there,  that  the  dev- 
isee of  an  equitable  estate  or  interest  for  life  to  any  person,  other 
than  a  married  woman,  carries  with  it,  as  a  necessary  incident  to  such 
estate  or  interest,  the  right  of  alienation  by  the  cestui  (|ue  trust,  and 
is  liable  for  the  payment  of  his  debts,  and  no  provision  by  way  of 

^-'The  dissenting  opinion  of  Alvey,  C.  J.,  conciu-red  in  by  Bryan,  J.,  has 
lieeu  omitted  l;ecause  of  its  lengtli.     It  deserves  a  careful  examination. 


Sec.  6)  BY  BANKRUPTCY.  251 

inhibition  or  otherwise,  which  does  not  operate  as  a  cesser  or  limita- 
tion over  of  the  estate,  can  protect  it  against  the  claims  of  creditors. 
Brandon  v.  Robinson,  18  Ves.  429;  Rochford  v.  Ilackman,  9  Hare, 
480;  Graves  v.  Dolphin,  1  Sim.  66;  Green  v.  Spicer,  1  Russ.  &  Myl. 
395  ;   Younghusband  v.  Gisborne,  1  Collyer,  400. 

In  this  comitry,  however,  the  decisions  are  conflicting,  and  the  Su- 
preme Court  of  the  United  States,  and  the  Supreme  Courts  of  other 
states,  have,  after  full  consideration  of  the  English  cases,  held  that 
the  power  of  alienation  is  not  a  necessary  incident  to  an  equitable 
estate  for  life,  and  that  the  owner  of  the  property  may,  in  the  free 
exercise  of  his  bounty,  so  dispose  of  it  as  to  secure  its  enjoyment  to  his 
beneficiary,  without  making  it  alienable  by  him,  or  liable  in  any  man- 
ner for  his  debts,  and  that  such  an  intention  wdien  clearly  expressed 
by  the  founder  of  the  trust,  must  be  respected  by  the  courts.  The  Su- 
preme Court,  after  reviewing  the  EngHsh  decisions,  in  an  able  opin- 
ion by  Justice  Miller,  say:  "But  the  doctrine,  that  the  owner  of  prop- 
erty, in  the  free  exercise  of  his  will  in  disposing  of  it,  cannot  so  dis- 
pose of  it,  but  that  the  object  of  his  bounty,  who  parts  with  nothing  in 
return,  must  hold  it  subject  to  the  debts  due  his  creditors,  though  that 
may  soon  deprive  him  of  all  the  benefit  sought  to  be  conferred  by  the 
testator's  afifection  or  generosity,  is  one  which  we  are  not  prepared  to 
announce  as  the  doctrine  of  this  Court.  *  *  =!=  Nor  do  we  see  any 
reason,  in  the  recognized  nature  and  tenure  of  property  and  its  trans- 
fer by  will,  why  a  testator  who  gives,  without  any  pecuniary  return, 
wdio  gets  nothing  of  property  value  from  the  donee,  may  not  attach 
to  that  gift  the  incident  of  continued  use,  of  uninterrupted  benefit  of 
the  gift,  during  the  life  of  the  donee."  Nichols,  Assignee,  v.  Eaton 
et  al.,  91  U.  S.  725,  727,  23  L.  Ed.  254. 

And  in  the  still  later  case  of  Broadway  National  Bank  v.  Adams, 
133  Mass.  170,  43  Am.  Rep.  504,  argued  in  June,  18S1,  and  reargued 
in  March,  1883,  the  Court  unanimously  held  that  property  may  be  con- 
veyed in  trust,  with  the  provision  that  the  income  shall  not  be  alienated 
by  the  beneficiary  by  anticipation,  or  be  subject  to  be  taken  by  his 
creditors  in  advance  of  its  payment  to  him,  although  there  is  no  cesser 
or  limitation  over  of  the  estate  in  such  an  event.  Morton,  C.  J.,  says: 
"We  are  not  able  to  see  that  it  would  violate  any  principles  of  sound 
public  policy  to  permit  a  testator  to  give  to  the  object  of  his  bounty 
such  a  qualified  interest  in  the  income  of  a  trust  fund,  and  thus  provide 
against  the  improvidence  or  misfortune  of  the  beneficiary.  *  *  * 
Under  our  system,  creditors  may  reach  all  the  property  of  the  debtor 
not  exempt  by  law,  but  they  cannot  enlarge  the  gift  of  the  founder  of 
a  trust,  and  take  more  than  he  has  given." 

And  then  again  in  Rife  v.  Geyer,  59  Pa.  393,  98  Am.  Dec.  351, 
Judge  Sharswood  speaking  for  the  Court  says :  "That  a  benefactor 
has  the  power  of  thus  restricting  the  enjoyment  of  his  bounty  through 
the  medium  of  a  trust  during  the  life  of  the  beneficiary  is  now  the  un- 
questionable law  of  this  state."     In  Shankland's  Appeal,  47  Pa.   113, 


252  TRANSFER   OP   RESPECTIVE   INTEUESTS   OF   PARTIES.  (Ch.  3 

the  point  was  expressly  decided,  and  it  was  there  held  that  a  trust  to 
collect  and  receive  rents  and  pay  over  the  same  to  a  son  of  the  testa- 
trix for  and  during  the  term  of  his  natural  life,  without  heing  suhject 
to  his  debts  and  liabilities  was  an  active  one,  and  that  the  legal  estate 
was  vested  in  the  trustee,  and  no  act  of  the  cestui  que  trust  could  de- 
prive him  of  it,  or  allow  him  to  interfere  with  the  collection  of  the 
income,  and  no  creditor  could  touch  the  income  or  any  interest  which 
the  cestui  que  trust    had  in  it. 

In  \'ermont,  Connecticut  and  Kentucky,  the  highest  courts  have 
held  that  the  income  of  property  may  be  devised  in  trust  for  the  benefit 
of  the  cestui  que  trust  for  life  to  the  exclusion  of  the  claims  of  his 
creditors.  Ex'rs  of  White  v.  White,  30  Vt.  338;  Leavitt  v.  Beirne, 
21  Conn.  1 ;   Pope's  Ex'rs  v.  Elliott,  8  B.  Mon.  (Ky.)  56. 

In  other  states,  however,  and  it  may  be  said  in  the  majority  of  the 
states  where  the  question  has  arisen,  the  English  rule  has  been  adopted 
without  qualification.  Tillinghast  v.  Bradford,  5  R.  I.  205;  Dick  v. 
Pitchford,  21  N.  C.  480;  Heath  v.  Bishop,  4  Rich.  Eq.  (S.  C.)  46,  55 
Am.  Dec.  654;  Bailie  v.  McWhorter,  56  Ga.  183;  Rugeley  and  Har- 
rison V.  Robinson,  10  Ala.  702. 

In  this  state  there  is  no  decision  to  govern  us,  and  with  conflicting 
decisions  in  other  Courts  entitled  to  the  highest  consideration,  the 
question  is  one  after  all  to  be  determined  by  us  on  principle.  The 
English  decisions  rest  on  two  grounds:  First,  that  the  right  of  aliena- 
tion is  a  necessary  incident  to  an  equitable  estate  for  life,  and  any  re- 
straint upon  this  right  is  against  the  policy  of  the  law  which  favors  the 
ready  alienation  of  property ;  and  secondly,  that  public  policy  forbids 
that  one  should  have  the  right  to  enjoy  the  income  of  property,  to  the 
exclusion  of  his  creditors.  Now  the  right  to  sell  and  dispose  of  prop- 
erty, is  a  necessary  incident  of  course  to  the  absolute  ownership  of 
such  property.  You  cannot  give  to  one  a  fee  simple  interest,  and  then 
say  he  shall  not  sell  or  dispose  of  it,  because  the  right  to  alien  it  is  a 
legal  and  necessary  incident  to  the  estate  granted,  and  to  impose  such 
a  condition  would  be  repugnant  to  the  nature  and  tenure  of  the  estate 
itself.  And  besides  the  best  interests  of  the  public  require  that  there 
should  be  a  ready  transmission  of  property.  But  the  reasons  on  which 
the  rule  is  founded  do  not  apply  to  the  transfer  of  property  in  trust. 

Where  by  the  terms  of  the  trust  the  legal  estate  is  vested  in  a  trus- 
tee, he  takes  the  legal  title  with  the  necessary  incidents  attached  to  it, 
and  among  such  incidents  is  the  right  to  alien  it.  The  cestui  que  trust 
takes  the  equitable  estate  with  the  right  to  the  accrued  income,  and 
when  this  has  been  paid  to  him,  the  absolute  right  to  dispose  of  it.  So 
neither  the  principal  nor  the  income  can  be  said  to  be  inalienable.  And 
besides,  the  policy  of  the  law  is  not  against  all  restraints  on  the  abso- 
lute right  to  dispose  of  it.  You  may  give  an  estate  for  life,  with  a  pro- 
vision that  the  estate  shall  go  over  to  a  third  person  upon  alienation, 
voluntary  or  involuntary,  by  the  life  tenant.  You  cannot  give  prop- 
erty to  be  held  in  perpetuity,  but  you  may  give  one  an  estate  for  life, 


Sec.  6)  BY  BANKRUPTCY.  253 

with  a  limitation  over  to  lives  in  being,  and  twenty-one  years  there- 
after. And  so  by  the  English  rule  you  may  give  an  equitable  estate 
for  life,  with  a  limitation  over  or  a  cesser  -**  to  a  third  person,  should 
the  life  tenant  attempt  to  alien  it.  Now,  in  all  these  instances,  there  is 
a  restraint  to  a  greater  or  less  degree  on  the  right  of  alienation.  The 
law  does  not  therefore  forbid  all  and  any  restraints  on  the  right  to 
dispose  of  it,  but  only  such  restraints  as  may  be  deemed  against  the 
best  interests  of  the  community.  And  the  gift  of  an  equitable  right 
to  the  income  from  property  for  the  life  of  the  beneficiary,  to  the  ex- 
clusion of  his  alienee,  is  not,  in  our  opinion,  repugnant  to  the  estate 
or  interest  granted,  nor  is  it  such  a  restraint  on  the  right  of  alienation 
as  the  law  for  reasons  of  public  policy  forbids. 

And  then  as  to  the  other  ground,  that  it  is  against  the  policy  of  the 
law  to  permit  one  to  hold  and  enjoy  an  estate  or  interest  in  property 
for  life,  whether  legal  or  equitable,  to  the  exclusion  of  his  creditors. 
Now  common  honesty  requires,  of  course,  that  every  one  should  pay 
his  debts,  and  the  policy  of  the  law  for  centuries  has  been  to  subject 
the  property  of  a  debtor  of  every  kind,  which  he  holds  in  his  own 
right,  to  the  payment  of  his  debts.  He  has  as  owner  of  such  property 
the  right  to  dispose  of  it  as  he  pleases,  and  his  interest  is,  therefore, 
liable  for  the  payment  of  his  debts.  But  a  cestui  que  trust  does  not 
hold  the  estate  or  interest  in  his  own  right;  he  has  but  an  equitable 
and  qualified  right  to  the  property  or  to  its  income,  to  be  held  and  en- 
joyed by  the  beneficiary  on  certain  terms  and  conditions  prescribed  by 
the  founder  of  the  trust.  The  legal  title  is  in  the  trustee,  and  the 
cestui  que  trust  derives  his  title  to  the  income  through  the  instrument 
by  which  the  trust  is  created.  The  donor  or  devisor,  as  the  absolute 
owner  of  the  property,  has  the  right  to  prescribe  the  terms  on  which 
his  bounty  shall  be  enjoyed,  unless  such  terms  be  repugnant  to  the 
law.  And  it  is  no  answer  to  say  that  the  gift  of  an  equitable  right  to 
income  to  the  exclusion  of  creditors  is  against  the  policy  of  the  law. 
This  is  begging  the  question.  Why  is  it  against  the  policy  of  the  law  ? 
What  sound  principle  does  it  violate?  The  creditors  of  the  beneficiary 
have  no  right  to  complain,  because  the  founder  of  the  trust  did  not 
give  his  bounty  to  them.  And  if  so,  what  grounds  have  they  to  com- 
plain because  he  has  seen  proper  to  give  it  in  trust  to  be  received  by 
the  trustee  and  to  be  paid  to  another,  and  not  to  be  liable  while  in  the 
hands  of  the  trustee  to  the  creditors  of  the  cestui  que  trust.  All  deeds 
and  wills,  and  other  instruments  by  which  such  trusts  are  created,  are 

2  6  Limitation  over:  Yarnold  v.  jNIorehouse.  1  R.  &  M.  364  (1830) ;  Manning 
V,  Cliambers,  1  De  G.  &  Sm.  282  (1847) ;  Rochford  v.  Hackman,  9  Hare,  475 
(1852)  ;  Sliarp  v.  Cosserat,  20  Beav.  470  (1855)  ;  Joel  v.  Mills,  3  K.  &  J.  458 
(1857)  ;  Nichols  v.  Eaton,  91  U.  S.  716,  23  L.  Ed.  254  (1875)  :  Bull  v.  Kv.  Nat. 
Bk.,  90  Ky.  4.52.  14  S.  W.  425  (1890) ;  Bottom  v.  Fultz.  124  Ky.  302,  98  8.  W. 
1037  (1907) ;    Bramliall  v.  Ferris,  14  N.  Y.  41,  67  Am.  Dee.  113  (18.56). 

Cesser:  Dommett  v.  Bedford,  3  Yes.  Jr.  149  (1796);  Shee  v.  Hale,  13  Yes. 
Jr.  404  (1807) ;  Rochford  v.  Hackman,  9  Hare,  475,  480-483  (1852)  ;  Joel  v. 
Mills,  3  K.  &  J.  458  (1857)  ;  Hatton  v.  May.  L.  R.  3  Ch.  Div.  148  (1876) ; 
Nichols  V.  Eaton,  91  U.  S.  716,  23  L.  Ed.  254  (1875). 


254  TRANSFER   OF   RFSTECTIVE    INTERESTS   OF   PARTIES.  (Ch.  3 

required  by  law  to  be  recorded  in  the  public  offices,  and  creditors  have 
notice  of  the  terms  and  conditions  on  which  the  beneficiary  is  entitled 
to  the  income  of  the  property.  They  know  that  the  founder  of  the 
trust  has  declared  that  this  income  shall  be  paid  to  the  object  of  his 
bounty  to  the  exclusion  of  creditors,  and  if  under  such  circumstances 
they  see  proper  to  give  credit  to  one  who  has  but  an  e(|uitable  and 
qualified  right  to  the  enjoyment  of  property,  they  do  so  with  their 
eyes  open.  It  cannot  be  said  that  credit  was  given  upon  such  a  quali- 
fied right  to  the  enjoyment  of  the  income  of  property,  or  that  creditors 
have  been  deceived  or  misled;  and  if  the  beneficiary  is  dishonest 
enough  not  to  apply  the  income  when  received  l)y  liim  to  the  payment 
of  his  debts,  creditors  have  no  right  to  comi)lain  because  they  cannot 
subject  it  in  the  hands  of  the  trustee  to  the  j)ayment  of  their  claims, 
against  the  express  terms  of  the  trust.  The  hardship  to  them  is  one 
that  will  surely  bring  about  its  own  remedy,  for  the  dishonest  bene- 
ficiary it  is  i^lain  would  soon  be  without  credit.  And  then,  as  to  the 
rights  of  creditors,  these  may  be  defeated,  even  according  to  the  Eng- 
lish decisions,  by  providing  that  in  the  event  of  the  recovery  of  a  judg- 
ment against  the  cestui  que  trust,  or  upon  his  insolvency,  his  interest 
in  the  property  shall  cease,  and  shall  go  to  another.  Now  what  advan- 
tage to  the  creditor  is  the  cesser  or  limitation  over?  What  he  wants  is 
the  money  due  to  him,  and  this  is  not  paid  by  depriving  the  beneficiary 
of  the  property.  But  it  may  be  said  that,  sooner  than  lose  his  interest 
in  the  prot)crty,  self-interest,  if  no  higher  consideration,  will  prompt 
him  to  pay  his  debts.  There  is  force  in  this,  but  with  the  best  inten- 
tions any  one  may,  by  the  chances  and  hazards  incident  to  every  pur- 
suit in  life,  be  unable  to  pay  his  debts,  and  in  that  event,  by  depriving 
one  of  his  property  by  limitation  over  to  a  third  person,  you  may  de- 
prive him  of  the  very  means  by  which  he  might  in  the  future  repair 
his  fortune.  So  it  does  not  seem  to  us  there  is  any  substantial  advan- 
tage to  the  creditor,  in  thus  permitting  the  founder  of  the  trust  to  do 
that  indirectly,  which  we  think  he  can  do  directly.  And  then  again, 
by  the  English  rule,  the  rights  of  creditors  may  be  excluded  by  pro- 
viding that  the  income  may  be  paid  or  not  to  the  beneficiary  at  the 
option  of  the  trustee.  To  impose  a  requirement,  so  harsh  in  itself, 
Ujion  the  bounty  of  a  donor  or  devisor  who  may  desire  to  provide  for 
the  certain  support  of  the  object  of  his  bounty  is  not  warranlerl,  it 
seems  to  us,  by  any  principle  of  justice  or  sound  public  policy.  And 
a  rule  of  law  which  requires  this  to  be  done,  and  one  which  may  be 
evaded  by  carefully  drawn  terms  and  provisions,  is  hardly  worth  pre- 
serving. Upon  principle,  therefore,  we  are  of  opinion  that  the  founder 
of  a  trust  may  provide  in  direct  terms  that  his  property  shall  go  to  his 
beneficiary  to  the  exclusion  of  his  alienees,  and  to  the  exclusion  of  his 
creditors.  This  being  so,  the  rents  and  profits  in  the  hands  of  the 
trustee,  and  which  the  testator  in  the  will  before  us  directs  shall  be 
paid  into  the  hands  of  his  son,  Robert,  and  "not  into  the  hands  of  an- 
other, whethiCr  claiming  by  his  authority  or  otherwise,"  cannot,  in  our 


Sec.  G)  BY    BANKRUPTCY.  255 

opinion,  be  reached  by  his  creditors,  by  any  process,  either  at  law  or  in 
equity,  before  such  rents  and  profits  are  paid  to  him."^ 
Judgment  affirmed 


In  re  NEIL. 
HEMMING  V.  NEIL. 
(In  Chancery,  befoie  Kekewich,  J.,  1890.    62  T^w  Times  Reports  [N.  S.]  G49.) 

Adjourned  Summons. 

James  Neil  who  died  in  1888,  devised  and  bequeathed  all  his  real 
and  personal  estate  to  his  trustees  to  convert  the  same  into  money  and 
divide  the  total  into  seven  equal  parts,  and  to  stand  possessed  of  one- 
seventh  upon  trust  during  the  life  of  his  son  Philip  to  pay  and  apply 
the  whole  or  any  part  of  the  income  or  accumulations  of  income  for 
the  support,  maintenance,  or  education,  or  otherwise  for  the  benefit 
of  his  son  Philip,  his  wife  and  children,  or  any  one  or  more  of  them, 
his  said  son,  his  wife  and  children,  in  such  manner  in  all  respect  as 
his  trustees  should  in  their  uncontrolled  discretion  think  fit. 

August  1,  1889,  Philip  Neil  assigned  to  R.  C.  A.  Hemming  all  his 
interest  in  said  one-seventh  to  secure  payment  of  i60.,  October  31, 

2  7  Nichols  V.  Eaton,  91  U.  S.  716,  725-729.  23  L.  Ed.  254  (1875)  ;  Hyde  v. 
Woods,  94  U.  S.  523,  526,  24  I>.  Ed.  264  (1876)  ;  Steib  v.  Whitehead,  111  111. 
247  (1.S84)  ;  Roberts  v.  Stevens,  84  Me.  325,  24  Atl.  873,  17  E.  R.  A.  266  (1892)  ; 
Braman  v.  Stiles,  2  Pick.  (Mass.)  460,  463,  13  Am.  Dec.  445  (1824)  ;  Broadway 
Nat.  Bank  v.  Adams,  133  Mass.  170,  43  Am.  Rep.  504  (1882);  Billings  v. 
Marsh,  153  Mass.  311,  26  N.  E.  1000.  10  L.  R.  A.  764.  25  Am.  St.  Rep.  635 
(1891);  Leigh  v.  Harrison,  69  INIiss.  923.  11  South.  604,  18  L.  R.  A.  49  (1892); 
Lampert  v.  Haydel,  96  Mo.  439.  9  S.  W.  780,  2  L.  R.  A.  113.  9  Am.  St.  Rep. 
3.58  (1888)  ;  Partridge  v.  Cavender,  90  Mo.  452,  9  S.  W.  785  (188S)  ;  Fisher  v. 
Tavlor,  2  Rawle  (Pa.)  .33  (1829)  ;  Vaiix  v.  Parke,  7  Watts  &  S.  (Pa.)  19  (1844) ; 
Shanklaud's  Appeal,  47  Pa.  113  (1864);  Rife  v.  Geyer.  .59  Pa.  393,  98  Am. 
Dec.  351  (1868) :  Overman's  Appeal,  88  Pa.  276  (1879) :  Thackara  v.  Mintzer, 
100  Pa.  151  (1882)  ;  Jourolmon  v.  Massengill,  86  Tenn.  81,  5  S.  W.  719  (1887) ; 
Barnes  v.  Dow,  59  Vt.  530,  10  Atl.  2.58  (1887). 

A  man  cannot  settle  his  own  property  in  trust  for  his  own  benefit,  so  as 
to  exempt  the  income  from  alienation  by  him  or  from  process  by  his  creditors. 
Warner  v.  Rice,  06  Md.  436,  8  Atl.  84  (188(5) :  Pacific  National  Bank  v.  Wind- 
ram,  133  Mass.  175  (1882) ;  Jackson  v.  Von  Zedlitz,  136  Mass.  342  (1884)  ;  Mc- 
Ilvaine  v.  Smith,  42  Mo.  45,  97  Am.  Dec.  295  (1867) ;  Schenck  v.  Barnes,  156 
N.  Y.  316,  50  N.  E.  967,  41  L.  R.  A.  395  (1898) ;  Mackason's  Appeal,  42  I'a. 
330,  82  Am.  Dec.  517  (18(32)  ;  Ghornmley  v.  Smith,  139  Pa.  584,  21  Atl.  135, 
11  L.  R.  A.  565,  23  Am.  St.  Rep.  215  (1891). 

In  some  .iurisdictions,  e.  g.,  California,  Illinois.  Indiana,  Kansas,  Michigan, 
ISIinnesota,  New  Jersey,  New  York,  North  Dakota.  South  Dakota.  Oklahoma, 
Tennessee,  and  Wisconsin,  the  rights  of  creditors  of  tlie  cestui  que  trust  are 
fixed  by  statutes ;  they  being  either  doiied  all  rights  or  limited  to  the  surplus 
income  that  may  remain  after  providing  a  suitable  support  for  the  cestui  que 
trust.  See  Cunimings  v.  Corey.  58  Mich.  494,  25  N.  W.  481  (1885) :  Harden- 
burgh  V.  Blair,  .30  N.  J.  Eq.  645  (1879);  Force  v.  Brown,  .32  N.  J.  Eq.  118 
(1880)  ;  Lippincott  v.  Evens.  .35  N.  J.  Eq.  553  (1SS2)  ;  Linn  v.  Davis,  58  N.  J. 
Uaw,  29,  32  Atl.  129  (1895)  ;  Williams  v.  Thorn,  70  N.  Y.  270  (1S77)  ;  Tolles 
V.  Wood,  99  N'.  Y.  616,  1  N.  B.  251  (1SS5) ;  Kilroy  v.  Wood.  42  iiim  (N,  Y.) 
636  (1886). 


256  TUANSFKR   OF   UKSl'Et'TIVE   INTERESTS   OF   PARTIES.  (Ch.  3 

1889,  and  August  14,  1889,  gave  said  Heniniing  a  further  charge  on 
the  same  to  secure  payment  of  a  further  sum  of  £60.  the  same  day. 

August  15,  1889,  Hemming  notified  the  trustees  of  these  assign- 
ments. Notwithstanding  this  notice  the  trustees  continued  to  pay 
Philip  Neil  weekly  sums  on  account  of  the  income  of  his  share. 

An  originating  summons  was  taken  out  by  Hemming  against  the 
trustees  and  Philip  Neil  asking  that  certain  questions  be  determined. 

The  summons  was  adjourned  into  court  and  now  came  on  to  be 
heard. 

Kekewich,  T-""  ***]■(■  ap])ears  that  some  moneys  have  been 
paid  to  or  for  the  benefit  of  Philip  Neil  since  notice  of  the  assignment 
of  his  interest  was  given  to  the  solicitors  for  the  trustees  of  the  will, 
and  the  plaintilT  seeks  to  make  the  trustees  liable  in  respect  of  the  pay- 
ments so  made.  In  determining  that  question  the  word  which  will 
guide  mc  is  the  word  "benefit"  in  the  direction  to  the  trustees  to  pay 
or  apply  the  whole  or  any  ])art  of  the  income  of  his  share.  Philip  is 
entitled  to  assign  nothing  but  his  beneficial  interest  under  the  will  of 
the  testator.  Money  paid  to  him  or  to  any  person  on  his  behalf — ex- 
cluding such  a  special  case  as  that  put  by  Cotton,  L.  J.,  in  Re  Coleman  ; 
and  Henry  v.  Strong  (60  L.  T.  Rep.  N.  S.  127;  39  Ch.  Div.  443)— is 
necessarilv  i^art  of  his  beneficial  interest.  Mr.  MacSwinney  says  that 
the  money  is  not  his  until  it  is  actually  paid  to  him.  I  think  that  that 
argument  is  more  ingenious  than  sound.  I  think  that  it  must  be  as- 
sumed that  money  paid  by  the  trustees  to  him  or  to  any  person  in  his 
behalf  was  his  in  their  irrevocable  determination  immediately  before 
the  payment.  At  that  period  of  time  they  had  notice  or  were  affected 
with  notice  of  the  assignment.  I  think,  therefore,  the  trustees  are 
liable  to  pay  to  the  plaintiff  all  moneys  which  have  been  paid  by  them 
to  Philip  Neil,  or  to  any  person  on  his  behalf,  since  the  receipt  by  the 
trustees  of  the  notice  of  the  charge.     *     *     * 


In  re  BULLOCK. 
GOOD  V.  LICKORISH. 

(Tn  Chancery,  before  Kekewich  J.,  1891.     G4  Law  Tunes  Reports  [N.  S.]  7.3G.) 

Adjourned  Summons. 

By  the  will  and  codicil  of  Edwin  Bullock  (who  died  on  the  14th 
Feb.,  1870),  all  the  real  and  personal  estate  of  the  testator  were  vested 
in  the  plaintiffs  Charles  Patten  Good  and  Henry  Williams,  and  the 
testator's  w-idow,  Mary  Bullock,  his  executors  and  trustees,  in  trust 
for  the  testator's  children,  and  the  issue  born  in  his  lifetime  of  Mary 
Bullock,  as  she  should  by  deed  or  will  appoint,  and,  failing  such  ap- 
pointment, and  so  far  as  the  same  should  not  extend,  in  trust  for  those 

»8  A  part  of  the  opinion  is  omitted. 


Sec.  6)  BY   BANKRUPTCY.  257 

of  his  six  children  who  should  be  living  at  her  death,  and  the  issue  of 
such  as  should  be  then  dead  leaving  issue. 

Mary  Bullock,  by  her  will  dated  the  29th  May,  1883,  directed  and 
appointed  as  follows : 

"]).Iy  late  husband's  trustees  or  trustee  shall  stand  possessed  of 
£15,000.  further  part  of  the  said  net  proceeds,  upon  trust  to  invest  the 
same  in  some  or  one  of  tlie  modes  of  investment  by  law  authorized  for 
the  investment  of  trust  funds,  and  to  pay  the  income  of  such  invest- 
ments to  the  said  Theodore  Walter  William  Bullock,  during  his  life  or 
until  he  shall  become  a  bankrupt  or  a  liquidating  debtor,  or  cease  to  be 
entitled  to  receive  such  income,  or  any  part  thereof,  for  his  own  per- 
sonal use  or  benefit,  by  any  means  or  for  any  purpose.  And  in  the 
event  of,  and  upon  the  said  T.  W.  W.  Bullock  becoming  a  bankrupt  or 
a  liquidating  debtor,  or  ceasing  to  be  entitled  to  receive  the  said  in- 
come, or  any  part  thereof,  for  his  own  personal  use  or  benefit,  by  any 
means  or  for  any  purpose,  to  pay  to  him  or  apply  for  his  benefit,  dur- 
ing the  remainder  of  his  life,  either  the  whole,  or  so  much,  and  so 
much  only  of  the  said  income,  as  my  late  husband's  trustees  or  trustee 
shall  in  their  or  his  uncontrolled  discretion  think  fit,  and,  subject  to  the 
aforesaid  interest  hereinbefore  appointed  in  favor  of  the  said  T.  W. 
W.  Bullock,  my  late  husband's  trustees  or  trustee  shall  hold  the  said 
£15,000.,  and  the  investments  and  income  (including  any  accumulations 
of  income)  thereof  in  trust  for  the  child,  if  only  one,  or  all  the  children 
equally,  if  more  than  one,  born  in  my  lifetime,  of  the  said  T.  W.  W. 
Bullock,  and  if  there  be  no  such  child,  in  trust  for  the  said  William 
Bullock,  Mary  Holyoake  Bullock,  Constance  Bullock,  and  Dorothy 
Marian  Good  as  tenants  in  common  in  equal  shares." 

The  testatrix  died  on  the  29th  Dec,  1886,  and  her  will  and  several 
codicils,  which  did  not  affect  the  above  appointment,  were  proved  by 
her  executors,  the  plaintiffs  Charles  Patten  Good  and  Henry  Williams, 
on  the  loth  Feb.  1887.     *     *     * 

The  trustees  invested  the  £15,000.  in  stock,  *  *  *  the  interest 
on  which  was  paid  to  T.  W.  W.  Bullock  up  to  and  including  the  16th 
July,  1890. 

On  the  23rd  August,  1890,  the  trustees  received  notice  of  a  memo- 
randum of  charge,  dated  the  30th  Jan.,  1889,  from  T.  W.  W.  Bullock 
to  Lickorish  and  Bellord,  solicitors,  on  all  his  interest  under  the  will 
of  the  testatrix  to  secure  money  of  which  about  £500.  was  stated  to 
be  owing. 

On  the  23rd  of  Oct.,  1890,  a  receiving  order  was  made  against  T. 
W.  W.  Bullock,  and  on  the  14th  Nov.,  1890,  the  trustees  received  no- 
tice that  the  official  receiver  claimed  the  £12,011.  stock  as  trustee  in 
the  bankruptcy  of  T.  W.  W.  Bullock.  He  subsequently  claimed  the 
proportion  of  interest  due  at  the  date  of  the  receiving  order ;  but  the 
claims  of  the  trustees  were  afterwards  withdrawn. 

The  trustees  took  out  an  originating  summons,  asking  (inter  alia) 
Ken.Tr.— 17 


258  TRANSFER  OF  RESPECTIVE  INTERESTS  OF  PARTIES.  (Ch.  3 

whether  the  plaintiffs  properly  might  during  the  life  of  T.  W.  W. 
r.ullock  apply  the  whole,  or  any,  and  what  part,  of  the  income  of  the 
trust  fund  in  providing  in  such  manner  as  they  might  from  time  to 
time  think  fit  for  the  past  and  future  lodging,  hoard,  clothing,  main- 
tenance, and  support  of  T.  W.  W.  Bullock,  and  the  payment  of  sundry 
legal  expenses  incurred  by  him  or  on  his  behalf  in  and  since  July,  1890, 
or  how  the  said  income  ought  to  be  dealt  with  by  the  plaintiffs. 

The  summons  was  adjourned  into  court,  and  now  came  on  to  be 
heard. 

Kekewicii,  J.     At  the  conclusion  of  the  arguments  on  that  point, 
I  held  that  the  particular  assignee  represented  by  Mr.  Maidlow  is  not 
entitled  to  any  part  of  the  income  in  which  Theodore  Walter  William 
Bullock  takes  an  interest  under  the  will.     He  only  claimed  that  which 
accrued  before  notice  of  his  assignment  was  given  to  the  trustees  of 
the  will,  and  that  on  the  ground  that  until  such  notice  was  given  the 
assignment  was  not  perfect,  and  Mr.  Bullock  could  not  until  then  be 
said  to  have  ceased  to  be  entitled  to  receive  the  income  for  his  own 
personal  use  or  benefit.     I  held  that,  although  for  some  and  important 
purposes,  the  assignment  might  fairly  be  said  to  be  not  perfect  until 
r.otice  given,  yet  as  between  assignor  and  assignee  it  was  perfect  as 
from  its  date,  and  operated  as  a  cesser  of  the  assignor's  title  to  receive 
the  income.    I  advert  to  this  now  because,  with  reference  to  the  point 
remaining  to  be  decided,  it  is  important  to  observe  that  the  particular 
assignee  has  no  interest.    It  is  also  important  to  observe  that  the  gen- 
eral assignee — that  is,  the  trustee  in  bankruptcy — makes  no  claim.    He 
has  abstained  from  doing  so  deliberately,  and  I  have  no  doubt  wisely. 
He  could  not,  as  far  as  I  can  see,  have  put  forward  any  tenable  argu- 
ment in  support  of  a  claim  if  made.    The  question  is  therefore  raised  as 
between  Mr.  Bullock  and  those  entitled  under  the  gift  over,  or,  rather, 
such  of  them  as  claimed  adversely  to  him,  for  they  do  not  all  act  togeth- 
er or  take  the  same  view.     Mr.  Warmington's  argument  for  them  was 
that  the  language  of  the  will  only  empowers  the  trustees  to  pay  the 
income  to  Air.  Bullock  or  to  apply  it  for  his  benefit,  and  that  neither 
of  these  things  can  be  done.    As  regards  payment,  reliance  was  placed 
on  the  decision  in  Re  Coleman,  Henry  v.  Strong  (60  L.  T.  Rep.  N.  S. 
127;  39  Ch.  Div.  443)  and  my  own  judgment  in  Re  Neil,  Hemming  v. 
Neil  (62  L.  T.  Rep.  N.  S.  649),  to  which,  on  reflection  I  adhere;   and 
it  was  said  that  to  pay  income  to  Mr.  Bullock  would  be  to  make  a  pay- 
ment in   derogation  of  the  over-riding  title  of  the  trustee  in  bank- 
ruptcy, and  therefore  a  wrongful  payment,  which  would  be  no  dis- 
charge to  the  trustees  of  the  will,  and  render  them  accountable  to  the 
trustee  in  bankruptcy.     The  argument  is,  I  think,  well  founded. 

As  regards  applications  for  the  benefit  of  Mr.  Bullock,  the  argu- 
ment took  this  form.  It  was  said  that  where  the  court  has  upheld  a 
discretionary  trust  for  applications  arising  on  bankruptcy  or  the  equiv- 
alent of  bankruptcy,  the  discretion  has  been  exercisable  with  reference 
to  wife  and  children  as  well  as  the  bankrupt,  and  the  decisions  of  the 


Sec.  6)  BY    BANKRUPTCY.  259 

court  have  proceeded  on  the  impossibihty  of  determining  beforehand 
what,  if  anything,  the  trustees  would,  in  the  exercise  of  their  discre- 
tion, apply  for  the  benefit  of  the  bankrupt  as  distinguished  from  the 
other  objects  of  their  power.  For  this  reference  was  made  to  two 
cases  as  examples  of  a  class — Godden  v.  Crowhurst  ( 10  Sim.  642)  and 
Kearsley  v.  Woodcock  (3  Hare,  185).  The  language  of  the  judg- 
ments, and  especially  that  of  Vice  Chancellor  Shadwell  in  Godden 
V.  Crowhurst,  countenances  the  argument ;  but  the  precise  point  which 
I  have  now  to  consider  was  not  before  the  court  in  either  case,  and 
I  cannot  think  that  either  judge  intendedl  to  decide  it.  I  can  see  no 
reason  on  principle  for  defeating  the  obvious  intention  of  the  testatrix. 
That  obvious  intention  was  to  enable  the  trustees  in  the  event  of 
Mr.'  Bullock's  bankruptcy  to  apply  for  his  benefit  the  income,  or  an 
adequate  part  of  the  income,  \vhich  he  thereupon  ceased  to  be  entitled 
to  receive.  It  is  clear,  and  the  trustee  in  bankruptcy  has  practically 
admitted,  that  he  can  take  no  interest  in  income  thus  applied ;  and 
it  is  difficult  to  see  how  those  entitled  under  the  gift  over  can  success- 
fully claim  as  coming  to  them  what,  if  it  does  not  come  to  them,  would 
not  go  to  the  trustee  in  bankruptcy. 

The  argument  in  opposition  to  their  claim  is  strongly  supported  by 
Chambers  v.  Smith  (3  App.  Cas.  795).  It  is  a  Scotch  case,  but  the 
Scotch  law  was  expressly  stated  to  be  on  this  point  in  no  way  different 
from  that  of  England.  It  was  there  held  that  trustees  possessing  a  dis- 
cretionary power,  such  as  the  trustees  of  this  will  possess,  might  exer- 
cise it  in  favor  of  the  beneficiaries  occupying  ]\Ir.  Bullock's  position, 
notwithstanding  arrestment  by  judgment  creditors.  The  law  is  ex- 
pounded by  the  several  learned  Lords  who  gave  their  opinions  to  the 
House,  but  it  will  suffice  to  refer  to  those  of  Lord  Chancellor  Hatherley 
and  Lord  Blackburn.  There  is  a  passage  in  the  Lord  Chancellor's 
judgment  (on  page  804)  which  seems  to  me  directly  applicable  to  the 
case  in  hand.  It  may  be  thus  applied :  Mr.  Bullock  has  no  control  over 
the  fund  when  the  trustees  resolve  to  exercise  their  discretionary  power. 
He  cannot,  and  no  one  claiming  through  him  can,  make  a  claim  against 
the  trustees  for  payment.  It  would  be  a  sufficient  answer  to  any  such 
claifn  to  say,  "We  have  postponed!  such  payment  to  you  personally,  and 
intend  ourselves  to  apply  the  money  for  your  behoof."  And  on  page 
807  he  says:  'Tf  I  am  correct  in  holding  as  I  do  that  the  trust  powers 
could  not  be  destroyed  by  the  objects  of  them  becoming  indebted, 
which,  indeed,  seems  the  time  at  which  the  testator  would  have  desired 
them  to  be  brought  into  action,  then  the  trustees  are  not  innovating, 
but  only  exercising  their  rights  as  conferred  upon  them  by  their  trus- 
tee at  their  own  discretion."  On  page  817  Lord  Blackburn  notices 
the  great  and  fundamental  difiference  between  a  gift  to  one  either  di- 
rect or  through  the  medium  of  trustees,  who  are  mere  conduit  pipes 
to  convey  the  gift  to  the  beneficiary,  and  a  gift  subject  to  a  power  re- 
served to  trustees  to  be  exercised  paramount  to  the  beneficiary  and  in 
his  despite,  and  adds :   "I  think  the  arrestment  fixes  the  date  at  which 


2G0  TRANSFER   OF    RFSPKCTIVE   INTERESTS   OF   PARTIES.  (Cll.  3 

it  is  to  be  determined  whether  the  arresters  have  a  right  to  attach  the 
fund,  and  anything-  that  is  subsequently  done  by  the  debtor  or  by  those 
who  have  rights  against  the  debtor,  or  by  those  who  claim  under  him, 
comes  too  late  after  that."  In  other  words,  the  assignment  in  this  case, 
which  is  equivalent  to  the  arrestment  in  the  case  before  the  House  of 
Lords,  called  the  discretionary  power  of  the  trustees  into  operation, 
and  it  would  be  a  contradiction  to  hold  that  the  power  is  inoperative 
just  when  it  was  intended  to  be  e.xercised.  What  the  trustees  in  the 
exercise  of  their  discretion  do  not  from  time  to  time  think  fit  to  a])ply 
for  the  benefit  of  jVIr.  Bullock  goes  by  the  words  of  the  will  to  those 
entitled  under  the  gift  over;  but  they  take  only  this  overplus,  and 
cannot  claim  what  the  trustees  determine  to  apply. 

I  was  asked  by  the  trustees  to  define  the  limits  within  which  they 
may  apply  the  income  for  Mr.  Bullock's  benefit.  I  find  it  extremely 
difficult  to  do  this  in  the  abstract,  and  I  am  unwilling  to  fetter  the  trus- 
tees' discretion,  which  was  intended  to  be  and  ought  to  be  construed 
as  large.  I  could  not  refuse  to  determine  any  particular  question  sub- 
mitted by  them  to  the  court,  and,  if  any  real  difficulty  occurs,  they 
would  probably  be  justified  in  asking  the  court's  protection,  I  can  say 
no  more  at  present  than  that  they  certainly  may,  in  my  opinion,  spend 
the  whole  or  any  part  of  the  income  in  maintenance,  using  that  word 
in  its  most  general  and  widest  sense ;  and  I  doubt  whether  I  was  right' 
in  saying  in  the  course  of  the  argument  that  they  could  not  properly 
pay  Mr.  Bullock's  debts.  The  discretion  is  vested  in  them,  and  though, 
as  already  mentioned,  they  are  entitled  to  the  assistance  of  the  court 
if  a  case  of  real  difficulty  occurs,  they  must  exercise  it,  and  so  long 
as  they  exercise  it  honestly — that  is,  as  men  of  ordinary  business 
habits  and  prudence,  and  with  due  regard  to  all  the  circumstances  of 
the  casf — the  court  will  not  interfere  with  them.-"* 


SECTION  7.— r.Y  ACT  ()1<   CR 1U3ITORS. 

I.  Creditors  of  Trusti:e;. 

4    /     

r,  ,  .  .  <.u     *>?  ■  • ■ 

STITH  V.  LOOKABILL. 
(Supreme  Court  of  North  Carolina,  1874.    71  N.  C.  25.) 

Civil  Action,  to  recover  possession  of  certain  real  estate  tried  at  the 
Spring  Term,  1874,  of  the  Superior  Court  of  Davidson  County,  before 
His  Honor,  Judge  Cloud. 

The  plaintifif  showed  title  from  the  state  to  one  J.  M.  Lisle;  then  a 
deed   from  Lisle  to  F.    M.    Camman ;   then   an   original   attachment 

2  9  See  Gray,  Restraints  on  the  Alienation  of  Troperty  (2(3  Ed.)  lG7f-lG7j. 
See,  also,  Nichols  v.  Eaton,  91  U.  S.  716,  2.3  L.  Ed.  254  (1S75). 


Sec.  7)  BY  ACT    OF   CREDITORS.  261 

against  Camman,  which  was  duly  levied  on  the  premises,  and  after 
proper  proceedings  had  thereon,  a  final  judgment  in  said  attachment, 
and  a  ven.  ex.  issued  to  sell  the  land.  Plaintiff  further  showed  a  sale 
and  that  A.  B.  Stith  became  the  purchaser,  who,  dying  pendente  lite, 
willed  the  same  to  the  plaintiff;  also,  that  the  defendant  was  in  pos- 
session. 

Here,  the  plaintifif  resting  his  case,  the  defendant  moved  the  Court 
to  non-suit  the  plaintiff,  on  the  ground  that  Camman  did  not  acquire 
such  an  interest  as  was  the  subject  of  attachment,  levy  and  sale  under 
execution,  the  defendant  stating  that  if  His  Honor  should  overrule  the 
motion  he  had  evidence  to  offer  showing  title  in  himself. 

His  Honor  sustained  the  motion  and  non-suited  the  plaintifif.  From 
this  judgment  the  plaintiff  appealed.  '"^ 

The  provisions  of  the  deed  to  Camman  are  sufficiently  set  forth  in    ut  o.    .~^ 
the  opinion  of  the  Chief  Justice. 

Pearson,  C.  J.^"     Upon  the  motion  to  non-suit,  the  only  question  ~J  ■-'^^ 
was,  "Had  Camman  such  an  estate  as  was  subject  to  sale  under  ex-       ■'^''  ' 
ecution  by  his  creditors?"     On  this  depended  the  right  of  the  plaintiff, 
who  was  the  purchaser,  to  maintain  an  action  against  the  defendant,  ,^ol^,^^  j, 
who  for  the  purposes  of  the  motion,  stands  as  a  wrong-doer,  without  .-2^  <^  " 
connection,  either  as  assignee  or  agent,  with  the  cestui  que  trusts  for    ,'   ^       ^ 
whom  Camman  is  assumed  to  have  held  the  legal  estate. 

Mr.  Gilmer  in  a  well-considered  argument  admitted  the  general  po- 
sitions taken  by  Mr.  Bailey,  in  respect  to  "uses  and  trusts,"  to  wit : 

1.  This  case  did  not  come  within  the  operation  of  Stat.  27  Henry 
Vni.  So  the  legal  title  was  in  Camman  subject  to  the  trust,  set  out 
in  the  deed,  "for  the  sole  and  exclusive  benefit  of  the  members  of  a 
company  called  and  known  as  'The  Conrad  Hill  Gold  and  Copper 
Company,'  "  their  successors  and  assigns  forever. 

2.  Camman,  in  the  courts  of  law,  was  considered  to  be  the  owner 
of  the  land,  and  no  notice  was  taken  of  the  trust,  to  which  he  was 
subject. 

3.  Camman  had  power  to  assign  the  legal  estate,  and  it  could  be 
sold  under  an  execution  against  him,  the  purchaser  taking  subject  to 
the  trust,  and  notice  being  presumed. 

4.  Under  the  old  system  the  plaintiff  would  have  been  entitled  to 
judgment  on  a  demurrer  to  the  evidence. 

Mr.  Gilmer  then  "proved  by  the  books"  that  although  the  plaintiff 
was  in  a  court  of  law  (under  the  old  system)  treated  as  the  absolute 
owner  of  the  estate,  still  being  a  trustee,  on  the  face  of  the  deed  by 
which  he  derives  title,  he  and  his  assignee,  whether  by  his  own  sake, 
or  that  of  the  sheriff,  is  subject  to  the  control  of  the  courts  of  equity, 
by  which  these  trust  estates  were  upheld  and  treated  as  the  real  owner- 
ship.    See  the  reasoning  in  Blackmer  v.  Phillips,  67  N.  C.  340. 

The  trustee  or  his  assignee  will  be  enjoined  from  enforcing  his  mere 

30  A  part  of  the  opinion  dealing  with  a  question  of  practice  is  omitted. 


262  TRANSFER   OF    RESPECTIVE   INTI:RKSTS   OF    rAUTIKS.  (Ch.  3 

legal  right  in  order  to  take  possession  of  the  land.  From  the'je  prem- 
ises he  drew  the  conclusion  that  under  our  new  system,  the  Court  act- 
ing both  as  a  court  of  equity  and  a  court  of  law,  the  assignee  of  the 
trustee  by  sale  on  execution  will  not  be  allowed  to  take  judgment  for 
the  recovery  of  the  possession  of  the  land. 

The  argument  is  well  constructed,  but  it  fails  in  this :  Under  the  old 
system  the  court  of  ecjuity  only  interfered  by  injunction  to  prevent  the 
trustee  or  his  assignee  from  taking  possession  as  against  the  cestui 
<iue  trusts,  or  their  assignee  or  agent,  but  did  not  interfere  in  favor 
of  a  wrongdoer,  who  fails  to  connect  himself  in  any  way  with  the 
cestui  que  trusts.  Such  is  the  law  under  the  new  system.  In  our  case, 
for  the  purposes  of  the  motion  to  non-suit,  the  cestui  que  trusts  are 
not  before  the  court,  and  the  defendant  stands  as  a  wrong-doer,  with- 
holding the  possession  from  the  plaintiff  who  is  the  owner  of  the  legal 
estate. 

If  Camman  had  brought  the  action,  the  defendant,  so  far,  as  for 
the  purposes  of  the  motion,  as  the  matter  now  stands,  would  not  have, 
under  the  old  system,  entitled  himself  to  an  injunction;  neither  can 
he  do  so  under  the  new  system,  by  which  the  equity  of  the  case  as 
well  as  the  law  is  administered  in  the  same  forum,  for  the  plain  reason 
that  he  stands  as  a  wrong-doer,  withholding  the  possession  from  one 
having  the  legal  estate,  and  does  not  in  any  way  connect  himself  with 
the  supposed  cestui  que  trusts. 

There  is  error.     Judgment  reversed  and  venire  de  novo.     *     *     * 

Per  Curiam.    Venire  de  novo. 


STITH  V.  LOOKABILL. 

(Supreme  Court  of  North  Caroliua,  1877.     76  N.  C.  465.) 

Civil  Action  to  recover  possession  of  real  estate,  tried  at  Fall  Term, 
1875,  of  Cabarrus  Superior  Court,  before  Schenck,  J. 

The  plaintiff  claimed  as  devisee  of  one  A.  B.  Stith,  who  bought  the 
land  in  controversy  at  execution  sale.  The  defendant  claimed  as  ten- 
ant of  one  Sturges  who  claimed  to  be  the  owner  in  fee  of  said  land, 
or  if  not  the  owner  in  fee,  then  the  beneficiary  owner,  and  entitled  to 
the  equitable  fee  therein. 

Rkadk,  J.    Land  is  conveyed  to  A.  in  trust  for  B. 

A.  has  the  legal  title  and  conveys  to  C. 

B.  has  the  equitable  title  and  conveys  to  D. 

Who  is  entitled  to  hold  the  land  in  this  Court,  C.  or  D.  ? 

Very  clearly  D.  is  entitled  to  hold  the  land  in  a  court  of  equity  as 
this  is. 

That  is  substantially  this  case,  and  that  principle  settles  this  case 
in  favor  of  the  defendant. 

John  M.  Lisle  conveyed  the  land  to  Camman  in  trust  for  certain 
persons.     The  plaintiff's  devisor  had  an  execution  against  Camman 


Sec.  7)  BY   ACT    OF   CREDITORS.  2G3 

levied  on  the  land  and  bought  is  at  sheriff's  sale.    That  puts  the  plain- 
tiff in  the  shoes  of  Camnian  with  the  naked  legal  title. 

The  cestui  que  trusts  conveyed  to  Sloan,  who  conveyed  to  the  de- 
fendant's landlord.  That  puts  the  defendant  in  the  shoes  of  the  cestui 
.que  trusts  with  the  equitable  title. 

The  plaintiff  insists  that,  even  if  that  principle  be  correct,  yet  it 
does  not  apply  here  because  the  defendant  does  not  represent  the 
cestui  que  trusts ;  that  the  cestui  que  trusts  were  the  Conrad  Hill  Gold 
and  Copper  Company;  and  that  that  company  attempted  to  join  and 
merge  itself  into  the  North  Carolina  Mining  Company,  by  proceed- 
ings which  were  irregular  and  ineffectual  for  that  purpose,  and  that 
the  said  North  Carolina  Mining  Company  conveyed  to  Sloan,  etc. 

It  may  be  admitted  as  contended  by  the  plaintiff,  that  the  deeds  and  -.  -  -.  .  ' 
proceedings  relied  on  by  the  defendant,  are  irregular  and  ineft'ectual  '^^-^"^^^-^^ 
to  pass  the  legal  title,  for  if  they  had  been  ever  so  regular  and  formal 
they  could  not  have  passed  the  legal  title.  The  legal  title  was  in  the 
plaintiff  and  not  in  the  cestui  que  trusts.  But  what  the  defendant 
rightly  insists  upon  is  that  the  deeds  and  proceedings  coupled  with  the 
facts  that  they  were  for  value  and  were  fair  and  bona  fide,  operate  as 
assignments  of  the  equitable  interest  of  the  cestui  que  trusts  ;  and  that  /-^ 

having  the  possession  of  the  land  he  is  entitled  to  hold  it.  .  '"  ' 

There  is  no  error.^^ 

Per  Curiam.     Judgment  affirmed. 

31  The  creditor  of  an  executor  or  administrator  cannot  even  at  law  take 
the  assets  of  the  deceased  to  satisfy  his  debtor's  individual  debt.  Farr  v. 
Newman,  4  T.  R.  621  (1702) ;  Gaskell  v.  Marshall,  1  M.  &  R.  132  (18.31)  ; 
Williams  v.  Fullerton,  20  Vt.  346  (1848). 

Some  decisions  hold  that  the  creditor  of  a  trustee  cannot  even  at  law  take 
the  trust  property  to  satisfy  the  individual  debt  of  the  trustee.  Lessee  of 
Smith  v.  McCann,  24  How.  398,  16  L.  Ed.  714  (1860) ;  Hitchcock  v.  Galveston 
Wharf  Co.  (C.  C)  50  Fed.  263  (1880) ;  Baker  v.  Copenbarger,  15  111.  103.  58 
Am.  Dee.  600  (1853) ;  Robison  v.  Botkin.  181  111.  182,  54  N.  E.  915  (1899) ; 
Bostick  v.  Keizer.  4  J.  J.  Marsh.  (Ky.)  597,  20  Am.  Dec.  237  (1830) ;  Logan  v. 
Moore,  7  Dana  (Ky.)  74  (1838) :  Booker  v.  Carlile.  14  Bush  (Kv.)  154  (1878) ; 
Morrill  v.  Raymond.  28  Kan.  415,  42  Am.  Rep.  167  (1882) ;  Houston  v.  Now- 
land.  7  Gill  &  J.  (Md.)  480  (1836) ;  Bancroft  v.  Consen,  13  Allen  (Mass.)  50 
(1866) :  Hayward  v.  Cain,  110  Mass.  273  (1872) ;  Ashurst  v.  Given,  5  Watts 
&  S.  (Pa.)  323  (184.3) ;  Wilhelm  v.  Folraer,  6  Pa.  296  (1847) ;  Reed's  Appeal, 
13  Pa.  476  (1850) ;  Shryock  v.  W^aggoner.  28  Pa.  4.30  (1857) ;  Brown  v.  Wil- 
liamson's Executor,  .36  Pa.  .338  (1860) ;  Miller  v.  Baker,  166  Pa.  414.  31  Atl. 
21,  45  Am.  St.  Rep.  680  (1894) ;  Townsley  v.  Barber.  27  Vt.  417  (1855) ;  Bar- 
ber v.  Chapin.  28  Vt.  413  (18.56) ;  Hackett  v.  Callender.  32  Vt.  97  (1859)  ;  Hart 
V.  Farmers'  &  Mechanic-s'  Bk.,  33  Vt.  252  (1860);  Abell,  Adm'r,  v.  Howe,  43 
Vt.  403  (1871). 

It  would  seem,  however,  that  the  creditor  of  a  feoffee  to  use  could  satisfy 
his  .iudgment  against  the  feoffee  individually  out  of  the  property  held  in  use. 
Y.  B.  14  Hen.  VIII,  fol.  4,  pi.  5. 


204  TUAXSFEU   OF    ItKSrECTlVE   INTEUKSTS   OF   PARTIES.  (Cll.  3 

S.AIITH  V.  SMITH  and  the  BAXK  OF  WADESROROUGH. 

»  (.Supreme  Court  of  North  Carolina,  1S5S.     57  N.  C.  303.) 

Appeal  from  the  Court  of  Equity  of  Richmond  County,  from  an  in- 
terlocutory order  made  hy  Saunders,  J. 

Upon  the  bill  and  answers,  the  case  appears  to  be  this :    Jonathan 
Hailey,  of  Richmond  county,  the  father  of  the  plaintiff,  by  his  will, 
dated  January,  1855,  bequeathed  as  follows:    "I  give  to  my  daughter 
-(       Hannah,  the  wife  of  Franklin  C.  Smith,  my  slaves,  Lydia,  Jim,  Reuben 
;  '  and  Hannah,  to  the  sole  and  exxlusive  use  of  the  said  Hannah  Smith, 

'^  •■'  "^'        separate  and  apart  from  all  control,  or  ownership  of  her  said  husband, 
'^^'  and  free  from  all  liability  for  his  debts  or  contracts,  for  and  during 

her  natural  life,  and  at  her  death,  to  her  daughter  Ahce,  and  all  such 
■  C>K>  ."         children  as  she  may  have  then  living,  share  and  share  alike,  it  being 
my  express  will,  that  the  said  Franklin  C.  Smith  shall  have  no  inter- 
est, trust,  or  property,  either  at  law  or  in  equity,  in  or  to  said  negroes." 
.-A^.  o ..M^<'-Aitev  the  death  of  the  testator,  the  slaves  went  into  the  possession  of 
the  plaintiff,  or  her  husband,  by  the  assent  of  the  executor,  as  the  bill 
states.     One  of  the  slaves,  Jim,  about  seventeen  years  of  age,  was 
.      iji^'-c^''  rogueish  and  unmanageable,  and  the  plaintiff,  and  her  husband,  con- 
^:^  curred  in  thinking  it  was  best  to  dispose  of  him,  and  the  bill  states 

L.^'dto^cK^..  ^^^^  '^  ^^^^  agreed  between  them,  in  October,  1855,  that  the  husband 
Al^h''.<}^  rshould  carry  him  off  and  exchange  him  for  a  female  slave,  that  could 
,i.^^/'  serve  in  the  house,  or  sell  him,  and  invest  the  proceeds  in  such  a  fe- 
male, to  be  held  in  the  place  of  Jim,  and  that  accordingly  Smith  took 
Jim  to  Richmond,  Ya.,  and  soon  after  brought  back  a  negro  girl  by 
the  name  of  Harriet,  about  thirteen  years  of  age,  whom,  he  said,  he 
had  received  in  exchange  for  Jim,  and  also  the  sum  of  $135  to  boot, 
and  he  delivered  the  said  girl  to  the  plaintiff,  and  she  accepted  her, 
in  place  of  Jim,  agreeing  that  he  should  retain  the  money  for  his  time, 
trouble,  and  expense  in  the  transaction ;  that  the  plaintiff  claimed  Har- 
riet, and  held  her  as  her  separate  property,  under  her  father's  will, 
up  to  August,  1858,  when  the  sheriff'  of  Richmond  seized  her  under  a 
fieri  facias,  on  a  judgment,  at  the  instance  of  the  Bank  of  Wadesbor- 
ough,  against  Franklin  C.  Smith  and  others,  and  advertised  her  for 
sale  as  the  property  of  Smith,  the  husband ;  and  then  this  bill  was  filed 
by  ]\Irs.  Smith,  by  her  next  friend,  who  was  the  father's  executor, 
against  the  Bank  of  W'adesborough  and  her  husband,  i)raying  that  the 
husband  may  be  declared  to  hold  the  said  Harriet  in  the  place  of  Jim, 
in  trust  for  her  separate  use,  during  her  life,  and  then  for  her  daugh- 
ter Alice,  and  such  other  child  or  children  as  she  may  have,  and  that 
the  said  negroes  may  be  properly  settled  upon  a  fit  trustee,  according 
to  the  purposes  and  trusts  of  the  will ;  and  that,  in  the  meanwhile, 
the  defendants  may  be  restrained  by  injunction  from  proceeding  to 
sell  the  slave  Harriet.  Upon  the  bill  an  injunction  was  granted  as 
prayed  for. 


Sec.  7)  BY   ACT    OF   CREDITORS.  2G5 

The  answer  of  Smith  admits  all  the  material  allegations  of  the  bill, 
and  submits  that  all  the  negroes,  including  Harriet,  shall  be  conveyed 
to  such  trustees  as  the  Court  may  designate,  and  settled  upon  the 
trusts  declared  in  the  will. 

The  answ^er  of  the  other  defendant,  the  Bank  of  Wadesborough, 
admits  the  bequest  of  the  negroes  by  the  will,  and  that  Mark  Hailey, 
the  executor,  assented  to  some  of  the  legacies,  but  denies  that  he  as- 
sented to  the  legacy  of  Jim,  and  states  that  Smith,  the  husband,  as  the 
defendant  believes,  took  Jim  against  the  assent  of  the  executor,  and 
without  his  knowdedge.  It  admits  the  character  imputed  in  the  bill 
to  the  negro,  Jim,  but  denies  that  the  plaintiff  requested  her  husband, 
or  agreed  with  him,  that  he  should  carry  Jim  off  and  exchange  him 
for  a  negro  girl,  or  sell  him,  and  with  the  proceeds  purchase  a  girl  in 
his  place ;  and  states  that  Jim  was  carried  off  against  the  will  and 
decided  opposition  of  the  plaintiff.  It  also  denies  that  Jim  was  ex- 
changed for  Harriet,  or  that  Harriet  was  purchased  with  the  proceeds 
of  Jim,  or  was  ever  delivered  to  the  plaintiff  by  her  husband,  or  by 
her  accepted  in  place  of  Jim.  It  states  that,  about  the  time  Smith 
went  off  with  Jim,  he  borrowed  twelve  or  fourteen  hundred  dollars, 
and  on  his  return  stated  that,  on  the  trip,  he  purchased  Harriet  and 
another  negro  and  sold  the  latter  before  he  got  back;  that  Smith  took 
a  bill  of  sale  for  Harriet  in  his  own  name,  as  the  absolute  owner,  and 
claimed  her  as  his  own  property  and  frequently  offered  to  sell  her, 
saying  he  could  make  a  good  title,  and  no  claim  was  set  up  to  her  by 
the  plaintiff  until  after  the  bank  got  the  judgment  against  her  hus- 
band, when,  after  becoming  insolvent,  he  executed  to  the  plaintiff  a 
bill  of  sale  for  Harriet,  with  the  intent  to  defraud  his  creditors,  and 
absconded.  The  answer  admits  the  seizure  of  Harriet  on  the  execu- 
tion, and  the  intention  to  sell  her  under  it,  as  the  property  of  Smith. 

Upon  this  answer,  the  counsel  for  the  Bank  of  Wadesborough 
moved  to  dissolve  the  injunction,  which  was  refused,  and  the  Bank 
appealed. 

RuFFiN^  J.^'  Although  the  order  in  the  court  of  equity  does  not 
declare  the  grounds  on  which  it  was  made,  )et,  in  the  opinion  of  the 
court,  enough  appears  in  the  pleadings  to  sustain  it.  Equity  does  not 
usually  interfere  to  restrain  a  trespass,  but  leaves  the  party  to  legal 
redress.  But,  both  from  the  nature  of  the  property,  and  the  pecul- 
iarity of  the  situation  in  which  the  parties  stand,  the  plaintiff  is  entitled 
to  rehei.  The  bequest  is  plainly  and  expressly  to  the  separate  use  of 
the  wife,  with  a  remainder  to  a  child  then  born,  and  to  such  others  as 
may  come  in  esse.  But  no  trustee  is  nominated,  and,  therefore,  the 
legacy,  as  far,  at  least,  as  the  estate  of  the  wife  is  concerned,  vested 
jure  mariti,  in  the  husband.  But,  in  this  court,  he  stands  as  trustee 
for  her,  upon  the  clear  intent  that  he  should  not  take  for  his  own  bene- 
fit, but  that  she  should  enjoy,  for  her  life,  as  if  she  were  sole.     Parker 

32  A  part  of  the  opinion  is  oniilted. 


C*-  i^ 


200  TRANSFER   OF    RKSPECTIVE   INTERESTS   OF   PARTIES.  (Cll.  3 

V.  Brooke,  9  Yes.  583  ;  Steel  v.  Steel,  36  N.  C.  452.  He,  then  havin,^- 
the  legal  title,  though  on  trust,  could  not  maintain  an  action  against 
the  slieriff  for  taking  the  slave  as  his  property,  nor  against  the  pur- 
chaser from  the  sheriff.  It  is  possible  that  obstacles  may  present  them- 
selves in  the  way  of  getting  the  full  relief  asked  (that  of  a  settlement 
of  all  the  negroes  in  trust  for  the  plaintiff  for  life,  and  then  for  the 
children),  both  from  the  nature  of  the  limitatiim  in  remainder  to  the 
children,  and  from  the  fact  that  the  children  arc  not  parties.  But  we 
are  not  to  deal  with  that  question  now,  nor  io  anticipate  the  effect  on 
tlie  injunction  of  amending  the  bill,  by  bringing  in  the  children.  The 
controversy,  at  present,  concerns  the  interest  of  the  plaintiff  alone. 
She  has,  unquestionably,  an  estate  to  her  sejiarate  use  in  the  negroes, 
and  that  is  purely  an  equitable  interest  that  can  be  asserted  only  in 
this  court,  and  will  be  protected  in  this  court,  because  she  has  either 
no  trustee,  or  none  that  can,  in  the  actual  condition  of  things,  make 
the  title  available  at  law,  so  as  to  secure  her  equitable  interest. 

Thus  far  the  jurisdiction  has  been  considered  as  if  the  controversy 
were  touching  the  negroes  specifically  bequeathed,  in  which  case,  as 
the  separate  use  of  the  wife  is  beyond  all  doubt,  the  court  holds  that 
she  would  be  entitled  to  an  injunction  against  the  husband  to  restrain 
his  alienation  in  breach  of  the  trust,  and  to  a  decree  securing  the  prop- 
erty to  her  by  a  proper  settlement,  with  a  fit  trustee,  and,  therefore, 
that  she  is  equally  entitled  to  a  similar  relief  against  the  creditor  of 
the  husband,  endeavoring  to  effect  a  similar  breach  of  trust,  by  a  sale 
under  execution,  wherein  the  purchaser  could  only  get  (if  anything) 
the  naked  legal  title  of  the  husband,  and  would  hold  it,  in  the  view  of 
this  court  on  the  same  trusts  as  attached  to  it  in  the  hands  of  the  hus- 
band. Freeman  v.  Hill,  21  N.  C.  389;  Polk  v.  (Gallant,  22  N.  C.  395. 
34  Am.  Dec.  410.  This,  however,  is  not  the  case  of  a  seizure  of  one 
of  the  slaves  bequeathed  to  the  separate  use  of  the  plaintiff,  but  of  a 
slave  which,  the  bill  alleges,  was  got  in  exchange  for  one  of  them  by 
the  husband,  acting  as  the  agent  of  the  plaintiff,  by  an  agreement  be- 
tween her  and  her  husband,  or  purchased  by  him  for  her  with  the 
price  obtained  for  one  of  the  original  slaves,  necessarily  sold  for  his 
faults,  and  accepted  by  her  in  his  stead.  It  must  be  admitted  that  on 
those  positions,  if  denied  by  the  defendants,  the  onus  is  on  the  plain- 
tiff. She  must  show  that  she  has  the  same  equity  attaching  to  the 
slave  in  controversy  which  she  had  in  the  one  her  father  gave  her. 

■->:  *  * 

[The  court,  having  concluded  that  the  plaintiff  had  established  this 
equity,  affirmed  the  order  appealed  from.]  " 

3s  Pop  Newlands  v.  Payntor,  4  Myl.  &  C.  408  (ls:i9) ;  Roberts  v.  Dealh.  T.. 
R  8Q  P.  D.  319  (18S1);  Cooper  V.  Griffin,  L.  R.  1  Q.  P.  D.  740(1892);  Siiediker 
V.  Boyleston,  Ki  Ala.  408,  4  South.  738  (1887);  Cfeditors -of  Spicer  v.  Spicer, 
21  Ga  200  (1857);  ITollinssworth  v.  Trueblood,  r.9  Ind.  542  (1877);  Uoffors 
V  Hendsley,  2  La.  597  (18:50-18.31)  ;  Huutt  v.  TowiisIumuI,  31  Md.  3:U>,  100  Am. 
Dee  (53  (1869);  Ilartsock  v.  Russell,  52  Md.  019  (1879);  Ilouslitou  v.  Daven- 
port 74  Me.  590  (1883) ;   Lerow  v.  Wiliuarth,  9  Allen  (Mass.)  382  (1864) ;    Han- 


f' 


Sec.  7)  BY  ACT    OF   CREDITORS.  •        2G7 

DYSON  and  Others  v.  SIMMONS. 
(Court  of  Appeals  of  Maryland,   1878.     48  Md.   207.) 

Appeal  from  the  Circuit  Court  for  Montgomery  County,  in  Equity. 

The  appeal  in  this  case  was  taken  from  a  decree  directing  the  sale 
of  the  mortgaged  premises  in  the  proceedings  mentioned,  and  from  an 
order  ratifying  certain  auditor's  accounts  distributing  the  proceeds 
of  sale,  and  rejecting  others.  By  the  accounts  ratified  the  judgments 
rendered  on  contracts  made  after  the  date  of  the  mortgage  were 
awarded  payment  in  full,  and  to  the  mortgage  claim  was  awarded  the 
balance,  less  certain  expenses,  which  was  not  sufiicient  to  pay  it  in 
full.  Creditors  who  held  judgments  obtained  on  claims  existing  prior 
to  the  mortgage,  Mrs.  Cornelia  Jones  who  claimed  under  a  deed  of 
trust,  and  her  trustee  appealed.  The  case  is  further  stated  in  the 
opinion  of  the  Court. 

Alvey,  J.,  delivered  the  opinion  of  the  court. ^* 

The  bill  in  this  case  was  filed  by  the -appellee  as  assignee  of  Eliza- 
beth A.  Simmons,  of  a  mortgage  and  single  bill,  for  $2,500;  the 
single  bill  being  executed  by  John  L.  T.  Jones,  and  the  mortgage  by 
the  saidi  Jones  and  his  wife;  both  instruments  bearing  date  the  19th 
of  April,  1<S71.  The  mortgage  was  in  all  respects  duly  executed  and 
acknowledged  by  the  mortgagors,  and  the  consideration  sworn  to  by 
the  mortgagee ;  and  it  was  filed  for  record  within  the  time  prescribed 
by  law,  and  actually  recorded,  in  Montgomery  county,  where  the  land 
mortgaged!  is  situate;  but  the  acknowledgment  and  affidavit  having 
been  made  before  a  justice  of  the  peace  in  Frederick  county,  there 
was  an  omission  to  obtain  the  clerk's  certificate  of  the  official  char- 
acter and  qualification  of  the  justice,  as  required  by  the  Code,  art. 
24,  §  3.  The  mortgagor,  Jones,  being  legally  indebted  on  contracts 
made  both  before  and  since  the  date  of  the  mortgage,  upon  which  "^-^L  6^  v, ' 
a  large  number  of  judgments  have  been  recovered  subsequent  to  that  -\^Jl,, 
date,  jUi_e_presenL.bjll..  is  filed  to  enforce  the  mortgage,  thus  inefifectu- ,  ^  /  / 
ally  recorded,  upon  the  footing  of  a  contract,  and  as  an  equitable  "'^^^^^-^■\. 
charge  upon  the  land  embraced  in  it.  This  is  resisted  by  the  judg- 
ment creditors,  upon  the  ground  that  their  judgments  have  created 
liens  upon  the  land,  and  that  such  liens  cannot  be  displaced  or  inter- 
fered with  by  a  prior  unrecorded  or  equitable  mortgage,  which  should 

cock  V.  Titus.  39  Miss.  224  (1860) ;  South  Presbyterian  Church  v.  Ilintze,  72 
Mo.  .303  (ISSO) ;  Connor  v.  Follansbee,  59  N.  H.  124  (1879)  ;  CaniDiield  v. 
.Tohuson,  5  N.  J.  Eq.  245  (1845) ;  Bunn  v.  Mitchell,  27  N.  J.  Eq.  54  (187(5) ; 
Ells  V.  Tousley.  1  Taige  (N.  T.)  280  (1828)  ;  Wylie  v.  White,  10  Rich.  Eq. 
(S.  C.)  294  (1858) ;  Sandford  v.  Weeden.  2  Heisk.  (Tenn.)  71  (1870) ;  Baker 
V.  Hardin,  10  Heisk.  (Tenn.)  ,300  (1872)  ;    Parker  v.  Coop,  60  Tex.  Ill  (1SS3). 

In  the  followin.uf  decisions  the  creditor  of  the  trustee  was  siren  preference 
over  the  cestui  que  trust:  Buck  v.  Webb,  7  Colo.  212,  3  Pac.  211  (18S3) ; 
Roberts,  Adm'r,  Broom,  1  Del.  Ch.  388  (1831)  ;  Kennedy  v.  Lee,  72  Ga.  39 
(1883)  ;    Dill  v.  Hamilton,  118  Ga.  208,  44  S.  E.  989  (1903). 

3*  Only  so  much  of  the  opinion  as  deals  with  the  first  question  is  given. 


2G8  TRANSFER   OF    RESPECTIVE   INTERESTS   OF   TARTIES.  (Ch.  3 

only  be  enforced  as  as^ainst  the  mortgagor,  and  his  ordinary  or  non- 
lien  creditors,  existing  at  the  date  of  the  mortgage. 

Two  questions  arise:  ,1st,  whether  the  lien  of  a  judgment  can  be  dis- 
placed or  subordinated  to  that  of  a  prior  equitable  mortgage  or  charge? 
and,  '^ndiy,  if  such  mortgage  or  cliarge  can  be  enforced  as  against 
judgment  liens,  in  what  order  are  the  creditors  to  be  alTected  thereby? 

1.  The  principle  is  now  so  well  settled,  that  it  would  seem  to  be 
beyond  all  question  and  controversy,  that  if  a  party  makes  a  mort- 
gage, or  affects  to  make  one,  but  it  proves  to  be  defective,  by  reason 
of  some  informality  or  omission,  such  as  failure  to  record  in  due  time, 
defective  acknowledgment,  or  the  like,  though  even  by  the  omission 
of  the  mortgagee  himself,  as  the  instrument  is  at  least  evidence  of 
an  agreement  to  convey,  the  conscience  of  the  mortgagor  is  bound, 
and  it  will  be  enforced  by  a  court  of  equity.  Taylor  v.  Wheeler,  2 
Vern.  565;  Mestaer  v.  Gillispie,  11  Ves.  621,  624;  Price  &  Bevan 
V.  McDonald,  1  ]\ld.  414,  54  Am.  Dec.  657.  As  against  the  mort- 
gagor himself  this  proposition  was  never  regarded  as  questionable 
(Carson  &  Vickery  v.  Phelps,  40  Aid.  73),  but  as  against  judgment 
creditors  of  the  mortgagor,  obtaining  their  judgments  subsequent  to 
the  date  of  the  mortgage,  there  w^as  formerly  some  dispute.  The 
question,  however,  both  in  England  and  in  this  State,  has  been  long 
since  settled ;  and  the  cases,  without  an  exception,  so  far  as  we  are 
informed,  hold  that  a  judgment,  being  but  a  general  lien,  must  be 
subordinated  to  the  superior  equity  of  a  prior  specific  lien,  created! 
by  a  defective  mortgage  or  conveyance.  Judgments  create  liens  only 
because  the  land  is  made  liable  by  statute  to  be  seized  and  sold  on 
execution:  Aliller  v.  Allison,  8  Gill  &  T-  38;  Coombs  v.  Jordan.  3 
r.land,  284,  298-310,  22  Am.  Dec.  236";  Eschbach  v.  Pitts,  6  Md. 
77;  Tayloe  v.  Thomson,  5  Pet.  358,  8  L.  Ed.  154.  But  such  lien  se- 
cures to  the  creditor  neither  jus  in  re  nor  jus  ad  rem:  Ex  parte 
Knott,  11  Ves.  609,  617;  Lacy  v.  Fugle,  2  I'hill.  442;  Conard  v. 
Atlantic  Ins.  Co.,  1  Pet.  442-443,  7  L.  Ed.  189.  At  the  time  of  the 
execution  of  this  mortgage  the  mortgagor  had  full  and  complete 
power  of  conveying  or  charging  the  land,  provided  it  was  bona  fide 
as  against  existing  creditors,  and  the  general  principle  is,  that  if  a 
party  has  power  to  charge  certain  lands,  and  agrees  to  charge  same,  in 
equity  he  has  actually  charged  them ;  and  a  court  of  equity  will  en- 
force the  charge.  Alexander  v.  Ghiselin,  5  Gill,  187;  Rolleston  v. 
Morton,  1  Dr.  &  War.  195.  And  the  fact  that  judgments  have  been 
subsequently  recovered  against  the  party  agreeing  to  convey  or  charge 
the  land,  will  in  no  manner  defeat  the  right  to  have  the  agreement 
executed.  As  has  been  very  properly  said,  a  judgment  has  relation 
to  the  time  when  it  is  entered  up.  It  will  not  aitect  any  bona  fide 
conveyance  made  for  value  before  that  time,  for  it  only  attaches  upon 
that  which  is  then,  or  afterwards  becomes  the  property  of  the  debtor. 
The  fact  that  the  debtor  may  retain  the  pro])erty  at  law  does  not 
change  the  principle  upon  wliich  a  court  of  equity  proceeds.     If  the 


Sec,  7)  BY   ACT    OF   CREDITORS.  269 

property  is  charged  in  equity  before  the  entry  of  the  judgment,  the 
judgment  will  not  affect  such  charge.  Whitworth  v.  Gaugain,  1 
Phill.  728,  729.  The  judgment  creditor  therefore  stands  in  the  place 
of  his. debtor,  and  he  can  only  take  the  property  of  his  debtor,  sub- 
ject to  the  equitable  charges  to  which  it  w^as  justly  liable  in  the  hands 
of  the  debtor,  at  the  time  of  the  rendition  of  the  judgment, — except  ^ 
in  those  cases  where  the  principle  may  have  been  modified  by  express 
statute.  Taylor  v.  Wheeler,  2  Vern.  565;  Finch  v.  Earl  of  Win- 
chelsea,  1  P.  Wms.  277,  282;  Sir  Simeon  Stewart's  Case,  cited  in 
Burn  V.  Burn,  3  Ves.  573,  and  stated  and  approved  in  Alexander  v. 
Ghiselin,  5  Gill,  185. 

In  no  case  to  be  found  in  the  books  is  the  question  more  directly 
and  strongly  presented  than  in  that  of  Whitworth  v.  Gaugain,  3 
H,are,  416.  In  that  case,  an  equitable  mortgagee  of  lands  was  held 
to  be  entitled  in  equity  to  enforce  his  charge  on  the  land  in  priority 
to  a  creditor  of  the  mortgagor,  who,  without  notice  of  the  equitable 
mortgage,  had,  subsequently  thereto,  recovered  judgment  against 
the  mortgagor,  and  obtained  actual  possession  of  the  land  by  writ  of 
elegit  and  attornment  of  the  tenants.  A  stronger  case  than  that 
could  hardly  be  stated ;  and  yet  it  was  held,  upon  full  review  of  the 
cases,  that,  notwithstanding  the  judgment  had  been  executed  to  the 
extent  of  obtaining  actual  possession  of  the  land  under  the  elegit, 
the  equitable  mortgagee  had  the  superior  equity,  and,  consequently, 
was  entitled  to  priority.  That  case  was  affirmed  on  appeal,  upon 
full  review  of  the  authorities  by  the  Lord  Chancellor  (1  Phill.  728), 
and  it  has  been  fully  approved  in  subsequent  cases.  Abbott  v.  Strat- 
ten,  3  Jones  &  Lat.  603;  Eyre  v.  McDowell,  9  H.  L.  Cas.  619,  642; 
Beavan  v.  Lord  Oxford,  6  De  G.,  M.  &  Gord.  507.  These  cases  are 
the  stronger,  as  they  involve  the  consideration  of  the  Act  of  1  &  2 
Vict.  ch.  110,  as  applicable  to  England,  and  the  similar  Act  of  3  & 
4  Vict.  ch.  105,  as  applicable  to  Ireland,  which  enacted  that  a  judg- 
ment shall  operate  as  a  charge  on  all  lands  of  which  the  judgment 
debtor  shall,  at  the  time  of  entering  up  judgment  or  afterwards,  be 
seized  or  possessed,  or  over  which  such  judgment  debtor  shall,  at  the 
time  of  entering  up  judgment  or  afterwards,  have  any  disposing 
powder  which  he  might,  without  the  consent  of  any  other  person,  ex- 
ercise for  his  own  benefit.  These  statutes,  it  was  decided,  contained 
nothing  to  vary  the  rule  as  to  the  equities  to  which  the  property  may 
be  subject.  For,  as  said  by  Lord  Cranworth,  in  Eyre  v.  McDowell, 
supra,  the  debtor  could  not  have  appropriated  the  land  in  question 
to  the  liquidation  of  his  debt,  without  first  satisfying  the  claim  of  his 
equitable  mortgagee,  and  the  Legislature  did  not  intend  to  enable 
the  creditor  by  judgment  to  take  what  his  debtor  could  not  give. 

This  well  established  principle  of  the  English  cases  has  been  fully 
adopted  in  our  own;  and  the  cases  to  which  w^e  are  about  to  refer, 
are,  we  think,  quite  decisive  of  the  question  under  consideration. 
[Here  the  court  refers  to  Hampson  v.  Edelen,  2  Har.  &  J.  64,  3  Am. 


270  TRANSFER  OF    RESPECTIVE  INTERESTS  OF   PARTIES.  fCh.  3 

Dec.  530;  Repp  v.  Repp,  12  Gill  &  J.  341;  Alexander  v.  Ghiselin,  5 
Gill,  138.] 

It  is  clear,  therefore,  that  the  fact  of  the  existence  of  judgments, 
recovered  subsequent  to  the  date  of  the  mortgage,  gives  to  the  judg- 
nfent  creditors  no  such  fixed  lien  upon  the  land  as  to  exclude  or  defeat 
the  security  intended  by  the  mortgage;  and  it  was  in  accordlance  with 
this  view  that  the  decree  appealed  from  was  passed. ^'^     *    *    * 

Decree  affirmed. 


MOVER   V.    HI X MAN. 

(Court  of  Appeals  of  New  York,  1855.     13  N.  Y.  ISO.) 

-j-.f*  In  October,  1835,  II.  W.  Schrocppel  being  the  owner  of  two  hun- 

dred  and  fifty  acres   of  land,  situate  in   Oswego  county,  contracted 
..  with  the  plaintifif  to  sell  and  convey  to  him  a  part  of  it  containing 
sixty  acres,  at  the  agreed  price  of  $465 ;   fifty  dollars  of  the  purchase 
price  to  be  paid  down,  and  the  residue  at  or  before  the  expiration  of 
ten  years  with  annual  interest.     By  the  contract  it  was  agreed  that  the 
plaintifiF  should  have  immediate  possession  of  the  premises,  and  on 
payment  of  the  purchase  money,  the  same  should  be  conveyed  to  him 
in  fee  by  Schroeppel.     The  following  spring  the  plaintiff  entered  into 
....  ^..    possession  of  the  land   mentioned   in  the   contract,   which   was   wild, 
andl  erected   a   house    and    commenced   making   other    improvements 
thereon.     From  that  time  till  the  commencement  of  this  action,  he 
.^  occupied  and  improved  the  premises. 

.C\s^uU^     In  1838,  R.  S.  Corning  recovered  a  judgment  against  Schroeppel 
^  oJlii.' ~     '"  the  Supreme  Court,  which  then  became  a  lien  on  the  real  estate  of 
•    the  latter,  situate  in  Oswego  county;   and  in  1844,  an  execution  upon 
this  judgment  was  issued  to  the  sheriff  of  Oswego  county,  who,  by 
virtue  thereof,  in  August  of  that  year,  sold  the  premises  contracted 
to  the  plaintifif,   together  with   the  residue  of  the  two  hundred  and 

ar.  P.urgh  v.  Francis,  3  Swanston,  .5.36,  note  (a)  (1G7.3)  ;  Brace  v.  Duchess  of 
■Marlhorousli.  2  P.  Wms.  491  (1728) ;  Casberd  v.  Atty.  Genl.,  6  Price.  411 
(1819);  Whitworth  v.  Gaufiain,  3  Hare,  416  (1844).  aftirnied  1  Phillips,  728 
(1846);  Abbott  v.  Stratten,  3  J.  &  Lat.  603  (1846i :  P.rearfliff  v.  Dorringtoii,  4 
De  G.  &  Sm.  122  (1850);  Dunster  v.  Lord  Gleiiiiall,  3  Ir.  Ch.  47  (1853);  Scott 
V.  r»rd  Hastings,  4  K.  &  J.  633  (185S) ;  Eyre  v.  McDowell,  9  H.  L.  C.  619 
(1861):  IMckerinj;  v.  Ilfraconibe  Ry.  Co.,  T>.  R.  3  C.  P.  2.35  (1868);  Robinson 
V.  AVilliains.  22  N.  Y.  3S0  (18()0) ;  Ins.  Co.  of  Pa.  v.  Phanix  Ins.  Co..  71  Pa. 
31  (1872) ;    Delaire  v.  Keenan,  3  Desaus.  (S.  C.)  74,  4  Am.  Dec.  604  (1809). 

The  same  principle  j^ives  tlie  mortgafjee  of  after-acquired  property  priority 
over  the  creditor  of  the  mortgagor.  Ilolroyd  v.  Marshall,  10  H.  L.  C.  191 
(1861);  Brown  v.  Bateman,  L.  R.  2  C.  P.  272  (1.S67) ;  Pennock  v.  Coe,  23 
How.  117.  16  Tj.  Ed.  436  (18.59)  ;  Robinson  v.  Mauldin.  11  Ala.  977  (1847) ; 
Floyd  V.  Morrow.  26  Ala.  .353  (IS.5.5) ;  Hamlin  v.  .Terra rd.  72  Me.  62  (1881); 
Sillers  v.  Lester,  48  Miss.  513  (1873);  Wright  v.  Bircher's  Ex'r,  72  Mo.  179, 
37  Am.  Rep.  4-33  (1880);  Rutherford  v.  Stewart.  79  Mo.  216  (1S83):  France 
V.  Thomas,  86  :Mo.  80  (188.5);  Smithurst  v.  Edmunds.  14  N.  .7.  Eq.  408  (1862); 
Philadeli)hia,  W.  &  B.  R.  Co.  v.  Vv'oolpper,  64  Pa.  366,  3  Am.  Rep.  596  (1870) ; 
Groton  ]\rfg.  Co.  v.  Gardiner,  11  R.  T.  626  (1877);  First  Nat.  Bank  of  Alexan- 
dria V.  Turnlinll.  32  Grat.  (Va.)  695,  34  Am.  Rep.  791  (1880).  Contra:  Ross 
V.  Wilson,  7  Bush    (Ky.)  29  (1869). 


Sec.  7)  BY  ACT    OF   CREDITORS.  271 

fifty  acres,  and  gave  the  usual  sheriff's  certificate  of  sale  to  Corning, 
the  plaintiff  in  the  execution,  who  was  the  purchaser  at  the  sale. 
A  duplicate  of  this  certificate  was  duly  filed  by  the  sheriff  in  the 
clerk's  office  of  Oswego  county.  In  August,  1845,  Corning  sold  and 
assigned  to  the  defendant  the  sheriff's  certificate,  and  in  the  ensuing 
January  the  premises  were  conveyed  to  him  by  the  sheriff,  pursuant  to 
the  sale  and  certificate.  The  sheriff's  deed  to  the  defendant  was  duly 
recorded  in  Oswego  county,  in  February,  1846. 

Intermediate  the  recovery  of  the  judgment  and  the  sale  by  virtue 
of  the  execution,  the  plaintiff  made  several  payments  to  Schroeppel 
upon  the  contract;  and  in  October,  1845,  after  the  sale  and  assign- 
ment of  the  sheriff's  certificate  to  the  defendant,  but  before  the  execu- 
tion of  the  sheriff's  deed,  he  made  a  further  payment  to  Schroeppel  on 
the  contract,  of  $224.  When  the  plaintiff  made  these  payments,  he 
had  no  actual  notice  of  the  judgment  or  of  the  sale  made  by  the  sheriff. 

Soon  after  the  defendant  received  his  deed,  he  notified  the  plain- 
tiff and  forbid  his  making  further  payments  to  Schroeppel,  and  of- 
fered to  convey  to  him  the  premises  on  his  paying  to  the  defendant 
ihe  amount  unpaid  upon  the  contract  at  the  time  of  the  sheriff's 
sale.  This  the  plaintiff  declined  to  do,  and  the  defendant,  in  1851, 
brought  an  action  against  him  to  recover  possession  of  the  premises. 
The  plaintiff  thereupon  tendered  to  the  defendant  the  amount  due 
upon  the  contract  after  crediting  the  $224,  paid  Schroeppel  after  the 
sheriff's  sale,  and  before  he  conveyed  to  the  defendant  and  demanded 
a  conveyance  of  the  premises  described  in  the  contract;  and  the  de-  ; 
fendant  declining  to  accept  the  amount  and  execute  the  deed,  thi&/'/ 
action  was  instituted  to  compel  him  to  do  so,  and  to  stay  the  suit', 
commenced)  to  recover  possession  of  the  premises.  This  action  was 
tried  before  ]\Ir.  Justice  Pratt  without  a  jury,  in  1852.  He  foimd 
the  facts  above  stated,  and  decided  that  the  payment  made  to  Schroep- 
pel in  October,  1845,  was  not  valid  as  against  the  defendant,  and 
that  the  latter  was  entitled  to  demand  and  receive  the  amount  owing 
on  the  contract  at  the  time  of  the  sheriff's  sale,  and  he  ordered  judg- 
ment that  the  defendant  convey  the  premises  to  the  plaintiff,  on  his 
paying  this  amount.  The  plaintiff  excepted,  and  the  judgment  having 
been  affirmed  by  the  Supreme  Court  at  general  term  in  the  Fifth  dis- 
trict, he  appealed  to  this  court. 

Denio,  J.^'^  The  counsel  for  the  parties  in  this  case  agree  that 
the  plaintiff,  being  in  possession  under  his  contract  at  the  time  of 
docketing  the  judgment  under  which  the  defendant  claims,  is  to  be 
protected  in  equity  as  to  his  rights  which  existed  at  that  time ;  and 
the  position  is  so  well  established  by  authority  as  to  have  become 
an  elementary  doctrine  in  this  branch  of  the  law  of  real  estate.  I 
consider  it  equally  well  settled  that  the  docketing  of  a  judgment 
against  the  vendor  affords  no  notice  of  its  existence,  either  actual 

3G  A  part  of  the  opinion  of  Denio,  J.,  and  the  concurring  opinion  of  Hand, 
J.,  are  oraitted. 


->a 


-(/M^ 


272       TRANSFER  OF  RESPECTIVE  INTERESTS  OF  PARTIES.     (Cll.  3 

or  constructive,  to  the  prior  vendee  of  the  judgment  debtor.  Parties 
who  deal  with  the  debtor  respecting  his  lands  subsequently  to  the 
docketing-  of  the  judgment,  are  affected  with  notice.  Such  persons 
may  make  themselves  perfectly  safe  in  that  particular,  by  searching 
the  docket  book  of  judgments  in  the  proper  office;  and  they  will,  of 
course,  abstain  from  purchasing  if  they  find  the  land  which  they 
are  proposing  to  buy,  encumbered  by  a  judgment.  So,  it  may  be 
saidl,  a  party  holding  a  contract  upon  which  payments  remain  to  be 
paid,  may,  before  making  such  payments,  examine  for  judgments 
against  the  vendor;  but  it  would  be  an  intolerable  inconvenience  to 
require  this,  where  the  payments,  as  is  usually  the  case,  are  to  be 
made  annually  or  oftener;  and  should  such  examination  ever  be  strict, 
the  vendee  would  have  to  run  the  risk  of  an  encumbrance  inter- 
vening, while  he  w^as  going  from  the  office  where  the  same  was 
made  to  the  residence  of  the  vendor  to  make  the  payment.  It 
has  been  repeatedly  decided  that  the  docketing  of  a  judgment  or  the 
recording  of  a  mortgage  is  no  notice  to  a  prior  purchaser  or  mort- 
gagee of  the  premises  whose  conveyance  is  on  record,  or  of  which 
notice  was  had,  the  object  of  the  recording  acts,  and  of  the  law 
requiring  judgments  to  be  docketed,  being,  it  is  said,  to  protect  sub- 
sequent purchasers  and  incumbrancers  against  previous  deeds,  mort- 
gages, etc.,  which  are  not  recorded  and  of  which  they  had  no  no- 
tice, and  to  deprive  the  holder  of  the  prior  unrecorded  conveyance 
or  mortgage  of  the  right  which  his  priority  would  have  given  him  at 
the  common  law.  Cheeseborough  v.  jNlillard,  1  John.  Ch.  409,  7  Am. 
Dec.  494;  Stuyvesant  v.  Hall,  2  Barb.  Ch.  151.  The  plaintiff  in  this 
case  being  in  possession  under  his  contract,  that  circumstance  was 
notice  to  all  persons  who  might  subsequently  become  interested  in 
any  way  in  the  premises,  not  only  of  such  possession,  but  of  the  terms 
of  the  contract  and  of  all  his  existing  rights  under  it. 

In  the  view  of  a  court  of  equity,  his  condition  was  like  that  of  a 
party  having  a  prior  conveyance  or  lien  which  was  duly  recorded. 
When,  therefore,  Corning  had  recovered  his  judgment  against 
Schroeppel,  the  situation  of  the  respective  parties  was  this :  The 
plaintiff  was  the  equitable  owner  of  the  land,  subject  to  future  pay- 
ments to  be  made  by  him,  and  the  judgment  creditor  had  notice  of 
his  situation  and  of  his  rights;  but  the  plaintiff  had  no  notice  and 
was  not  chargeable  with  notice  of  the  lien  of  his  creditor.  The  cred- 
itor hadl  at  law  the  right  to  acquire  the  legal  title  to  the  land  by 
means  of  a  sheriff's  sale  and  a  purchase  by  himself ;  but  in  equity  his 
rights  were  limited  to  the  future  payments  to  be  made  by  the  plain- 
tiff. But  as  the  vendee  had  no  notice  of  the  judgment  creditor's  lien, 
and  the  creditor  had  full  notice  of  the  vendee's  situation,  it  would 
seem  to  be  reasonable  that  in  order  to  intercept  those  payments  and 
divert  them  from  the  vendor's  hands  into  his  own,  the  creditor  ought 
at  least,  to  inform  the  vendee  of  the  existence  of  his  lien  and  of  his 
right  to  the  unpaid  purchase  money. 


Sec.  7)  BY  ACT    OF  CREDITORS.  273 

In  accordance  with  this  view,  it  was  held,  in  a  case  in  Maryland, 
that  where  the  vendee,  subsequently  to  the  recovery  of  a  judgment 
against  the  vendor,  but  without  actual  notice  thereof,  had  paid  over 
a  balance  of  the  purchase  money  and  taken  a  conveyance  from  the 
judgment  debtor,  such  vendee  was,  in  equity,  entitled  to  be  pro- 
tected against  the  claim  of  the  judgment  creditor.  Hampson  v. 
Edelen,  2  Har.  &  J.  (Md.)  64,  3  Am.  Dec.  530.  *  *  * 
-  If  then,  the  payment  made  by  the  plaintiff  to  Schroeppel  is  not 
affected  by  the  docketing  of  Coming's  judgment,  I  am  not  aware  of 
'any  principle  upon  which  the  sale  upon  the  execution  and  the  pur- 
'chase  of  the  premises  by  Corning,  under  which  the  defendant  holds, 
can  prejudice  that  payment.  The  sale  converted  the  general  lien 
into  a  particular  one  upon  these  premises.  It  was  still  but  a  lien; 
for  any  judgment  creditor  of  Schroeppel  might,  notwithstanding,  re- 
deem the  premises.  But  the  consideration,  which  in  my  judgment, 
prevents  its  having  the  effect  claimed  for  it,  of  cutting  off  the  plain- 
tiff's right  to  pay  Schroeppel,  is,  that  the  former  had  no  notice  of 
the  transaction,  while  Corning  and  the  defendant  must  be  considered 
as  having  full  notice  of  the  plaintiff's  rights.  Admitting  that  Schroep- 
pel had  no.xi&ht  to  the  money,  and  that  Corning  or  the  defendant  had, 
either  the  plaintiff  or  the  defendant  must  lose  the  money;  and  the 
rule  in  such  cases  is  that  the  party  shall  suft'er  who,  by  his  acts  or 
omission,  permitted  the  money  to  go  into  the  hands  of  a  party  not 
entitled  to  it.  The  defendant  could  readily  have  informed  the  plain- 
tiff ^oLlhe  judgment  and  of  the~sEeriff's  sale ;  and  then  if  the  plain- 
tiff had  chosen  to  pay  Schroeppel,  instead  of  refusing  so  to  pay,  or 
to  take  measures  by  bill  of  interpleader  or  otherwise,  if  threatened 
by  a  suit  by  Schroeppel,  perhaps  the  payment  would  have  been  in  his 
own  wrong.  As  the  case  stands,  he  paid  the  money  to  the  party 
holding  his  obligation  for  the  payment  without  any  notice  that  any 
other  person  had  become  interested  in  that  contract,  or  had  any  right 
to  the  money  which  he  had  engaged  to  pay  to  Schroeppel.     *     *     * 

The  judgment  of  the  Supreme  Court  should  be  modified!,  and  a 
judgment  should  be  given  in  accordance  with  this  opinion,  to  be  set- 
tled by  one  of  the  judges  of  this  court.  The  defendant  should  pay 
the  costs  in  the  Supreme  Court. ^^ 

3  7  In  many  jurisdictions,  so  long  as  the  vendor  retains  the  legal  title,  his 
judgment  creditor  acquires  a  charge  thereon  as  security  for  the  unpaid  pur- 
chase money,  and  a  purchaser  of  the  legal  title  at  execution  sale  can  hold  the 
same  as  such  security.  A  payment  by  the  vendee  to  the  vendor  in  ignorance 
of  the  judgment  or  sale  will  pro  tanto  lessen  this  right.  Doe  ex  dem.  Nickles 
V.  Haskins.  15  Ala.  619,  50  Am.  Dec.  154  (1S49)  ;  Sellers  v.  Hayes.  17  Ala. 
749  (1850);  Hardee  v.  McMichael,  Adm'x,  68  Ga.  678  (1882);  Bell  v.  Mc- 
Duffle,  71  Ga.  264  (1883) ;  Simpson  v.  Niles.  1  Ind.  196  (1848) ;  Gaar  v.  Lock- 
ridsre,  9  Ind.  92  (1857) ;  Holman  v.  Creagmiles.  14  Ind.  177  (1860)  ;  Burke  v. 
Johnson,  .37  Kan.  337.  15  Pac.  204,  1  Am.  St.  Rep.  252  (18S7) ;  Doe  on  dem. 
Riley  v.  Million,  4  .J.  J  Marsli.  (Ky.)  395  (18.30).  See.  however.  Cooper  v.  Ar- 
nett.  95  Ky.  603,  26  S.  AY.  811  (1894) ;  Hampson  v.  Edelen,  2  Har.  &  J.  (Md.) 
64,  3  Am.  Dee.  530  (1807) ;    Doak  v.  Runyau,  33  Mich.  75  (1875) ;    Corey  v. 

Ken.Tr.— 18 


274  TRANSFER   OF    RESrECTIVE   INTEUESTS   OF   PARTIES.  (Ch.  3 

BROWN  V.  PIERCE. 

(Supreme  Court  of  the  Uiiitod  States,  1S6S.     7  Wall.  205,  19  L.  Ed.  134.) 

Error  to  the  Supreme  Court  of  Nebraska  Territory. 

Brown  filed  his  bill  in  September,  1860,  in  the  court  below  against 

three  persons,  Pierce,  Morton,  and  Weston,  alleging  that  in  the  spring 

of  1857  he  settled  upon  and  improved  a  tract  of  land  near  Omaha ; 

that  he  erected  a  house  on  the  tract  and  continued  to  occupy  it  until 

August  10,  1857,  when  he  entered  the  tract  under  the  pre-emption 

laws  of  the  United  States ;   that  Pierce  claimed  the  land  by  virtue  of 

the  laws  of  an  organization  known  as  the  Omaha  Claim  Club ;    that 

this  organization,  consisting  of  very  numerous  armed  men,  sought  to, 

and  did  to  a  great  extent,  control  the  disposition  of  the  public  lands  in 

the  vicinity  of  Omaha  in  1857,  in  defiance  of  the  laws  of  the  United 

States;    that  it  frequently  resorted  to  personal  violence  in  enforcing 

its   decrees ;    that   the    fact   was   notorious   in   Omaha,   and   that   he. 

Brown,  was   fully  advised  in  the  premises ;    that  as  soon  as  he  had 

-  '  '  acquired  title  to  the  land.  Pierce,  together  with  several  other  members 

of  the  club,  came  to  his  house  and  demanded  of  him  a  deed  of  the 

land,  threatening  to  take  his  life  by  hanging  him,  or  putting  him  in 

the  Missouri  river,  if  he  did  not  comply  with  the  demand ;   that  the 

"^    '         club  had  posted  handbills  calling  the  members  together  to  take  action 

^  against  him,  and  that  knowing  all  this,  and  in  great  fear  of  his  life, 

^O  he   did,   on  the   10th   of  August,    1857,  convey  the   land  by  deed  to 

J  fierce;    that  he,  Brown,  received  no  consideration  whatever,  for  the 

conveyance ;  that  from  the  date  of  his  settlement  upon  said  land,  until 

-oC,    u  the  time  of  filing  the  bill,  he  had  continued  to  keep  possession  either 


■v^. 


Smalley,  100  Mioh.  2.">7,  64  N.  W.  1.3.  58  Am.  St.  "Rep.  474  (180.5) ;  Filley  v. 
Duncan,  1  Neb.  134.  03  Am.  Dec  .337  (1871) ;  Coin-tnay  v.  Parker,  10  Neb. 
311,  20  N.  W.  120  (18S4),  s.  c.  21  Neb.  .582.  .33  N.  W.  2(;2  (l.S,S7)  ;  Olander 
V.  TiRhe.  43  Neb.  34  1  (ISO."));  AVebn  v.  Fall.  .5.5  Neb.  .547.  70  N.  W.  13.  70 
Am.  St.  Rep.  .307  (ISOS);  Lane  v.  Ludlow.  6  Paine  (N.  Y.)  310,  note  a  (lS:;7i; 
Smith  V.  Gase,  41  Barb.  (N.  Y.)  00  (180.3);  Butler  v.  Brown's  Heirs,  5  Ohio 
St.  211  (1855) ;  Lefferson  v.  Dallas.  20  Ohio  St.  08  (1870) ;  Coggshall  v.  Marine 
Bk.  Co.,  03  Ohio  St.  88,  .57  N.  E.  108ii  (1000);  Fasholt  v.  Reed.  10  Serg.  &  R. 
(Pa.)  200  (1827)  ;  McMullen  v.  Wenner.  10  Serg.  &  R.  (Pa.)  18.  10  Am.  Dec. 
543  (1827);  Stewart  v.  Coder.  11  Pa.  00  (1840);  Patterson's  Estate.  25  Pa. 
71  (18.55)  ;  Kinports  v.  Boynton.  120  Pa.  .300.  14  Atl.  135.  0  Am.  St.  Rep.  700 
(18S8);    Snyder  v.  Botkin.  37  W.  Va.  .3.55,  10  S.  F.  .501  (1802). 

In  some  .iurisdictions  the  judgment  creditor  of  the  uni)aid  vendor  and  the 
jmrchaser  at  execution  salf  with  notice  of  the  vendee's  rights  acipiire  no 
rights.  Strauss  v.  White.  (!0  Ark.  107.  51  S.  W.  (!4  (1800)  ;  Baldwin  v.  Thomp- 
son. 15  Iowa.  .504  (1804);  Woodward  v.  Dean,  40  Iowa,  400  (1877);  Money 
V.  Dar.sey,  15  Miss.  15  (ISK!) ;  Taylor  v.  Lowenstein,  .50  Miss.  278  (1874)  ; 
r'hisholni  v.  Andrews,  57Miss.  0.30  (1880):  .Tones  v.  Howard,  142  Mo.  117.  43 
S.  W.  035,  04  Am.  St.  Rep.  540  (1807);  Moore  v.  Byers,  (55  N.  C.  240  (1871): 
Tally  V.  Reed.  72  N.  C.  .3.30  (187.5);  F^lger  v.  Bowles,  72  N.  C.  003  (1S75)  ; 
Adickes  v.  Lowry,  15  S.  C.  128  (1870). 

If  the  purchase  money  has  been  fully  paid,  the  vendee  mny  enjoin  a  sale 
under  an  execution  against  the  vendor.  Finch  v.  Earl  of  Winehelsea,  1  P. 
Wms.  277  (171.5):  Prior  v.  Penpraze,  4  Price,  00  (1817);  Valentine  v.  Seiss,  79 
Md.   187,  2S  Atl.  892  (1894). 


Sec.  7)  BY   ACT    OF   CREDITORS.  275 

actually  or  constructively ;  that  Morton  claimed  an  interest  in  the 
premises  by  virtue  of  a  judgment  lien,  and  that  Weston  also  made 
some  claim. 

The  prayer  was,  that  the  deed  might  be  declared  void,  and  Pierce 
be  decreed  to  reconvey,  and  for  general  reHef.  ' 

The  bill  was  taken  pro  confesso  as  to  all  the  defendants,  except 
Morton,  who  answered. 

This  answer,  stating  that  he,  Morton,  was  not  a  resident  of  the 
territory,  and  had  no  knowledge  or  information  about  the  facts  alleged 
in  the  bill,  but  on  the  contrary  was  an  utter  stranger  to  them,  and 
therefore  could  not  answer  as  to  any  belief  concerning  them,  set  forth, 
that  on  the  28th  of  August,  1857,  Pierce  was  "the  owner  and  in  pos- 
session of,  and  otherwise  well  seized  and  entitled  to,  as  of  a  good  and 
indefeasible  estate  of  inheritance  in  fee  simple,"  the  tract  in  con- 
troversy; that  being  so,  and  representing  himself  to  be  so,  and  having 
need  of  money  in  business,  he  applied  to  him,  Morton,  to  borrow  the 
samie,  and  that  he,  Morton,  being  induced  by  reason  of  the  repre- 
sentation, and  also  by  the  possession,  and  believing  that  he.  Pierce, 
was  the  owner,  he  was  thereby  induced  to  lend,  and  did  lend  to  him 
$6,000,  on  the  personal  security  of  him.  Pierce ;    that  before  the  filing  ^ 

of  this   bill  by  Brown,  he,   Morton,  had  obtained  judgment  against     ' - "- *-•  ^ ^-o*- 
Pierce  for  $3,400,  part  of  the  loan  yet  unpaid ;  that  this  judgment  was 
a  lien  on  the  lands  ;    and  that  as  he,  Morton,  was  informed  and  be- 
lieved, if  he  could  not  obtain  his  money  from  this  land,  he  would  be 
wholly  defrauded  out  of  it. 

The  court  below  declared  Brown's  deed  void,   and  decreed   a  re-     - 
conveyance  from  Pierce  to  him  and  that  neither  Morton  nor  Weston  j^ 

had  any  lien  on  the  premises.  INIorton  now  brought  the  case  here  for 
review. 

Mr.  Justice  Clifford  delivered  the  opinion  of  the  Court.    *    *    *  38 

Next  question  which  arises  in  the  case  is,  whether  the  judgment 
set  up  by  the  appellant  creates  a  superior  equity  in  his  favor  over  that 
alleged  and  proved  by  the  appellee.     *     *     * 

Express  decision  of  this  Court  is,  that  the  lien  of  a  judgment  con-   . 
gtitutes  no  property  in  the  land,  that  it  is  merely  a  general  lien  secur-  x. 

ing  a  preference  over  subsequently  acquired  interests  in  the  property, 
but  the  settled  rule  in  chancery  is,  that  a  general  lien  is  controlled  in  l  6    J^<~Ck.i 
such  courts  so  as  to  protect  the  rights  of  those  who  were  previously    "^l^  ■   '  ■ 
entitled  to  an  equitable  interest  in  the  lands  or  in  the  proceeds  thereof. 

Specific  liens  stand  upon  a  different  footing,  but  it  is  well  settled 
that  a  judgment  creates  only  a  general  lien,  and  that  the  judgment 
creditor  acquires  thereby  no  higher  or  better  right  to  the  property  or 
assets  of  the  debtor,  than  the  debtor  himself  had  when  the  judgment 
was  rendered,  unless  he  can  show  some  fraud  or  collusion  to  impair 
his  rights.    Drake  on  Attachments,  §  223. 

38  A  part  of  the  opinion  is  omitted. 


276  TRANSFER   OF    RESPECTIVE   INTERESTS   OF   PARTIES.  (Cll.  3 

Correct  statement  of  the  rule  is,  that  the  lien  of  a  judguient  creates 
a  preference  over  subsequently  acquired  rights,  but  in  equity  does  not 
attach  to  the  mere  legal  title  to  the  land,  as  existing  in  the  defendant 
at  its  rendition,  to  the  exclusion  of  a  prior  equitable  title  in  a  third 
person.  Howe,  Petitioner,  1  Paige  (N.  Y.)  128,  19  Ain.  Dec.  395; 
Ells  V.  Tousley,  1  Paige  (N.  Y.)  283;  White  v.  Car])enter,  2  Paige 
(N.  Y.)  219;  P.uchan  V.  Sumner.  2  P>arb.  Ch.  (X.  Y.)  181,  47  Am. 
Dec.  305;  Pounsbury  v.  Purdy,  11  P.arb.  (N.  Y.)  494;  Kcirsted  v. 
Avery,  4  Paige  (N.  Y.)  15. 

Guided  by  these  considerations,  the  Court  of  Chancery  will  pro- 
tect the  equitable  rights  of  third  persons  against  the  legal  lien,  and 
will  limit  that  lien  to  the  actual  interest  w^hich  the  judgment  debtor 
had  in  the  estate  at  the  time  the  judgment  was  rendered.     *     *     * 

Decree  affirmed. 


:i  * 


Qcu 


HARRIS  V.  GAINES. 

(Supreme  Court  of  Tennessee,  1878.    2  Lea,  12.) 

Appeal  from  the  Chancery  Court  at  Waverly.  G.  H.  Nixon,  Chan- 
cellor. 

IMcFarland,  J.,  delivered  the  opinion  of  the  Court. ^^ 
The  bill  in  substance  charges  that  on  the  12th  day  of  July,  1877, 
'•--'■-.v  >       .  .     the  complainant  entered  into  a  contract  with  the  defendant,  Gaines, 
, ,  ^      Q        and  in  pursuance  of  that  contract  conveyed  to  said  Gaines  and  the 
ti  ^^^'  defendant,  Morris,  a  small  tract  of  land  in  Humphreys  county,  and 
zL         gave  them  his  two  obligations  for  $150,  due  respectively  in  two  and 
,^  three  years  after  date,  one  of  which  he  has  paid  to  their  assignee,  and 

on  the  other  he  has  paid  $100,  in  consideration  of  all  which  said  Gaines 
<^'  f-^  /:.  '^.,  made  to  complainant  a  deed  for  certain  lands  which  he  claimed  he 
-jT  and  Morris  owned  in  Missouri,  but  Morris  did  not  join  in  the  deed; 

that  in  this  transaction  a  gross  fraud  was  committed  upon  him ;  that 
•  ••■'  OovvIa  v- ^^"^^^  represented  that. the  title  to  the  land  in  Missouri  was  clear 
and  unincumbered,  and  in  their  possession,  and  suggested  to  com- 
-vA\.o^  -  plainant,  who  resided  in  this  State,  to  write  to  certain  parties,  named 
by  Gaines,  for  information,  he,  Gaines,  having  in  the  meantime  fraud- 
ulently suggested  to  these  parties  the  answers  to  return,  so  as  to  de- 
ceive and  mislead  the  complainant.  He  charges  that  on  investigation 
he  found  that  Gaines  and  Morris  really  owned  no  land  in  Missouri. 
The  land  Gaines  proposed  to  convey  had  never  been  paid  for,  a  ven- 
dor's lien  existed  thereon,  and  they  were  not  in  possession;  so  that 
complainant  would,  in  reality,  have  to  purchase  the  land  again  be- 
fore he  could  get  any  title  or  possession. 

After  the  plaintiff  had  conveyed  his  land  to  Gaines  and  Morris, 
the  defendant,  Lucas,  who  had  a  judgment  against  Gaines,  caused 
execution  to  be  levied  on  the  land,  and  was  proceeding  to  have  it 

39  A  part  of  the  opinion  is  omitted. 


Sec.  7)  BY   ACT    OF   CREDITORS.  277 

condemned,  when  Gaines  filed  his  bill  enjoining  a  condemnation, 
which  bill  is  still  pending. 

The  prayer  is  for  a  rescission  and  that  the  cause  be  consolidated 
andl  heard  with  the  cause  of  Gaines  and  Lucas. 

Lucas  filed  a  demurrer  assigning  four  causes,  two  of  which,  the 
third  and  fourth,  were  sustained  by  the  Chancellor,  and  the  bill  dis- 
missed as  to  him.  [After  concluding  that  the  demurrers  should  have 
been  overruled,  the  Court  proceeded  as  follows :] 

Another  ground  of  demurrer  assigned  is,  that  it  not  being  alleged 
that  Lucas  had  knowledge  of  the  fraud,  the  levy  of  his  execution 
gave  him  a  right  prior  to  the  claims  of  the  complainant.  This  ground 
of  demurrer  was  not  acted  upon  by  the  Chancellor  and  in  strictness, 
perhaps,  we  need  express  no  opinion  upon  it.  It  being  alleged  that 
Gaines  has  a  bill  pending  to  enjoin  the  execution  of  Lucas,  it  may 
become  unnecessary  to  decide  the  question.  If  Lucas'  levy  gave  him 
priority,  that  right  may  be  enforced  on  final  decree  without  now  dis- 
cussing the  bill  as  to  him.  However,  the  weight  of  authority  and 
reason  is,  we  think,  that  the  mere  levy  of  an  execution  without  sale 
fixes  a  lien  attaching  to  the  legal  title,  and  this  is  subject  to  any  equity 
against  the  debtor,  relating  to  period  of  time  prior  to  the  levy,  and 
such  levy  is  not  a  superior  lien  to  the  right  of  the  grantor  to  rescind 
for  duress  or  fraud.     *     *     * 

Decree  reversed  and  demurrer  overruled,  Lucas  paying  costs  of 
this  court. 


WHITE  and  Others  v.  WILSON  and  Another. 
(Supreme  Court  of  Indiana,  1843.     6  Blackf.  448,  39  Am.  Dee.  437.) 

Error  to  the  Tippecanoe  Circuit  Court. 

Blackford,  J.  Wilson  and  another  filed  a  bill  in  chancery  against 
White  and  others.  The  object  of  the  bill  was  to  have  a  mistake  in  a 
mortgage,  which  bad  been  executed  by  one  of  the  defendants  to  the 
complainants,  corrected  by  the  insertion  in  the  mortgage  of  a  certain 
tract  of  land  which,  by  mistake,  had  been  omitted,  and  also  to  secure 
the  land  so  omitted  from  being  liable  to  certain  judgments  against  the 
mortgagor.  The  Circuit  Court,  on  the  bill,  answers,  depositions,  etc., 
rendered  a  decree  correcting  the  mistake,  and  freeing  the  land  omitted 
in  the  mortgage  from  the  lien  of  the  judgments. 

The  facts  necessary  to  be  noticed  in  this  case  are  as  follows :  .Hunt, 
one  of  the  defendants,  mortgaged  certain  lands  to  the  complainants, 
in  order  to  secure  them  against  loss  as  his  endorsers  of  a  promissory 
note..  A  tract  of  land,  intended  by  the  parties  to  be  included  in  the 
mortgage,  was  omitted  by  mistake.  Subsequently  to  the  mortgage,  and 
before  the  bill  was  filed,  certain  creditors  of  Hunt  obtained  judgments 
against  him ;  and  the  complainants  had  reason  to  apprehend  that 
executions  on  the  judgments  would  be  levied  on  the  land,  which,  by 


278  TRANSFEU   OF    UESPKCTIVE   INTERESTS   OF   PARTIES.  (Ch.  3 

mistake,  had  been  omitted  in  the  mortgage.  The  complainants  had 
paid  tlie  note,  which  was  for  a  larger  amount  than  the  mortgaged 
lands  and  the  tract  omitted  were  worth;   and  Hunt  was  insolvent. 

We  think  the  decree  is  right.  The  court  had  authority  to  correct 
the  mistake.  Mitford's  Ch.  PI.  184;  Gillespie  v.  ^Nloon,  2  John.  Ch. 
(N.  Y.)  585,  7  Am.  Dec.  559.  And  the  land  omitted  in  the  mort- 
gage, the  mistake  being  corrected,  was  not  subject  to  the  judgments. 
It  is  said  by  Judge  Story,  that,  in  all  cases  of  mistake  in  written  in- 
struments, courts  of  equity  will  interfere  as  between  the  original  par- 
ties, or  those  claiming  under  them  in  privity,  such  as  personal  rep- 
resentatives, heirs,  devisees,  legatees,  assignees,  voluntary  grantees,  or 
judgment  creditors,  or  purchasers  from  them  with  notice  of  the  facts. 
1  Story's  Eq.  178.  See,  also,  Burgh  v.  Francis,  1  Eq.  Cas.  Abr.  320; 
Taylor  v.  Wheeler,  2  Vernon,  564;  Finch  v.  The  Earl  of  Winchelsea, 
1  P.  Williams.  277;  In  the  Matter  of  Howe,  1  Paige  (N.  Y.)  125,  19 
Am.  Dec.  395. 

Per  Curiam.    The  decree  is  affirmed  with  costs. *° 


HARNEY  et  al.  v.  FIRST  NAT.  BANK  OF  JERSEY 
CITY  et  al. 
(Court  of  Chancery  of  New  Jersey,  1894.     52  N.  J.  Eq.  697,  29  Atl.  221.) 

Pitney,  V.  C.*^  *  *  *  Three  questions  are  to  be  solved  :  First. 
Was  the  lot  of  land  in  question  partnership  assets?  And,  second,  if 
so,  is  the  right  of  the  judgment  creditors  superior  to  that  of  the  com- 
plainants? Third  Are  the  complainants  in  a  position  to  assert  their 
equity  ? 

[The  Vice  Chancellor  concluded  that  the  lot  was  partnership  prop- 
erty.] 

2.  William  A.  Harney  failed  early  in  1893,  and  on  the  17th  of 
March,  1893,  the  defendant  Bowen,  as  assignee  of  Clark  &  Demarest. 
recovered  a  judgment  against  him  for  $399.29 ;    and  on  the  7th  of 

40  That  the  equity  of  reformation  is  good  against  attaching  or  execution 
creditors  without  regard  to  notice,  see.  also.  Stone  v.  Hale,  17  Ala.  .557,  52 
Am.  Dec.  185  (1850) ;  Whitehead  v.  lirown,  18  Ala.  082  (1851) ;  Early  v. 
Owens,  G8  Ala.  171  (1880) ;  Berry  v.  Sowell,  72  Ala.  14  (1882) ;  Bailey  v.  Tini- 
liorlake.  74  Ala.  221  (188,'',);  Orr  v.  Echols,  119  Ala.  .TIO.  24  South.  357  (1898); 
l',lackl)urn  v.  Randolph.  :]?.  Ark.  119  (1878);  I^.  Smith  Milling  Co.  v.  IMikles, 
01  Ark.  12.'',,  32  S.  W.  49.'^  (1895);  Wall  v.  Arrington,  13  Ga.  88  (185.3);  Burke 
V.  Anderson,  40  Ga.  535  (1809);  Lowe.  Adm'x,  v.  Allen.  (58  Ga.  225  (ISSI); 
riiillips  V.  Roquemore.  90  Ga.  719.  23  S.  E.  855  (189.5)  ;  Korchner  v.  Frazicr. 
100  Ga.  437,  32  S.  E.  351  (1898)  ;  Boyd  v.  Anderson,  102  Ind.  217,  1  N.  E.  724 
(1SS5)  ;  Welton  v.  Tizzard,  15  Iowa,  495  (1804) ;  Roa  v.  Wilson,  112  Iowa, 
517,  84  N.  W.  539  (1900) ;  Bush  v.  Bush,  .33  Kan.  5.50,  6  Pac.  794  (1885)  ;  Bod- 
well  V.  Ileaton,  40  Kan.  .30.  18  Pac.  901  (18S8)  ;  Young  v.  Coleman,  43  Mo.  179 
(1809) ;  Martin  v.  Nixon.  92  :\Io.  20,  4  S.  W.  503  (1887) ;  Galway  v.  Mahhow. 
7  Nel).  285  (1878);  Chadron  Building  &  Loan  Ass'n  v.  Hamilton,  45  Neb.  .".(iO, 
03  N.  W.  808  (1895)  ;    Strang  v.  Beach,  11  Ohio  St,  283,  78  Am.  Dec.  308  (1800). 

■ii  A  part  of  the  opinion  is  omitted. 


Sec.  7)  BY   ACT    OF   CREDITORS.  279 

June,  1893,  the  First  National  Bank  of  Jersey  City  recovered  a  juflg-- 
ment  for  $4,061.55,  and  subsequently,  on  the  14th  of  August,  1893, 
the  bank  recovered  a  further  judgment  against  him  for  the  sum  of 
$1,638.46.  Upon  this  last  judgment  execution  was  issued  and  re- 
turned unsatisfied.  William  A.  Harney  was  then  examined  under  sup- 
plementary proceedings,  and  upon  such  examination  his  interest  in 
this  property  was  discovered,  and  an^alias  execution  was  issued  and 
duly  levied  upon  the  lot  in  question,  and  it  was  advertised  for  sale. 

The  defendants  contend  that,  by  virtue  of  their  several  judgments 
and  levies,  they  acquired  a  lien  upon  the  one-third  interest  of  W.  A. 
Harney,  which  is  superior  in  right  to  the  equity  of  the  executors  of 
the  deceased  partner.  They  do  not  deny  that  the  executors  have  an 
equity,  but  they  say  it  is  a  secret  one,  and  must  yield  to  the  statutory 
lien  of  a  judgment. 

The  general  rule  is  that  an  equity  of  this  sort  is  superior  to  that 
of  a  judgment  creditor  or  any  other  party  acquiring  an  interest  from 
the  holder  of  the  legal  title,  except  it  be  a  bona  fide  purchaser  for 
value.  The  principle  is  that  the  lien  of  a  judgment  reaches  only  such 
right  as  the  defendant  in  execution  has  in  the  property,  subject  to  all 
equities  against  it.  The  holder  of  the  legal  title  of  real  estate  which 
constitutes  part^of  the  assets  of  a  partnership  holds  it  in  trust  for  the 
,firmj."so  far,  at  least,  as  may  be  necessary  to  pay  the  partnership  debts, 
and  adjust  the  equities  between  the  partners."  Pillsbury  v.  Kingon, 
31  N.  J.  Eq.  619,  at  page  625,  and  cases  cited;  Lindl.  Partn.  p.  351 
et  seq. ;  and  see  remarks  of  Mr.  Justice  Dixon  in  Arnold  v.  Hager- 
man,  45  N.  J.  Eq.  186,  at  page  197,  17  Atl.  93.  14  Am.  St.  Rep.  712. 
This  trust  in  favor  of  the  firm  results  from  the  mere  fact  that  the  land 
was  bought  and  paid  for  with  partnership  funds,  for  partnership  pur- 
poses, and  is  a  part  of  the  partnership  property.  The  doctrine  is  quite 
familiar,  and  perfectly  well  settled.     [Authorities  cited.] 

The  well-settled  and  only  groundl  upon  whicli  a  person  dealing  with 
tlie  holder  of  the  title  of  real  estate  subject  to  a  secret  trust,  of  which 
hehas  no  notice,  is  permitted  to  obtain  from  him  a  title  clear  of  the 
trust  is  that  he  parts  with  something  of  value  on  the  strength  of  the 
apparent  ownership  of  the  land.  This  is  the  very  essence  of  the 
doctriue^of  bona  fide  purchaser.  The  rule  is  universal  in  equity  that, 
in  order  to  constitute  a  person  a  bona  fide  purchaser  for  value,  he 
must  have  parted  with  something  either  in  the  way  of  money  or  val- 
uable thing,  or  of  a  right  of  action,  or  have  given  up  some  lien  which 
he  already  had,  or  assumed  some  new  obligation.  He  must  have  al- 
tered his  position  irretrievably  in  "actual  reliance"  upon  the  apparent 
title  of  the  other  party  to  a  particular  piece  of  propertv.  2  Pom.  Eq. 
Jur.  §§  745,  747;  Basset  v.  Nosworthy,  2  White  &  T.  Lead.  Cas.  Eq. 
(4th  Am.  Ed.)  82,  83. 

Now,  a  mere  judgment  creditor  is  not  clothed  with  this  armor.  He 
has  parted  with  nothing  on  the  strength  of  the  apparent  title  of  his 
debtor  in  any  particular  parcel  of  property.     Such  apparent  owner- 


280  TRANSFER   OF    RESrECTIVF   INTERESTS   OF   PARTIES.  (Ch.  3 

ship  has  not  misled  him  to  his  injury.  He  may  be  disappointed.  l)ut 
mere  disappointment  does  not  amount,  in  legal  contemplation,  to  in- 
jury. 

In  the  case  in  hand  it  apjicars  affirmatively  that  neither  of  the  cred- 
itors knew  that  the  debtor  had  the  title  to  this  land  until  after  they 
had  obtained  judgment.  But  if  they  had  acquired  such  knowledge 
previous  to  the  credit,  or  to  bringing  suit  on  their  debts,  the  situation 
and  rights  of  the  parties  would  not  be  changed,  for  the  mere  giving 
general  credit  on  the  strength  of  the  apparent  ownership  of  the  prop- 
erty does  not  constitute  one  a  bona  fide  purchaser.  Xor  does  the  in- 
curring the  expense  of  a  suit  at  law  create  an  estoppel.  Phillipsburg 
Bank  v.  Fulmer,  31  N.  J.  Law,  52,  at  page  55.     [Authorities  cited.] 

Our  recording  statutes  do,  indeed,  declare  that  unrecorded  deeds  of 
conveyance  absolute  of  land  (Revision,  p.  155.  §  14),  and  unrecorded 
deeds  of  mortgage  or  conveyances  in  the  nature  of  mortgages  of  lands 
(Revision,  p.  706,  §  22),  shall  be  void  as  against  subsequent  judgment 
creditors  and  bona  fide  purchasers  and  mortgagees  for  value. 

But  these  provisions  do  not,  by  their  terms,  include  resulting  trusts, 
or  other  purely  equitable  rights  or  liens,  and  they  have  never,  so  far 
as  I  am  informed,  been  construed  by  our  courts  to  have  such  effect. 

The  subject-matter  of  the  legislation  of  which  they  form  a  part  is 
the  providing  for  the  acknowledgment,  proof  of  execution,  and  re- 
cording of  deeds,  etc ;    and  it  would  be  a  great  stretch  of  the  power 
of  construction  to  hold  them  to  extend  to  rights  which,  from  their 
very  nature,  are  incapable  of  record.     See,  on  this  subject,   Martin 
v.  Bowen,  51  N.  J.  Eq.  452,  26  Atl.  823. 
/       The  reasoning,  however,  which  excludes  mere  judgment  creditors 
^^b^u  1  ^^^^  ^^''^  position  of  bona  fide  mortgagees,   except  when  expressly 
.^  il  given  that  position  by  the  statute,  does  not  apply  to  purchasers  for 
-    value  without  notice  (other  than  the  plaintiff)  upon  executions  upon 
judgments.     Such  purchasers  have  all  the  qualifications  of  bona  fide 
j    purchasers  for  value,  and  are  protected  as  such.     2  Pom.  Eq.  Jur.  § 
724      *     *     * 

3.  The  next  question  is  wdiether  the  complainants  are  in  a  position 
to  enforce  their  equity. 

It  is  insisted  that  to  give  them  standing  in  this  court  they  must 
either  have  established  their  claim  by  a  judgment  at  law  or  the  sub- 
ject-matter of  the  suit  must  have  been  brought  within  the  jurisdiction 
of  the  court  by  a  decree  of  dissolution  and  judicial  seizure  of  the 
assets  prior  to  the  judgment. 

Neither  of  these  positions  is  tenable.  \Miilc  it  is  well  settled  that 
a  mere  creditor  at  large  of  the  firm  has  no  standing  in  this  court  to 
prevent  an  improper  application  of  the  firm's  assets  (Young  v.  Frier, 
9  X.  J.  Eq.  465),  it  is  equally  well  settled,  as  I  think,  upon  the  plainest 
principles,  that  a  partner,  as  such,  may  maintain  such  a  suit  in  this 
court  by  virtue  of  his  equitable  right  or  lien  in  the  property  in  ques- 
tion.   Deveney  v.  Mahoney,  23  N.  J.  Eq.  247,  at  pages  249  [bottom], 


Sec.  7)  BY   ACT    OF   CREDITORS.  281 

250,  and  cases  cited ;  to  which  I  add:  1  Madd.  Ch.  Pr.  135 ;  1  Story, 
Eq.  Jur.  §  678,  and  cases  cited;  Beavan  v.  Lewis,  1  Sim.  376;  Kerr, 
Inj.  169;  Lindl.  Partn.  359;  Greenwood  v.  Brodhcad,  8  Barb. 
(N.  Y.)  593.     *     *     *  _ 

I  think  the  complainants  are  entitled  to  the  relief  prayed  for,  and  \'j)j2Jt. 
that  the  sale  should  be  stayed  until  the  partnership  debts  are  paid,  and 
the  accounts  adjusted;  and  will  advise  a  decree  accordingly.*^ 

■  ':■     I 


EVERETT  V.  DREW  and  Others. 

(Supreme  Judicial   Court   of  Massachusetts,   18S0.     129   Mass.   1.50.) 

Morton,  J.  This  is  an  action  of  contract,  and  the  substantial  al- 
legations of  the  plaintiff's  declaration  are,  that  the  defendants  made 
an  arrangement  with  Elijah  C.  Drew  that  he  was  to  buy  a  parcel  of  -,  ,^  J 

land,  to  take  the  deed  in  his  own  name,  and  to  execute  a  declaration 
that  he  held  it  in  trust  for  the  defendants,  to  pay  a  part  of  the  con 


sideration  with  money  furnished  by  the  defendants,  and  to  give  his^^,     yjji-^^ 

own  note  andi  mortgage  back  for  the  balance  thereof.     The  declara-  ^t,o,^u-<u/i 

tion  also  alleges  that  Drew  purchased  land  of  the  plaintiff''s  wife  and  '  7^  '   '   ' 

other  persons;    that  he  paid  therefor  $10,000,  with  money  furnished 

by  the  defendants;    that  the  owners  made  a  deed  to  him,  and  he,  at  '  -  ^   •" 

their  request,  gave  his  note  and  a  mortgage,  containing  a  power  of 

sale  to  the  plaintiff;   that  the  plaintiff  foreclosed  saidl  mortgage  by  a 

sale ;    that,  after  applying  the  proceeds  of  the  sale,  there  remains  a 

balance  due  on  said  note ;    and  that  the  defendants  owe  the  plaintiff 

the  said  balance  and  the  interest  thereon. 

The  plaintiff  contends  that  Drew  throughout  the  transaction  and  in 
giving  the  note  acted  as  the  agent  of  the  defendants ;   and  that,  as  the 
note  is  not  a  negotiable  promissory  note,  he  has  the  right  to  maintain     -^      ^. 
an  action  on  it  against  them  as  unknown  and  undisclosed  principals.    -   rr^^^ 

The  general  rule  is  well  established  that  if  an  agent,  acting  for  his    }"^-'~^-^U 
principal,  makes  a  contract  without  disclosing  his  principal,  the  lat--^^^^^  .  .  V 
ter  is  bound  by  the  contract.    Thomson  v.  Davenport,  2  Smith,  Lead.  "^^  c 
Cas.  (5th  Am.  Ed.)  358,  and  cases  cited.     He  is  bound  because  it  is 
his  contract  made  through  another  person.     But  this  rule  does  not 
apply  in  the  case  at  bar.    Drew  was  not  the  agent  of  the  defendants. 

42  The  last  six  cases  are  not  cases  of  technical  trusts.  They  are  cases  of 
"equities,"  so  called,  enforceable  in  a  court  of  equity  and  conferring  rights 
against  property,  superior  to  the  rights  of  creditors  as  such.  Instances  of 
other  "equities"  conferring  rights  superior  to  the  rights  of  creditors  will  be 
found  in  the  following  cases:  Wanzer  v.  Truly,  17  How.  584.  15  L.  Ed.  216 
(1854) ;  Justice  v.  Justice,  115  Ind.  201,  16  N.  E.  615  (1888) ;  Loomis  v.  Hud- 
son. 18  Iowa,  416  (1865) ;  Wiggiu  v.  Day,  9  Gray  (Mass.)  97  (18.57) ;  Walton 
V.  Hargroves,  42  Miss.  18,  97  Am.  Dec.  429  (1868)  ;  Matter  of  Howe,  1  Paige 
(N.  Y.)  125,  19  Am.  Dec.  395  (1828):  Williams  v.  IngersoU,  89  N.  Y.  508 
(1882);  Manifold's  Estate,  In  re,  5  Watts  &  S.  (Pa.)  340  (184.3);  Farmers'  & 
Mechanics'  Nat,  Bk.  v.  King.  57  Pa.  202.  98  Am.  Dec.  215  (1868) ;  Burkholder 
V.  Ludlam,  30  Grat.  (Va.)  2,55.  82  Am.  Pvep.  668  (1878). 


282       TRANSFER  OF  RESPECTIVE  INTERESTS  OF  PARTIES.     (Cll.  3 

He  was  not  authorized  to,  and  did  not  in  fact,  make  any  contract  for 
and  on  behalf  of  them.  He  bought  the  land  and  took  the  title,  he  gave 
the  note  and  the  mortgage,  in  his  own  name  and  for  his  own  behalf 
as  trustee.  The  relations  between  him  and  the  defendants  were  not 
those,  of  agent  and  principal,  but  of  trustee  and  cestuis  que  trust.  Sucli_ 
a  relation  is  lawful,  and,  in  the  absence  of  fraud,  does  not  render  the 
pestuis  que  trust  liable  to  suits  at  law  upon  contracts  made  ^y  tlie^ 
trustee  in  his  own  name. 

It  is  true  that  the  declaration  alleges  that  Drew  was  the  agent  of 
the  defendants.  But  it  also  alleges  the  specific  facts  which  show  the 
relations  between  the  parties,  and  those  facts  show  that  he  was  not 
an  agent.  The  allegations  that  he  was  an  agent,  must  be  regarded 
as  mere  allegations  of  a  conclusion  of  law  which  are  not  sustained 
by  the  facts!  The  defendants'  demurrer  was  therefore  rightly  sus- 
tained.'*^ 

Exceptions  overruled. 


O'BRIEN  V.  JACKSON  et  al 
(Court  of  Appeals  of  New  York,  1901.     167  N.  Y.  .31,  GO  N.  E.  2.38.) 

Action  by  Michael  J.  O'Brien  against  Henry  H.  Jackson  and  others, 
executors  of  the  will  of  Peter  A.  II.  Jackson.  From  a  judgment  of 
the  appellate  division,  affirming  a  judgment  in  favor  of  plaintiff,  and 
from  an  order  denying  a  new  trial,  defendants  appeal.     Reversed 

CuLLEN,  J.'**  This  action  was  brought  against  the  defendants,  as 
executors  of  and  trustees  under  the  will  of  Peter  A.  H.  Jackson,  de- 
ceased, to  recover  a  balance  due  on  a  contract  for  repairs  made  to 
some  buildings  of  the  testator,  which  were  devised  to  the  defendants 
on  certain  trusts.  The  complaint  alleged!  that  the  defendants  were 
the  executors  of  and  trustees  under  said  will,  and  were  authorized 
to  make  the  agreement  sued  on.  This  allegation  as  to  authority  was 
put  in  issue  by  the  answer.  On  the  trial  of  the  case  the  defendants 
moved  to  dismiss  the  complaint  on  the  ground  that  it  stated  no  cause 
of  action  against  them  in  their  representative  capacity.  This  motion 
was  denied.  At  the  close  of  the  evidence  the  motion  was  renewed 
on  the  same  grounds,  and  again  denied,  to  which  rulings  the  defend- 
ants excepted.  The  case  was  then  submitted  to  the  jury  on  the  issues 
relating  to  the  performance  of  the  contract  and  the  plaintift"s  claim 
for  extra  work.  A  verdict  was  rendered  for  the  plaintiff',  on  which 
judgment  was  entered  that  the  plaintiff  recover   of  the  defendants, 

•»s  The  distinction  here  drawn  seems  to  be  one  without  a  difference.  The 
relation  of  atrent  and  undiscl<ised  principal,  we  suliinit.  is  tliat  of  trustee  and 
cestui  que  trust,  and  a  suit  against  the  undisclosiMl  ]>rinciiial  on  a  contract 
made  with  his  agent  presents  the  anomaly  of  an  action  at  law  against  the 
cestui  que  trust  on  a  contract  made  with  his  trustee.  See  Ames'  Cases  ou 
Trusts  (2d  Ed.)  p.  258,  note  1. 

i*  A  part  of  the  opinion  is  omitted. 


Sec.  7)  BY   ACT    OF   CREDITORS.  283 

as  executors  of  and  trustees  under  the  last  will  and  testament  of  Peter  J^^'-^^^^^^^^^ 
A.  H.  Jackson,  deceased,  a  specified  sum,  and  that  the  plaintiff  have  .  j^^Jji^  ao  i 
execution  therefor.  The  judgment  having  been  affirmed  by  the  ap- / ,  ,^^  ^ ji>o  Aaa. 
pellate  division,  an  appeal  has  been  taken  to  this  court.  XLj-t'*=<=*-tl~^ 

We  are  of  opinion  that  the  action  in  its  present  form  cannot  be  r^t/fr-  0~^^ 

maintained,  and  the  defendants'  motion   to  dismiss  the  complaint  as  ^      '■    -^^Xu. 

.  .  .  i 

not  stating  a  cause  of  action  against  them  ni  their  representative  ca- 
pacity should  have  been  granted.     The  general  rule  is  well  settled  in 
tliis  state  that  executors  or  trustees  cannot,  by  their  executory  con-  jr_^         J^ 
tracts,  although  made  in  the  interest  and  for  the  benefit  of  the  estate     ^  ^ 

they  represent,  if  hiade  upon  a  new  and  independent  consideration, 
bind  the  estate,  and  thus  create  a  liability  not  founded  upon  the  con- 
tract or  obligation  of  the  testator.  Ferrin  v.  My  rick,  41  N.  Y.  315; 
Austin  v.  Munroe,  47  N.  Y.  360;  Matter  of  Van  Slooten  v.  Dodge, 
145  N.  Y.  327,  39  N.  E.  950;  Parker  v.  Day,  155  N.  Y.  383,  49  N. 
E.  1046.  The  reason  for  the  rule  is  clearly  explained  by  Hunt,  C.  J., 
in  the  earliest  of  the  cases  cited.  While,  as  between  the  executor 
and  the  person  with  whom  he  contracts,  the  latter  may  rely  on  the 
contract,  the  beneficiaries  are  not  concluded  by  the  executor's  act, 
but  the  propriety  of  the  charge  and  the  liability  of  the  estate  therefor 
must  be  determined  in  the  accounting  of  the  executor.  In  an  action 
at  law  against  the  executor,  the  legatees  and  persons  interested  in 
the  estate  have  no  opportunity  to  be  heard.  To  the  general  rule  there 
are  exceptions,  and  an  equitable  action  can  be  maintained  against  the 
estate  on  behalf  of  a  creditor  in  case  of  the  fraud  or  insolvency  of 
the  executor,  or  when  he  is  authorized  to  make  an  expenditure  for 
the  protection  of  the  trust  estate,  and  he  has  no  trust  fund  for  the 
purpose.  In  the  latter  case,  if  unwilling  to  make  himself  personally 
liable,  he  may  charge  the  trust  estate  in  favor  of  any  person  who 
will  make  the  expenditure.  Charges  against  the  trust  estate  in 
such  cases  can  be  enforced  only  in  an  equitable  action  brought  for 
the  purpose.  To  that  action  the  beneficiaries  and  cestuis  que 
trustent  are  necessary  parties.  The^  trust  estate  cannot  be  de- 
pleted or  swept  away  except  in  an  action  which  they  may  defend. 
The  defendants  were  personally  liable  on  their  contract  with  the  plain- 
tiff, but  the  action  cannot  be  changed  on  this  appeal  into  one  against 
the  defendants  individually.  Austin  v.  Munroe,  supra.  Any  amend- 
ment of  the  pleadings  or  in  the  parties  must  be  sought  in  the  su- 
preme court. 

This  action  is  in  form  at  law,  and  has  proceeded  on  that  theory. 
The  judgment  is  for  the  recovery  of  a  sum  of  money,  and  authorizes 
the  issue  of  an  execution.  But,  while  no  action  at  law  can  be  main- 
tained against  the  defendants  in  their  representative  capacity,  it  may 
be  that,  if  the  complaint  stated  a  good  cause  of  action  in  equity,  the 
defendants'  motion  to  dismiss  the  complaint  was  properly  denied,  and 
the  judgment  might  be  suft'ered  to  stand  for  whatever  it  is  worth  in 
any  subsequent  proceedings  the  plaintiff'  should  take  to  reach  the  trust 


284       TRANSFER  OF  RESPECTIVE  INTERESTS  OF  PARTIES.     (Cll.  3 

estate.  The  defendants  did  not  take  the  objection  at  the  trial,  either 
by  demurrer  or  answer,  that  their  cestuis  que  trustent  were  not  made 
parties  to  the  action,  and  therefore  cannot  raise  that  objection  now. 

'iBut  the  difficulty  is  that  the  complaint  did  nut  allei;e  facts  sufficient 

jjto  entitle  the  plaintiff  to  charge  the  trust  estate  in  equity.  It  did  not 
allege  that  the  defendants  were  insolvent,  or  not  am])ly  personally 
responsible  for  the  debt;  nor  did  it  state  that  the  defendants  were 
without  funds  sufficient  to  pay  for  the  work  contracted  for. 

It  is  said  by  the  learned  appellate  division  that  the  will  authorized 
the  executors  to  make  the  improvement  for  which  the  plaintiff  seeks 
to  recover.  By  his  will  the  testator  devised  his  residuary  estate,  real 
and  personal,  to  his  executors,  in  trust  to  hold  the  same  in  shares, 
and  to  apply  the  income  of  one  share  to  each  of  his  children  during 
life,  and  upon  the  death  of  the  child  the  testator  devised  the  share  to 
the  issue  or  heirs  at  law  of  such  child.  Pie  directed  his  executors  to 
])ay  all  taxes  and  assessments  on  his  property,  "keep  the  same  in- 
sured, and  in  good  repair  and  condition;  if  damaged,  rebuilt;  while 
held  in  trust  by  them,  respectively,  as  aforesaid."  The  executors  were 
authorized  to  sell  certain  pieces  of  real  property  with  the  consent  of 
all  his  children,  while  as  to  the  remainder  of  the  real  estate  they  were 
given  no  power  of  sale.  The  trustees  were  therefore  empowered  by 
the  will  to  make  the  improvement  out  of  which  this  action  grows. 
Probably,  the  repairs  being  necessary,  they  would  have  the  same 
power  without  express  direction  in  the  will.  But  the  authority  to  in- 
cur the  expense  did  not  of  itself  create  the  right  to  run  in  debt  for  it,, 
and  pledge  or  mortgage  the  trust  estate  for  the  payment  of  the  debt. 
Ordinarily,  the  cost  of  repairs  should  be  borne  by  the  income  of  the 
estate  as  it  accrues.  Extraordinary  expenditures  might,  however,  be- 
come necessary,  which  the  income  should  not  exclusively  bear,  or 
which  might  properly  be  apportioned  between  income  to  accrue  in 
various  years  in  the  future. 

The  supreme  court  is  now  empowered  by  statute  to  authorize  a  sale 
or  mortgage  of  the  trust  estate  under  proper  circumstances  and  for 
sufficient  reasons.  But  what  is  a  proper  charge  on  the  estate,  and 
how  that  charge  should  be  apportioned  and  satisfied,  are  to  be  deter- 
mined in  proceedings  between  the  trustee  and  his  cestui  que  trust. 

'  Unless  he  is  without  trust  funds  sufficient  for  the  purpose,  he  must 
act  for  himself  in  making  expenditures,  leaving  the  propriety  of  the 

:  .expenditures  to  be  determined  in  such  proceedings.     He  can  create 

a  lien  in  favor  of  a  third  party  only  where  the  expenditures  would 

otherwise  necessarilv  involve  an  advance  of  his  own   funds.     Willis 

V.  Sharp,  113  N.  Y.  586,  21  N.  E.  705,  4  E.  R.  A.  493.     *     *     * 

Judgment  reversed. 


Sec.  7)  BY   ACT    OF   CREDITORS.  285 

CLOPTON,  Adm'r,  v.  GHOLSON  and  Others. 
(Supreme   Court   of   Mississippi,   1876.     53   Miss.   4GG.) 

Appeal  from  the  Chancery  Conrt  of  Monroe  Connty. 

ChalmI'RS,  J.,  dehvered  the  opinion  of  the  court.*^ 

In  1865-66  Haughton  and  McNairy,  executors  of  T.  Brandon,  de- 
ceased, dehvered  for  collection  to  Davis  &  Haughton  (afterwards 
Davis,  Haughton  &  Gholson),  attorneys  at  law,  a  large  mass  of  claims 
against  various  persons,  amounting  in  the  aggregate  to  something 
more  than  $35,000.  Upon  all  of  them  suits  were  instituted,  which, 
in  many  instances,  resulted  in  long  and  complicated  litigation,  involv- 
ing injunctions  in  the  Chancery  and  appeals  to  the  Supreme  Court. 
A  large  majority  of  the  judgments  obtained  proved  worthless,  so  that, 
after  the  appropriation  by  the  attorneys  of  all  the  money  realized, 
there,  still  remained  due  them  several  thousand  dollars  for  fees.  The 
fees  charged  were  proved  to  be  usual  and  legitimate,  according  to  the 
custom  and  standard  at  the  Aberdeen  bar.  Both  of  the  executors 
having  resigned  and  subsequently  died,  the  appellant  Clopton  was,  in 
1869,  appointed  administrator  cum  testamento  annexo.  One  of  the 
suits  only  seems  to  have  been  revived  and  prosecuted  in  his  name, 
all  the  others  having  ripened  into  judgments  before  his  appointment. 
The  claim  of  the  attorneys  for  their  fees  remaining  unpaid,  this  bill 
W3.s^  filed  against  the  administrator  Clopton  in  his  representative  ca- 
■Ea.city,  to  compel  payment  out  of  the  assets  in  his  hands.  Many  ques- 
tions were  raised  by  the  pleadings  below  and  by  the  assignment  of 
errors  in  this  court ;  but  we  shall  notice  only  the  principal  one,  which 
underlies  and  controls  all  others.  Can  an  attorney  make  the  estate  0.,c^...e.^ 
of  a  decedent  liable  for  services  rendered  to  the  executor  or  admin-  ,  J 
istrator  in  its  management? 

We  had  occasion  in  the  recent  case  of  Fearn  v.  Mayers,  53  Miss. 
458,  to  declare  that,  while  trustees  have  a  lien  on  the  trust  estate  for 
all  costs  and  expenses  legitimately  incurred  by  them  in  its  adminis- 
tration, this  privilege  does  not  extend  to  agents  employed  by  them, 
but  such  agents  must  look  alone  to  the  trustee  for  reimbursement. 
It  follows  from  this,  that  while  the  trustee  who  has  paid  or  become 
responsible  to  parties  legitimately  employed  by  him  in  the  business 
of  the  estate  may  retain  the  assets  for  his  own  reimbursement,  yet  if 
he  does  not  do  so,  the  parties  employed  by  him  are  ordinarily  power- 
less to  assert  any  claim  against  the  estate. 

A  careful  re-examination  of  the  subject  has  strengthened  our  con- 
viction of  the  soundness  of  this  decision,  both  on  principle  and  au- 
thority. If  the  trust  estate  was  liable  to  be  attacked  and  impleaded 
by  every  person  who  had  dealt  with  the  trustee,  and  forced  to  liti- 
gate with  them,  the  nature,  value  and  beneficial  character  to  the  es- 
tate of  the  services  alleged  by  them  to  have  been  rendered,  it  would 

45  A  part  of  the  opinion  is  omitted. 


■^^  I- 


286  TRANSFER   OF    RESPECTIVE   INTERESTS   OF   PARTIES.  (Cll.  3 

be  involved  in  endless  complications,  and  be  perhaps  swallowed  up 
or  seriously  injured  by  the  accumulations  of  costs.  The  law,  there- 
fore, compels  such  i)ersons  to  look  to  the  trustee  with  whom  they 
dealt,  and  against  whom  alone  they  have  a  legal  demand.  If  their 
claim  is  recognized  -or  enforced  against  him,  he  presents  it  to  the 
proper  tribunal,  and  with  him  the  beneficiaries  of  the  estate  will  liti- 
gate the  question  of  the  propriety  of  its  allowance  against  themselves. 
The  authorities  on  this  point  are  almost,  if  not  altogether,  uniform 
and  harmonious.  Hill  on  Trustees,  567;  2  Perry  on  Trusts  (2d  Ed.) 
§  007;  Lewin  on  Trusts,  454,  455;  Worrall  v.  Harford,  8  Ves.  Jr. 
4 ;  Jones  v.  Dawson,  19  Ala.  672 ;  Wade  v.  Pope,  44  Ala.  690 ;  Mulhall 
v.  Williams,  32  Ala.  489;  Livingston  v.  Gaussen,  21  La.  Ann.  286, 
99  Am.  Dec.  731 ;  Kessler  v.  Hall,  64  N.  C.  60;  Austin  v.  Munroe.  47 
N.  Y.  360;  Guerry  v.  Capers,  Bailey,  Eq.  (S.  C.)  159;  Sims  v.  Stil- 
w^ell,  3  Plow.  (Miss.)  176;  Woods  v.  Ridley,  27  Miss.  119. 

It  is  evident  that  this  principle  applies  with  especial  force  to  con- 
tracts entered  into  by  executors  and  administrators.  These  futic- 
tionaries  have  no  authority  to  contract  debts  which  shall  primarily 
bind  the  estates  committed  to  them,  except  in  cases  specially  authorized 
by  statute,  and  ordinarily  such  debts  are  obligatory  only  as  personal 
obligations.  This  has  been  repeatedly  held  true  of  fees  due  attor- 
neys for  professional  services  in  the  management  of  estates,  as  was 
declared  in  the  leading  case  of  Worrall  v.  Harford,  ubi  supra,  and 
in  several  of  the  other  cases  above  cited. 

It  is  true  that,  under  some  circumstances,  attorneys  or  other  cred- 
itors of  the  administrator  may,  under  the  principles  of  substitution  and 
subrogation,  reach  the  assets  of  the  estate;  but  such  relief  must  be 
based  on  the  fact  that  the  administrator  himself  either  already  has 
some  claim  against  the  estate,  or  would  be  entitled  to  one  by  a  pay- 
ment of  the  demand  of  the  creditor,  and  that  the  latter  is  unable  to 
obtain  satisfaction  from  the  administrator.  If,  for  instance,  the  cred- 
itor can  show  that  the  consideration  of  his  demand  inured  to  the 
benefit  of  the  estate  and  is  unpaid ;  that  the  administrator  is  nonresi- 
dent or  insolvent ;  has  never  received  credit  for  it  in  his  settlements ; 
and  that  the  estate  is  indebted  to  him,— in  such  case  the  creditor  may, 
bv  a  bill  in  chancery,  have  himself  subrogated  to  the  rights  of  the  ad- 
ministrator against  the  estate,  and  to  that  extent  have  satisfaction  of 
his  demand  out  of  its  assets.  Nor  would  it  be  necessary  for  him  to 
show  that  the  estate  was  actually  indebted  to  the  insolvent  adminis- 
trator. It  would  be  sufficient  if  he  could  show  that  the  estate  would 
have  been  indebted  if  the  administrator  had  paid  the  demand  out  of 
his  private  funds.  Inasmuch  as  in  such  a  case  the  administrator 
ought  to  have  paid  it,  and  if  he  had  done  so,  would  have  been  allowed 
a  credit  against  the  estate,  a  court  of  equity  will  consider  that  done 
which  should  have  been  done,  and  will  give  the  creditor  a  decree 
against  the  estate,  provided  the  administrator  is  not  indebted  to  the 
estate,  or  would  not  thereby  become  so.  and  has  not  already  received 


Sec.  7)  BY  ACT    OF   CREDITORS.  287 

credit  for  the  claim.  Under  such  circumstances  the  creditor  would  ob- 
tain payment  only  for  beneficial  services  rendered  to  the  estate,  while 
it  would  be  in  no  wise  damaged. 

The  Supreme  Court  of  South  Carolina,  in  Guerry  v.  Capers,  Bai- 
ley, Eq.  159,  after  laying  down,  in  the  broadest  terms,  the  doctrine 
that  the  creditor  must  look  alone  to  the  administrator  with  whom  he 
contracted,  thus  announces  the  principle  above  stated :  "Whenever  the 
trustee,  if  he  hadi  paid  the  debt  out  of  his  own  funds,  would  be  in 
advance  to  the  trust  estate,  and  would  be  entitled  to  be  reimbursed 
out  of  it,  his  creditor  may,  if  the  trustee  is  insolvent,  be  allowed  to 
take  his  place,  and  be  paid  out  of  the  estate  to  the  same  extent.  This 
constitutes,  however,  the  only  exception  to  the  general  rule  which  we 
are  prepared  to  recognize."  This,  we  think,  announces  the  true  rule, 
except  that  the  court  omits  the  contingency  of  the  estate  being  already 
indebted  to  the  trustee,  in  which  event,  of  course,  the  equity  would 
be  still  stronger. 

This  right  of  subrogation  is  not  to  be  confounded  with  that  inti- 
mated in  Woods  v.  Ridley,  27  Miss.  119,  and  more  fully  exemplified 
in  Short  v.  Porter,  44  Miss.  533,  where  parties  had  furnished  money 
to  the  administrator  which  had  been  applied  in  exoneration  of  the 
debts  of  the  estate.  In  such  cases  the  equities  arise  by  reason  of  the 
application  of  the  money  to  the  discharge  of  the  burdens  resting  upon 
the  estate,  and  are  in  no  manner  affected  by  the  solvency  or  insolvency 
of  the  administrator,  or  by  the  state  of  the  accounts  between  himself 
and  the  estate.  In  the  class  of  cases  under  consideration  the  creditor 
has  no  debt  against  the  estate,  nor  has  he  discharged  any.  He  has  a 
personal  claim  against  the  administrator,  which  he  will  be  allowed  to 
assert  against  the  estate  under  the  limitations  above  indicated,  because 
the  estate  has  received  the  benefit  of  the  consideration,  and  has  not 
paid  for  it ;  and  while  it  is  impossible  to  collect  it  from  the  party  pri- 
marily liable,  its  payment  out  of  the  assets  can  inflict  no  injustice  upon 
the  beneficiaries  of  the  estate. 

Whether  under  any  circumstances  such  a  proceeding  can  be  in- 
stituted against  the  estate,  before  the  administrator  with  whom  the 
contract  was  made  has  been  pursued  to  insolvency,  is  a  mooted  ques- 
tion. It  was  ruled  in  the  affirmative  in  Coopwood  v.  Wallace,  12  Ala. 
790 ;  but  this  decision  was  overruled  in  Jones  v.  Dawson,  19  Ala.  672, 
Chief  Justice  Dargan  dissenting.  The  latter  decision  was  undoubtedly 
correct  in  the  principal  question  discussed,  to  wit,  the  non-liability  of 
the  trust  estate  to  the  claims  of  parties  dealing  with  the  trustee,  in 
discussing  which  the  court  remarked :  "We  say  nothing  of  the  right 
of  the  party,  after  he  has  exhausted  his  legal  remedy  against  the 
trustee,  to  proceed  in  equity  to  subject  an  equitable  demand  which  the 
trustee  may  have  against  the  estate." 

Conceding  that  the  party  has  this  right,  as  we  have  decided  above 
that  he  has,  we  see  no  reason  why  he  should!  not  be  allowed  to  assert 
it  primarily,  without  being  put  to  the  necessity  of  a  suit  at  law  in  the 


288  ^  TRANSFER   OF    RESPECTIVE   INTERESTS   OF   PARTIES.  (Cll.  3 

first  instance.  In  such  a  proceeding  he  must  assume  the  burden  of 
showing-  the  impossibility  of  obtaining  payment  from  the  administra- 
tor, as  well  as  of  establisliing  all  the  other  facts  necessary  to  maintain 
the  suit.  The  administrator  or  his  legal  representatives  should  be 
made  a  defendant,  as  well  as  the  existing  repiesentative  of  the  estate 
proceeded  against. 

The  bill  in  this  case  possesses  none  of  the  features  deemed  essential 
to  its  maintenance;  and  the  demurrer  filed  to  il  should  have  been  sus- 
tained!.    *     *     * 

Decree  reversed. 


FEARN  v.  MAYERS,  Trustee,  and  Others. 
(Supreme  Court  of  Mississippi,  1S7C.     53  Miss.  458.) 

Appeal  from  the  Chancery  Court  of  Hinds  County;  lion.  H.  R. 
Ware,  Chancellor. 

In  this  suit  a  bill  was  filed  to  subject  certain  lands  held  in  trust  to 
the  payment  of  services  rendered  by  an  agent  employed  by  the  trus- 
tees to  take  care  of  and  manage  the  trust  estate.  A  demurrer  was 
filed  to  the  bill,  which  was  overruled,  and  the  defendants  were  re- 
quired to  plead;  and  an  order  of  reference  to  a  commissioner  was 
made,  to  have  an  account  stated  between  the  trustees  and  their  agent. 
Pjut  the  Chancellor,  who  overruled  the  demurrer,  went  out  of  office; 
and  the  new  Chancellor,  upon  final  hearing,  dismissed  the  bill  for 
want  of  jurisdiction  of  the  matters  and  things  therein  set  forth.  The 
complainant  appealed  to  this  court,  and  assigned  for  error  the  action 
of  the  Chancery  Court  in  dismissing  the  bill. 

Chalmers,  J.''*'  In  1812,  William  P.  Bibb,  David  P.  Bibb,  Robert 
T.  Bibb,  and  Archibald  E.  Mills  conveyed  in  trust  to  Thomas  Bibb 
and  A.  M.  Plopkins  a  large  amount  of  real  and  personal  property,  sit- 
uated in  the  States  of  Alabama,  Mississippi,  and  Louisiana,  for  the 
purpose  of  liquidating  certain  liabilities  therein  specified.  When  these 
debts  had  been  extinguished,  the  surplus  property  remaining  was  to 
be  reconveyed  to  the  grantors,  or  soldi  for  division  of  the  proceeds 
among  them,  as  might  then  be  deemed  advisable. 

Under  a  special  authorization  contained  in  the  conveyance,  the  trus- 
tees appointed  George  Fearn  their  agent  to  look  after  and  manage  so 
much  of  the  property  as  was  situated  in  Mississippi,  at  a  stipulated 
salary.  There  was  a  full  settlement  between  Fearn  and  the  trustees 
in  1859,  by  which  a  small  balance  was  found  due  him;  and  after  that 
period  very  little  was  done  in  furtherance  of  the  trust,  the  debts  in- 
tended to  be  secured  by  it  having  been  mostly  liquidated.  Fearn, 
however,  remained  in  charge  of  the  Mississii)pi  property,  giving  it 
needful  attention,  until  1868,  when  he  was  adjudged  a  bankrupt.  At 
the  sale  of  his  effects  by  his  assignee,  the  complainant  Mary  C.  Fearn 

■•i'  A  part  of  tlie  oiiiuion   is  oniittod. 


Sec.  7)  BY   ACT    OF   CKEDITOUS. 


289 


became  the  purchaser  of  his  claim  against  the  trustees,  for  salary  and 
moneys  expended  in  his  agency.  The  original  trustees  having  died, 
and  the  appellee  Mayers  having  been  appointed  in  their  stead,  by  the 
Chancery  Court  of  Alabama,  in  which  State  the  parties  in  interest 
principally  resided,  Mary  C.  Fearn  filed  this  bill  against  said  new 
trustee,  and  against  the  children  and  representatives  of  the  original 
grantors  in  the  trust  deed,  for  the  purjjosc  of  subjecting  the  corpus  of 
the  trust  estate,  situate  in  this  State,  to  the  satisfaction  of  the  amount 
due  to  her  as  assignee  of  George  Fearn.     '■'^    *    * 

Can  a  lien  for  this  amount  be  asserted  against  the  body  of  the  trust 
estate? 

It  seems  well  settled,  that  while  trustees  have  a  lien  on  the  trust 
fund  for  all  costs  and  expenses  legitimately  incurred  by  them  in  its  ad- 
ministration, this  privilege  does  not  extend  to  agents  employed  by 
them,  but  such  agents  must  look  alone  to  the  trustees  for  reimburse- 
ment. Hill  on  Trustees,  567;  2  Perry  on  Trusts  (2d  Ed.)  §  907; 
Jones  v.  Dawson,  19  Ala.  672.  This  principle  is  not  disputedby  the 
complainant  as  a  general  proposition,  but  it  is  insisted  that  a  different 
rule  must  prevail  here,  because  by  the  instrument  creating  the  fund 
the  expenses  of  administering  it  were  expressly  made  chargeable  up- 
on the  estate,  and  the  trustees  were  given  authority  to  appoint  such 
agents,  who  might  "do  anything  which  the  said  grantees  [trustees] 
could  do  in  execution  of  the  trusts  of  said  deed." 

It  is  sufficient  to  remark  that,  without  any  stipulation  to  that  effect, 
the  expenses  of  administering  a  trust  are  always  chargeable  upon  the 
trust  fund,  and  that  every  appointment  of  a  trustee  or  agent  to  trans- 
act an  extended  and  complicated  business  carries  with  it  the  power  to 
employ  suitable  sub-agents;  so  that  the  enumeration  of  these  things 
in  the  conveyance  in  this  instance  was  unnecessary.  But  yet  it  was 
in  this  very  class  of  cases,  where  the  imposition  upon  the  estate  of 
the  expenses  properly  incurred  by  the  trustee,  and  his  power  to  em- 
ploy agents  or  attorneys,  were  unquestioned,  that  the  rule  denying 
to  such  employes  a  lien  on  the  estate  was  established.  In  none  of 
them  was  any  question  raised  as  to  his  power  of  employing  such 
agents,  or  as  to  the  liability  of  the  estate  for  the  cost  of  administering 
the  trust.  It  is  impossible  to  see,  therefore,  how  the  insertion  of  the 
provision  in  question  can  change  the  rule  of  law,  in  the  absence  of 
an  express  declaration  in  the  instrument  that  the  estate  shall  be  liable 
for  all  costs  and  charges  incurred  by  or  owing  to  the  sub-agents  of 
the  trustees.     *     *     * 

The  complainant  in  the  case  at  bar,  having  no  lien  upon  the  tru?*  es- 
tate, is  without  standing  in  a  court  of  chancery.  The  action  of  ^he 
court  below  in  dismissing  the  bill  is  afiirmed.*'' 

47  See  Worrall  v.  Harford,  8  Ves.  Jr.  4  (1802) ;     Strickhuid  v.  Symons,  L. 
R.  26  Ch.  Div.  245  (1864). 
KEN.Tlt.— 19 


290       TRANSFER  OF  RESPECTIVE  INTERESTS  OF  PARTIES.     (Cll.  3 

NORTON  and  Others  v.  PIIKLPS  and  Wife. 
(Supreme  Court  of  Mississippi,   1877.     54  Miss.  407.) 

Appeal  from  the  Chancery  Court  of  Washington  County. 

On  April  17.  1869.  M.  O.  H.  Morton  &  Co.  filed  this  bill  against  A. 
J.  Phelps  and  his  wife  Mary  B.  Phelps,  formerly  \'ick,  to  subject  a 
plantation  in  their  possession  to  an  account  for  supplies  and  money 
advanced  to  Menry  W.  Vick  and  Jonathan  Pearce,  trustee,  for  the 
plantation,  Henr}-  W.  Vick,  and  Mary  B.  Vick,  the  cestui  que  trust. 
The  trustee  Pearce  was  not  made  a  party  to  the  suit  until  1870.  In 
1850,  Sarah  Vick  conveyed  the  plantation  to  Pearce  in  trust,  as  in- 
dicated in  tlie  opinion.  Henry  W.  Vick  having  died  in  April,  1861, 
Pearce  took  possession  of  the  place  in  the  following  June,  and  be- 
came guardian  of  Mary  B.  Vick,  the  cestui  que  trust.  On  Nov.  28, 
1865,  Pearce,  as  guardian  andl  trustee,  exhibited  to  the  Proliate  Court 
his  account,  showing  that  the  estate  was  indebted  to  him  $3,000,  and 
to  Norton  &  Co.,  $10,000,  composed  of  $6,000  contracted  by  Henry 
W.  Vick,  and  $4,000  contracted  by  himself  in  the  course  of  his  guard- 
ianship. This  account,  having  been  exhibited  to  Mary  B.  Vick  after 
she  became  of  age  and  before  she  married,  was  approved  by  her ;  and 
Pearce  being  discharged  as  guardian,  surrendered  the  plantation  to 
her,  and  became  a  non-resident  of  this  State.  On  October  3,  1866, 
Norton  &  Co.  rendered  Pearce  an  account  of  that  date,  showing  a  bal- 
ance of  $7,631.16,  which  he  admitted  to  be  "correct,  due  and  owing." 
This  account  was  exhibited  to  Mary  B.  and  A.  J.  Phelps,  who  admit- 
ted it  to  be  a  proper  charge  against  them,  and  a  liability  for  which 
the  trust  estate  was  bound.  The  complainants  appealed  from  a  final 
decree  on  the  merits  dismissing  the  bill. 

Campbell,  J.,  delivered  the  opinion  of  the  court.*^ 

In  the  case  of  Clopton  v.  Gholson,  53  Miss.  466,  we  announced  the 
principles  applicable  to  this  case.  These  are,  that  persons  dealing 
w  ith  a  trustee  must  look  to  him  for  payment  of  their  demands,  and 
that,  ordinarily,  the  creditor  has  no  right  to  resort  to  the  trust  estate 
to  enforce  his  demand  for  advances  made  or  services  rendered  for  the 
benefit  of  the  trust  estate.  But  while  this  is  the  rule,  there  are  excep- 
tions to  it,  and  where  expenditures  have  been  made  for  the  benefit  of 
the  trust  estate,  and  it  has  not  paid  for  them,  directly  or  indirectly, 
and  the  estate  is  either  indebted  to  the  trustee,  or  would  have  been 
if  the  trustee  had  paid,  or  would  be  if  he  should  pay  the  demand, 
and)  the  trustee  is  insolvent  or  nonresident,  so  that  the  creditor  can- 
not recover  his  demand  from  him,  or  will  be  compelled  to  follow  him 
to  a  foreign  jurisdiction,  the  trust  estate  may  be  reached  directly  by 
a  proceeding  in  chancery.  The  principle  is  that,  while  persons  dealing 
as  creditors  with  the  trustee  must  look  to  him  personally,  and  not  to 
the  trust  estate,  yet  where  the  estate  has  received  the  benefit  of  ex- 

*8  A  part  of  the  opinion  Is  omitted. 


Sec.  7)  BY   ACT    OF   CUKDITORS.  201 

penditures  procured  to  be  made  for  it  by  the  trustee,  and  it  has  not 
in  any  way  borne  the  burden  of  these  expenchtures  properly  charge- 
able to  it,  and  to  fasten  the  charge  upon  it  will  do  it  no  wrong,  but 
simply  cause  it  to  pay  what  it  is  liable  for  to  the  trustee,  or  would  be 
liable  for  if  he  had  paid  it,  or  should  pay  it,  and  because  of  the  in- 
solvency or  non-residence  of  the  trustee,  our  tribunals  cannot  afford 
the  creditor  a  remedy  for  his  demand,  he  may  proceed  directly  against 
the  trust  estate,  and  assert  against  it  the  demand  the  trustee  could 
maintain  if  he  had  paid  or  should  pay  the  claim,  and  should  himself 
proceed  against  the  trust  estate.  Generally  the  trustee  alone  must  be 
looked  to.  He  stands  between  the  creditor  and  the  estate.  He  rep- 
resents the  estate,  and  deals  for  it.  He  is  entitled  to  be  reimbursed 
out  of  the  trust  estate  for  all  disbursements  rightfully  made  by  him  on 
account  of  it,  and  creditors  must  get  payment  from  him;  but  when 
they  cannot  do  that,  and  it  is  right  for  the  trust  estate  to  pay  the  de- 
mand, and  it  owes  the  trustee,  or  would  owe  him  if  he  had  paid  or 
should  pay  the  demand,  the  rule,  founded  in  policy,  which  denies  the 
creditor  access  to  the  trust  estate,  yields  to  the  higher  considerations 
of  justice  and  equity;  and,  in  order  that  justice  may  be  done,  the  cred- 
itor may  be  substituted,  as  to  the  trust  estate,  to  the  exact  position 
which  the  trustee  would  occupy  if  he  had  paid  or  should  pay  the  de- 
mand, and  seek  to  obtain  reimbursement  out  of  the  estate.  Apply- 
ing these  principles  to  the  facts  of  this  case,  it  will  be  found  that  they 
bring  it  within  the  exception  stated. 

Clearly,  if  Pearce,  the  trustee,  had  paid,  or  should  pay,  under  a  re- 
covery against  him,  the  demand  sought  to  be  enforced  against  the 
trust  estate,  he  would  be  a  creditor  of  the  estate.  He  is  a  non-resi- 
dent of  the  State  of  Mississippi,  where  the  trust  property  is  and 
where  the  debt  was  contracted,  and  the  creditor  has  the  same  rights, 
because  of  this,  as  to  the  trust  property,  as  if  Pearce  was  insolvent. 
The  reason  why  insolvency  of  the  trustee  is  an  element  in  the  com- 
bination of  circumstances  admitting  the  creditor  to  proceed  against 
the  trust  estate  is  because  of  the  inability  of  the  creditors  to  coerce  an 
insolvent  person  to  pay  his  liabilities;  and  the  same  considerations 
apply,  ordinarily,  in  case  of  the  non-residence  of  the  trustee,  without 
regard  to  his  pecuniary  condition;  for  a  creditor  seeking  the  aid  of 
our  courts  should  not  be  dismissed  because  he  might  pursue  a  person 
to  a  foreign  land,  and  there  have  a  recovery  against  him.  If  he  can- 
not obtain  justice  through  our  courts  except  by  departing  in  an  ex- 
ceptional case  from  a  rule  of  policy,  to  secure  justice  the  departure 
should  be  made.  "Trustees  have  an  inherent  right  to  be  reimbursed 
all  expenses  properly  incurred  in  the  execution  of  the  trust,  and  no 
express  declaration  in  the  trust  instrument  is  requisite  to  create  the 
right."  Hill  on  Trustees,  570  et  seq. ;  2  Perry  on  Trusts,  §  910.  The 
trust  deed  in  this  case  vests  the  title  of  the  property  in  Pearce,  as 
trustee,  providing  that  he  "is  to  permit  the  said  Henry  W.  Vick,  as 
agent  for  said  trustee,     *     *     *    to  superintend,  possess,  manage  and 


292  TRANSFKU   OF    RKSrECTIVE   IXTERKSTS   OF   TAUTIES.  (Cll.  3 

control  said  property,"  etc.,  "with  power  to  sell  and  exchange,"  etc. 
This  conferred  very  large  powers  for  incurring  expenditures  to  be 
borne  by  the  trust  estate.  Hill  on  Trustees,  571,  572.  Vick  was  thus 
constituted  the  agent  of  the  trustee  for  the  very  purpose  of  possessing, 
managing  and  controlling  the  trust  property.  Debts  properly  made  by 
Vick,  agent  and  co-trustee,  as  he  is  elsewhere  in  the  deed  called,  in 
the  management  of  the  trust  property,  were  the  debts  of  Pearce,  the 
trustee,  \vith  this  qualification,  viz.,  that  he  is  exempted  by  the  deed 
from  responsibility  personally  for  the  acts  or  condiict  of  Vick.*®  *  *  * 
Decree  reversed  and  cause  remanded. 


Ex  parte  GARLAND. 

(Tn  Chancery,  before  Lord  Chancellor  EUlon,  1804.     10  Vesey,  Jr.  110.) 

Henry  Ballman  by  his  will,  dated  the  17th  of  February,  1798,  after 
directing  his  debts,  etc.,  to  be  paid,  bequeathed  all  his  leasehold  and 
personal  estates  to  his  wife  Margaret  Ballman,  and  three  other  per- 
sons, their  respective  executors,  etc.,  upon  trust  to  permit  Margaret 
Ballman  to  receive  the  rents,  interest,  etc.,  for  her  life,  or  until  she 
should  marry  again,  for  her  own  use,  and  the  support,  maintenance, 
and  education,  of  his  five  children,  until  they  should  respectively  at- 
tain the  age  of  21,  subject  to  certain  payments  to  his  children  as  after 
mentioned ;  and  from  and  after  the  death  andl  second  marriage  of 
his  wife  in  trust  for  all  and  every  or  such  one  or  more  of  his  said  chil- 
dren or  their  issue,  and  in  such  shares,  manner,  and  form,  as  she 
should  appoint  by  any  deed  or  instrument  in  writing  or  by  her  will ; 
and  for  want  of  such  appointment  and  as  to  such  parts,  of  which  no' 
such  appointment  should  be  made,  in  trust  for  all  his  children,  their 
respective  executors,  etc.,  equally  to  be  assigned,  paid  and  transferred, 
at  their  respective  ages  of  21,  with  survivorship  in  case  of  the  death 
of  any  under  that  age ;  and  in  case  of  the  deaths  of  all  under  that  age 
without  leaving  issue  then  to  pay,  etc,  his  said  personal  estate  to  Mar- 
garet Ballman,  her  executors,  etc.- 

49  Habersham  v.  Huguenin,  R.  M.  Cliarlt.  (Ga.)  376  (1832);  Wylly  v.  Col- 
lins, 9  Ga.  2123  (ISol) ;  JNIaloue  v.  Buice,  (iO  Ga.  152  (187S) ;  Cater  v.  Eveleigh, 
4  Desaus.  (S.  C.)  19,  6  Am.  Dec.  59G  (ISOO) ;  James  v.  Mayrant,  4  Desaiis. 
(S.  C.)  591.  6  Am.  Dec.  030  (1815) ;  INIontgomery  v.  Eveleigh.  1  McCord.  Eq. 
(S.  C.)  267  (lS2(i);  Douglas  v.  Eraser,  2  McCord,  Eq.  (S.  C.)  105  (1827);  Guerry 
V.  Capers,  Bailey,  Eq.  (S.  C.)  159  (1S30) ;  Manigault  v.  Deas,  P.ailey,  Eq. 
(S.  C.)  283,  290  (1831);  Ilen.shaw  v.  Freer,  Bailey,  Eq.  (S.  C.)  311,  317,  318 
(1831);  Magwood  v.  Johnston.  1  Hill.  Eq.  (S.  C.)  228  (18.3.3);  Tennant  v. 
Stoney,  1  Rich.  Eq.  (S.  C.)  222,  44  Am.  Dec.  213,  243  (1845) ;  Owens  v.  Mitchell, 
38  Tex.  588  (1873). 

Most  of  the  cases  here  cited  recognize  the  principle  that  the  creditor  of  the 
^  trustee  cannot  recover  against  the  trust  estate  so  long  as  the  trustee  is  a  de- 
'  faulter  to  the  trust.  Wylly  v.  Collins,  9  Ga.  223  (1851),  and  Manderson's  Ap- 
\         peal.  113  I'a.  631,  6  Atl.  893  (1866),   are  contra. 

See  article  by  Ix)uis  D.  Brandeis,  15  Am.  Law  Rev.,  449. 


Sec.  7)  BY   ACT    OF   CREDITORS.  293 

The  testator  then  directed  his  trustees  to  pay  to  his  children  re- 
spectively, as  they  should  attain  21,  £400.  apiece  out  of  his  personal  es- 
tate ;  and  he  farther  directed,  that  his  trade  of  a  miller  and  the  farming 
business,  then  carried  on  by  him,  should  be  carried  on  by  Margaret 
Ballman,  until  his  trustees  should  think  proper  to  establish  his  sons 
or  either  of  them  therein ;  and  he  directed  his  trustees  upon  so  settling 
his  sons  or  either  of  them  in  the  business  to  permit  them  to  take  off 
the  stock,  crop,  and  other  effects  in  the  said  business  at  a  fair  valua- 
tion, and  to  take  a  bond  or  note  from  them  for  the  amount,  payable 
by  such  instalments  as  his  trustees  would  think  reasonable,  with  in- 
terest in  the  meantime  at  4  per  cent.  He  also  directed,  that  as  long 
as  the  businesses  should  be  carried  on  by  his  wife,  the  profits  thereof 
should  be  applied  for  her  own  use  and  for  the  maintenance  and  edu- 
cation of  his  children ;  and  that  an  inventory  and  valuation  of  his 
stock,  crop  and  effects,  in  his  said  businesses,  should  be  taken  within 
six  weeks  after  his  decease ;  and  that  any  sum  or  sums,  not  exceeding 
i300.,  which  by  a  codicil  he  increased  to  £600.,  should  be  paid  by  his 
trustees  to  Margaret  Ballman  out  of  his  personal  estate  for  the  pur- 
pose of  enabling  her  to  carry  on  the  said  businesses ;  and  that  she 
should  give  notes  of  hand  to  the  other  trustees  for  the  sums  so  ad- 
vanced to  her  and  the  amount  of  the  valuation.  He  appointed  his 
widow  and  the  other  trustees  his  executors. 

After  the  death  of  the  testator  Margaret  Ballman  carried  on  the 
trades  till  December,  1801  ;  when  she  became  bankrupt.  The  other 
trustees  had  according  to  the  directions  of  the  will  advanced  her  the 
sum  of  £600.;  and  the  stock  and  effects  were  valued  at  £1,351.  5s.; 
for  which  she  gave  two  notes  to  the  other  trustees.  At  the  time  of  her 
bankruptcy  she  was  indebted  to  the  trustees  in  respect  of  those  two 
notes,  and  also  in  £768.  12s.  4d.  of  the  testator's  assets  received  by 
her.  The  surviving  trustee  proved  under  the  commission  the  three 
sums  of  £1,351.  5s.,  £600.,  and  £768.  12s.  4d. 

The  petition  was  presented  by  the  assignees  under  the  commission ; 
praying,  that  the  proof  may  be  expunged;  and  the  dividends  re- 
funded ;  and  that  it  may  be  declared,  that  the  whole  of  the  personal 
estate  of  the  testator  is  liable  to  all  the  debts  contracted  by  the  bank- 
rupt in  carrying  on  the  trades  of  a  miller  and  farmer  under  the  direc- 
tions of  the  will. 

When  the  petition  was  first  heard,  two  points  were  made  for  the 
assignees:  1st,  that  the  surviving  trustee,  as  a  creditor  on  the  notes, 
ought  to  be  postponed  to  all  the  other  creditors  of  the  bankrupt ;  2dly, 
that  the  general  assets  of  the  testator  were  subject  to  the  bankruptcy. 

On  the  first  point,  the  Lord  Chancellor  immediately  expressed  a 
clear  opinion  in  favor  of  the  assignees.  The  second  His  Lordship 
considered  a  point  of  great  importance ;  and  directed  a  farther  argu- 
ment. 

The  Lord  Ckancellor.  In  the  case  before  Lord  Kenyon  the  im- 
portant difficulties  that  have  been  urged  upon  this  occasion,  were  not 


294       TRANSFER  OF  RKSPKCTIVK  INTKUKSTS  OF  PARTIES.     (Ch.  3 

submitted  to  the  Court.  Certainly,  Lord  Kenyoii  developed  the  rea- 
sons upon  which  he  drew  the  conclusion  in  that  case,  in  a  very  lim- 
ited degree,  if  at  all.  The  (luestion  really  goes  to  this:  Whether  this 
Court  is  to  hold,  that,  where  a  testator  directs  a  trade  to  be  carried  on, 
and  without  limitation,  all  the  other  purposes  of  his  will  are  to  stand 
still,  or  all  the  administration  under  it  to  be  checked,  that  every  person 
taking  is  in  effect  to  become  a  security  in  proportion  to  the  property 
he  takes,  and  to  the  extent  of  all  time,  for  the  trade  which  the  testator 
has  directed  to  be  carried  on.  The  inconvenience  would  be  intoler- 
able ;  amounting  to  this ;  that  every  legatee  is  to  hold  his  legacy  upon 
terms,  connected  with  transactions,  by  which  he  cannot  benefit,  which 
he  cannot  control,  and  which  may  cut  down  all  his  hopes;  as  far  as 
they  are  founded  upon  his  receipt  of  that  bounty.  On  the  other  hand, 
the  case  of  the  executor  is  very  hard.  He  becomes  liable,  as  person- 
ally responsible,  to  the  extent  of  all  his  own  property;  also,  in  his 
person  ;  and  as  he  may  be  proceeded  against  as  a  bankrupt ;  though 
he  is  but  a  trustee.  But  he  places  himself  in  that  situation  by  his 
own  choice;  judging  for  himself,  whether  it  is  fit  and  safe  to  enter 
into  that  situation,  and  contract  that  sort  of  responsibility.  The  cred- 
,  itors  of  the  testator  must  be  either  those,  whose  debts  were  contracted 

•  before  his  death,  or  persons,  who  have  become  creditors  of  the  trade 

after  his  death.  If  they  are  creditors  of  the  former  description,  they 
have  the  power  and  the  means  of  calling  forth  after  the  testator's 
death  (he  whole  of  his  property,  in  discharge  of  their  demands;  and,  if 
they  do  not  put  an  end  to  that  relation,  but  permit  the  representative 
to  act,  they  have  perhaps  no  more  reason  to  complain  of  a  decision, 
more  limited  than  that  of  Lord  Kenyon,  than  they  would  have,  if  by 
their  own  conduct  they  permitted  part  of  the  assets  to  get  to  the 
hands  of  persons,  from  whom  they  could  nor  draw  them ;  and  they 
relied  upon  his  liability. 

As  to  creditors,  subsequent  to  the  death  of  the  testator,  in  the  first 
place,  they  may  determine,  whether  they  will  be  creditors.  Next,  it 
is  admitted,  they  have  the  whole  fund  that  is  embarked  in  the  trade ; 
and  in  addition  they  have  the  personal  responsibility  of  the  individual, 
with  whom  they  deal;  the  only  security  in  ordinary  transactions  of 
debtor  and  creditor.  They  have  something  very  like  a  lien  upon  the 
estate,  embarked  in  the  trade.  They  have  not  a  lien  upon  anything 
else ;  nor  have  creditors  in  other  cases  a  lien  upon  the  effects  of  a  per- 
son, with  whom  they  deal ;  though,  through  the  equity,  as  to  the  ap- 
plication of  the  joint  and  separate  estates  to  the  joint  and  sejjaratc 
debts  respectively,  they  work  out  that  lien.  If  it  is  to  be  determined 
upon  the  convenience,  it  is  not  so  inconvenient  to  say,  those,  who 
deal  with  the  executor,  must  take  notice,  that  the  testator's  responsi- 
bility is  limited  by  the  authority  given  the  executor,  as  to  say,  on  the 
other  hand,  that,  the  executor  being  authorized  to  carry  on  that  trade, 
making  from  day  to  day  a  great  variety  of  engagements,  or,  as  it  has 
been  put,  entering  into  one  great  and  im])ortant  engagement,  but  also 


Sec.  7)  BY  ACT    OF   CREDITORS.  295 

authorized  by  the  will  to  do  many  other  acts,  which  he  must  equally 
do  in  a  due  administration  under  the  will,  wherever  for  the  benefit  of 
one  child  the  trade  is  directed  to  be  carried  on,  all  the  other  objects 
of  the  will  must  at  any  distance  of  time  be  considered,  to  the  extent 
of  the  property  they  take,   security  for  the  creditors  on  the  trade. 

Such  a  decision  was  never  made  previously  to  Hankey  v.  Ham- 
mock. I  am  not  aware,  that  such  a  decision  has  ever  been  made 
since  that  case.  We  may  recollect  cases  not  consistent  with  the  sup- 
position, that  the  law  is  according  to  that  decision.  It  is  necessary 
to  look  into  other  cases,  from  which  it  may  appear,  that  it  was  not 
present  to  the  mind  of  the  court,  that  there  was  such  a  rule.  The 
difficulty  also,  that  must  exist  in  a  variety  of  instances,  is  to  be  con- 
sidered ;  the  case,  that  has  been  put,  where  a  tradesman  directs  the 
trade  to  be  carried  on  for  the  benefit  of  a  son,  giving-  him  a  legacy  of 
£50,000.  It  is  difficult  to  say,  that  legacy  must  not  be  liable ;  and  yet 
it  is  very  difficult  to  say,  it  shall  be  liable  consistently  with  saying 
legacies  to  others  shall  not ;  unless  upon  this,  that  the  legacy  is  given 
by  the  same  will,  for  the  benefit  of  the  same  person,  who  is  to  have 
the  benefit  of  the  trade ;  and  yet  I  do  not  know,  that  is  a  principle  of 
decision,  by  which  I  can  abide.  But,  in  the  ordinary  case,  the  eldest 
son,  made  residuary  legatee  and  executor,  and  ordered  to  carry  on  the 
trade  for  the  benefit  of  another  child,  cannot  possibly  withdraw  his 
residuary  legacy  from  the  liability  the  trade  carried  on  would  impose 
upon  him  personally;  for  he  makes  himself  personally  liable;  and 
therefore  with  reference  to  the  property,  taken  from  his  father, 
though  not  liable  as  legatee,  he  becomes  liable,  as  a  person  carrying  on 
the  trade ;  his  legacy  assisting  the  means  of  his  responsibility  in  carry- 
ing on  the  trade.  That  person,  therefore,  both  legatee  and  executor, 
must  answer  for  his  acts  as  to  the  trade.  Then  why  should  not  another 
legatee?  The  answer  is,  that  person  is  liable,  not  as  legatee;  but  upon 
the  ground  that  the  property  is  part  of  his  general  substance,  and  he 
may  spend  it,  notwithstanding  his  liability  as  executor.  So  may  an- 
other legatee ;  but  the  power  of  spending  his  general  substance  shows, 
there  is  no  great  convenience  in  this  doctrine. 

In  this  case,  I  fear,  I  shall  be  under  the  necessity  of  contradicting 
the  authority  of  a  judge  I  most  highly  respect;  feeling  a  strong  opin- 
ion, that  only  the  property  declared  to  be  embarked  in  the  trade,  shall 
be  answerable  to  the  creditors  of  the  trade.  If  I  am  not  bound  by 
decision,  the  convenience  of  mankind  requires  me  to  hold,  that  the 
creditors  of  the  trade,  as  such,  have  not  a  claim  against  the  distributed 
assets,  in  the  hands  of  third  persons  under  the  direction  of  the  same 
will,  which  has  authorized  the  trade  to  be  carried  on  for  the  benefit 
of  other  persons. 

Aug.  13th.  The  Lord  Chancellor.  My  opinion  upon  this  case  is, 
that  it  is  impossible  to  hold,  that  the  trade  is  to  be  carried  on,  perhaps 
for  a  century;  and  at  the  end  of  that  time  the  creditors,  dealing  with 
that  trade,  are,  merely  because  it  is  directed  by  the  will  to  be  carried 


296  TRANSFER   OF    RESPECTIVE   INTERESTS   OF   PARTIES.  (Ch.  3 

on,  to  pursue  the  general  assets,  distributed  perhaps  to  fifty  famihcs. 

The  order  was,  that  the  proof  should  stand  in  respect  of  the  sum  of 
i768.  12s.  4d. ;  without  prejudice  to  filing  a  bill."^** 

No  bill  was  filed. 


In  re  JOHNSON. 
SHEARMAN  v.  ROBINSON. 

(Iligh  Court  of  .Tustice,  Chancery  Division.  1879.     Law  Reports  15  Chancery 

Division,  548.) 

Adjourned  Summons: 

Peter  Johnson,  by  his  will,  dated  the  27th  of  May,  1873,  appointed 
the  defendant  Robinson  and  another  his  executors;  and,  after  making 
certain  specific  and  pecuniary  bequests,  and  directing  the  payment 
of  his  debts,  and  funeral  and  testamentary  expenses,  he  directed  his 
executors,  as  soon  as  might  be  after  his  decease,  to  collect,  get  in 
and  receive  all  debts  owing  to  him  in  respect  of  the  business  of  a 
tailor  and  robe-maker  then  carried  on  by  him  at  Cambridge,  and  also 
all  other  debts  owing  to  him  not  connected  with  the  business  then 
carried  on  by  him  in  London  in  partnership  with  Thomas  Sadler,  and 
(subject  to  the  provisions  thereinafter  contained)  to  sell  and  convert 
into  money  all  his  Cambridge  stock  in  trade,  and  standi  possessed  of 
the  proceeds,  and  all  other  his  personal  estate  and  effects  whatsoever 
(except  his  share  and  interest  in  the  London  business)  not  therein- 
before specifically  bequeathed,  upon  trust  to  pay  one  equal  fourth  part 
thereof  to  and  amongst  such  of  the  children  of  his  deceased  sister 
Catherine  Neill  (including  his  nephew  John  Neill)  as  should  be  living 
at  the  time  of  his  decease;  one  other  equal  fourth  part  to  the  plaintiff; 
and  the  remaining  two  fourth  parts  to  the  several  persons  therein 
named.    And  the  testator  declared  that  in  case  his  nephew  John  Neill 

EOEx  parte  Richardson,  .3  Mad.  1.38  (1818);  Thompson  v.  Andrev^-s.  1  :\I. 
&  K.  IIG  (1832);  Cntlmsh  v.  Cntlmsh,  1  Reav.  184  (18.39):  Ex  parte  Rntter- 
field,  De  G.'s  Rlcpty.  Itep.  570  (1847);  McNeillie  v.  Acton.  4  De  M.  &  G. 
744  (18.'5.3);  Ex  parte  Westcott.  L.  R.  9  Ch.  App.  Cas.  626  (1874);  Fairland  v. 
Percy,  L.  R.  3  P.  &  D.  217  (1875):  Owen  v.  Delaniere,  L.  R.  15  Eq.  134  (1871) ; 
Burwell  v.  (\i\vood.  2  How.  (U.  S.)  5(10,  11  L.  Ed.  378  (1844);  Smith  v.  Ayer. 
101  TJ.  S.  320,  25  L.  Ed.  9.")5  (1879);  .Tones  v.  Wallcer,  103  U.  S.  444.  26 
L.  Ed.  404  (1880);  Coolv  v.  Adm'r  of  Rogers  (C.  C.)  3  Fed.  69  (1880):  Edijar 
V.  Coolv,  Adm'r,  4  Ala.  588  (1843);  Altheimer  v.  Ilnnter,  56  Ark.  1.59,  19  S. 
W.  496  (1892);  Pitlun  v.  I'itldn,  7  Conn.  307.  18  Am.  Dec.  Ill  (1828);  Blod- 
gett  v.  Am.  Nat.  Rlv.,  49  Conn.  9  (1881) ;  Wilson.  Ex'x,  v.  Fridenberjj,  21 
I'la.  .386  (1885)  ;  Stanwood  v.  Owen,  Adm'r,  14  Gray  (Mass.)  195  (1859) ; 
Ilagan  v.  Rarlvsdale,  44  Miss.  186  (1870);  Brasfield  v.  French,  59  Miss.  6.32 
(1882);  Laible  v.  Ferry,  ,32  N.  J.  Eq.  791  (1880);  Willis  v.  Sharp,  113  N.  Y. 
586,  21  N.  E.  705,  4  L.  R.  A.  493  (1889);  Stewart  v.  Robinson,  115  N.  Y. 
328.  22  N.  E.  160,  163,  5  L.  R.  A.  410  (1889);  Adams  v.  Albert,  155  N.  Y. 
356,  49  N.  E.  929,  63  Am.  St.  Rep.  675  (189.S) ;  Eucht.  Adm'r.  v.  P.ehrens,  28 
Ohio  St.  231,  22  Am.  lie]).  378  (1876);  Gratz  v.  Rayard,  11  Serg.  &  R.  (Pa.) 
41  (1824);  Mathews  v.  Stephenson,  6  Pa.  496  (18471;  Lanshlin  v.  Adm'r  of 
]>orenz,  48  Pa.  275,  86  Am.  Dec.  592  (1864) ;  Davis  v.  Christian,  15  Gratt. 
(Va.)  11  (1859). 


Sec.  7)  BY  ACT    OF   CnEDlTOKS.  297 

should  be  under  the  a^^c  of  twenty-one  years  at  the  time  of  his  de- 
cease, it  should  be  lawful  for  his  said  executors,  upon  the  request  of 
the  said  John  Neill,  to  postpone  the  sale  of  his  Cambrid.Lje  stock  in 
trade  and  allow  his  said  business  of  tailor  and  robe-maker  at  Cam- 
bridge to  be  carried  on  by  the  said  John  Neill  for  his  own  benefit 
under  the  supervision  of  his  said  executors  until  such  time  as  the  said 
John  Neill  should  attain  twenty-one,  and  during  such  period  should 
use  such  part  of  the  share  of  the  said  John  Neill  in  his  residuary  per- 
sonal estate  as  might  be  requisite  for  the  due  carrying  on  of  the 
said  business.  And  he  directed,  in  case  that  provision  was  carried 
into  efifect,  that  an  inventory  and  valuation  of  all  his  stock  in  trade  at 
Cambridge  should  be  taken  immediately  after  his  decease,  and  that 
on  the  said  John  Neill  attaining  his  age  of  twenty-one  years  he  should 
have  the  option  of  taking  the  then  existing  stock  at  the  amount  of 
such  valuation,  and  that  if  he  declined!  to  do  so,  and  the  said  stock 
was  sold,  then  the  said  John  Neill  should  bring  the  amount  of  the  pro- 
ceeds of  such  sale  into  hotchpot  on  the  calculation  for  the  distribution 
of  the  residuary  personal  estate.  The  testator  then  gave  certain  direc- 
tions as  to  the  winding-up  of  his  partnership  in  the  London  business, 
and  directed  that  his  share  and  interest  therein  should  fall  into  his 
residuary  personal  estate. 

The  testator  died  on  the  25th  of  November,  1875,  and  his  will  was 
proved  by  the  defendant  Robinson  alone,  the  other  executor  having 
renounced.  There  were  living  at  the  testator's  death  two  children  of 
his  deceased  sister  Catherine,  one  of  whom  was  the  said  John  Neill, 
then  an  infant. 

After  the  testator's  death  the  defendant  did  not  get  in  the  book  debts 
of  the  Cambridge  business  as  directed  by  the  will,  but  he  continued 
to  carry  on  the  business  in  his  own  name  until  the  30th  of  June,  1878. 
when  John  Neill  attained  twenty-one ;  he  also  continued  the  manage- 
ment of  the  testator's  share  in  the  London  business.  For  the  purpose 
of  carrying  on  the  Cambridge  business,  the  defendant  advanced  from 
time  to'  time  several  sums  of  money  out  of  John  Neill's  share  in  the 
testator's  personal  estate,  which  sums  were  repaid  out  of  the  busi- 
ness in  the  ordinary  course  of  carrying  it  on,  but  the  defendant  kept 
no^separate  banking  account  for  the  business. 

An  action  having  been  instituted  by  one  of  the  residuary  legatees, 
and  a  judgment  obtained  for  the  administration  of  the  testator's  es- 
tate, it  was  found,  on  taking  the  defendant's  accounts,  that  there  was 
due  from  him  a  balance  of  £764.  16s.  Id.  in  respect  of  profits  from  the 
Cambridge  business,  and  also  a  balance  of  il,668.  3s.  Id.  in  respect 
of  the  general  personal  estate  of  the  testator,  including  his  share  in 
the  London  business. 

Amongst  the  creditors  who  made  claims  against  the  estate  under 
the  judgment  were  several  persons  who  had  supplied  the  defendant 
with  goods  in  the  course  of  his  carrying  on  the  Cambridge  business 
subsequently  to  the  testator's  death,  but  these  claims  being  disallowed 


298  TRANSP^ER   OF    RESPECTIVi:   INTERESTS   OF   PARTIES.  (Ch.  3 

by  the  chief  clerk,  summonses  were  taken  out  by  three  of  these  cred- 
itors for  the  purpose  of  estabhshing  their  ckiims.  One  of  the  sum- 
monses was  by  a  firm  of  Standen  &  Co.,  woollen  warehousemen,  and 
asked  that  a  sum  of  i460.  5s.  lOd.  due  to  them  for  goods  sold  and 
delivered  to  the  defendant,  the  executor,  in  the  course  of  his  carrying 
on  the  trade  or  business  of  a  tailor  from  the  time  of  the  testator's 
death  down  to  the  30th  of  June,  1878,  might  be  forthw  ith  paid  to  them 
by  the  said  executor  out  of  the  share  of  the  said  John  Neill  in  the 
testator's  residuary  personal  estate ;  or  otherwise  that  it  might  be  de- 
clared that  the  applicants  were  entitled  to  a  lien  on  the  portion  of  the 
estate  of  the  said  testator  which  on  the  30th  of  June,  1878,  was  em- 
barked in  the  carrying  on  as  aforesaid  of  the  said  testator's  business ; 
and  that  an  inquiry  might  be  directed  for  the  purpose  of  ascertaining 
what  were  the  assets  of  the  said!  testator  which  were  so  subject  to  the 
lien  of  the  applicants. 

The  two  other  summonses,  which  were  by  creditors  for  an  aggre- 
gate amount  of  upwards  of  £600.,  asked  that  they  might  be  at  liberty 
to  bring  in  their  claims  against  the  assets  of  the  business  carried  on 
by  the  defendant  under  the  powers  of  the  will,  in  respect  of  debts 
incurred  by  him  to  the  applicants  in  the  course  of  such  business,  and 
ttiat  such  assets  might  be  applied  in  payment  of  what  should  be  found 
due  to  the  applicants  in  respect  of  their  debts.  Upon  the  further  con- 
sideration of  the  action  all  three  summonses  came  on  for  hearing. 

It  appeared  that  the  defendant,  the  executor,  was  insolvent. 

Jessel,  ]\1.  R.  I  shall  dismiss  these  summonses,  but  I  will  give  the 
creditors  liberty  to  present  a  petition.  I  will  not  distribute  the  assets 
until  they  have  presented  a  petition ;  that  seems  to  me  the  regular 
course,  but  at  present  I  do  not  see  that  they  are  entitled  to  anything. 
That  seems  to  have  been  the  course  taken  in  several  cases,  and  I 
think  it  is  the  right  course,  for  the  creditors  are  not  parties  to  this 
suit  at  all.  'i'hey  ought  to  come  in  under  a  petition.  With  regard  to 
the  point  that  has  been  argued,  I  understand  the  doctrine  to  be  this, 
that  where  a  trustee  is  authorized  by  a  testator,  or  by  a  settlor — for 
it  makes  no  difference — to  carry  on  a  business  with  certain  funds 
which  he  gives  to  the  trustee  for  that  puri)ose,  the  creditor  who  trusts 
the  executor  has  a  right  to  say,  "I  had  the  personal  liability  of  the 
man  I  trusted,  and  I  have  also  a  right  to  be  put  in  his  place  against  the 
assets ;  that  is,  I  have  a  right  to  the  benefit  of  indemnity  or  lien  which 
he  has  against  the  assets  devoted  to  the  purposes  of  the  trade."  The 
first  right  is  his  general  right  by  contract,  because  he  trusted  the 
trustee  or  executor ;  he  has  a  personal  right  to  sue  him  and  to  get 
judgment  and  make  him  a  bankrupt.  The  second  right  is  a  mere 
corollary  to  those  numerous  cases  in  equity  in  which  persons  are  al- 
lowed to  follow  trust  assets.  The  trust  assets  having  been  devoted  to 
carrying  on  the  trade,  it  would  not  be  right  that  the  cestui  que  trust 
should  get  the  benefit  of  the  trade  without  paying  the  liabilities ;  there- 
fore the  court  says  to  him.  You  shall  not  set  up  a  trustee  who  may  be 


Sec.  7)  BY   ACT    OF   CREDITOKS.  299 

a  man  of  straw,  and  make  him  a  bankrupt  to  avoid  the  responsibility 
of  the  assets  for  carrying-  on  the  trade ;  the  court  puts  the  creditor,  so 
to  speak,  as  I  understand  it,  in  the  place  of  the  trustee.  But  if  the 
trustee  has  wronged  the  trust  estate,  that  is,  if  he  has  taken  money 
out  of  the  assets  more  than  sufficient  to  pay  the  debts,  and  instead  of 
applying  them  to  the  payment  of  the  debts  has  put  them  into  his  own 
pocket,  then  it  appears  to  me  there  is  no  such  equity,  because  the 
cestuis  que  trust  are  not  taking  the  benefit.  The  trustee  having 
pocketed  the  money,  the  title  of  the  creditor,  so  to  speak,  to  be  put  in 
the  place  of  the  trustee,  is  a  title  to  get  nothing,  because  nothing  is  due 
to  the  trustee.  It  does  not  appear  to  me  that  in  that  case  the  creditor, 
who  has  never  contracted  for  anything,  who  has  only  got  the  benefit 
of  this  equity,  if  I  may  say  so,  by  means  of  the  trustee,  through  the 
lucky  accident  of  there  being  a  trust,  ought  to  be  put  in  a  better  posi- 
tion than  any  other  creditor.     I  do  not  see  that  any  judge  has  said  so. 

If  we  start  with  Ex  parte  Garland  [10  Ves.  Jr.  110],  what  Lord  El- 
don  says  is  this  [page  120]  :  "It  is  admitted,  they  [the  creditors]  have 
the  whole  fund  that  is  embarked  in  the  trade" — that  is,  as  between 
themselves  and  the  executors  the  creditors  can  claim  the  application 
of  the  fund — "and  in  addition  they  have  the  personal  responsibility 
of  the  individual  with  whom  they  deal ;  the  only  security  in  ordinary 
transactions  of  debtor  and  creditor."  [His  Lordship  then  read  down 
to  the  words  "security  for  the  creditors  on  the  trade"  (Id.  121;,  and 
continued:]  Then  [page  122],  after  expressing  his  strong  opinion 
that  only  the  property  declared  to  be  embarked  in  the  trade  should  be 
answerable  to  the  creditors  of  the  trade,  he  says :  "If  I  am  not  bound 
by  decision,  the  convenience  of  mankind  requires  me  to  hold,  that  the 
creditors  of  the  trade,  as  such,  have  not  a  claim  against  the  distributed 
assets,  in  the  hands  of  third  persons  under  the  direction  of  the  same 
will,  which  has  authorized  the  trade  to  be  carried  on  for  the  benefit  of 
other  persons."  That  does  not  decide  the  point  I  have  mentioned  at 
all.  All  that  it  decides  is  that  the  claim  of  the  creditors  is  limited  to 
the  assets  devoted  to  trade.  What  their  right  against  those  assets  is. 
Lord  Eldon  does  not  decide. 

Then  we  have  a  case  which  I  think  comes  nearest  to  the  present 
case.  Ex  parte  Edmonds  [4  De  G.,  F.  &  J.  488] .  Lord  Justice  Turner 
says  this  [page  498]  :  "The  case  of  Ex  parte  Garland  and  the  other 
cases  referred  to  in  the  argument  have  not.  in  my  opinion,  any  appli- 
cation to  the  present  case.  They  proceed  upon  the  principle  that  the 
executor  or  trustee  directed  to  carry  on  the  business  having  the  right 
to  resort  for  his  indemnity  to  the  assets  directed  to  be  employed  in 
carrying  it  on,  the  creditors  of  the  trade  are  entitled  to  the  benefit 
of  that  right,  and  thus  become  creditors  of  the  fund  to  which  the  ex- 
ecutor or  trustee  has  a  right  to  resort." 

Having  read  those  two  authorities,  which,  being  decisions  of  a  Lord 
Chancellor  and  of  the  Court  of  Appeal  in  Chancery,  would  be  binding 
on  me,  I  need  only  say  that  I  do  not  think  the  point  arises  in  any  of  the 


300  TRANSFER  OF    RESPECTIVE   INTERESTS   OF   PARTIES.  (Cll.  3 

subsequent  cases,  or  was  the  subject  of  consideration  in  them.  Owen 
V.  Delamere  [L.  R.  15  Eq.  134J,  which  contains  a  mere  dictum  of 
\'ice-Chancellor  I>acon,  but  still  of  course  entitled  to  great  respect, 
if  it  did  differ — which  I  do  not  think  it  does — from  what  Lord  Jus- 
tice Turner  laidi  down  in  Ex  parte  Edmonds  as  the  true  principle, 
would  tuA  be  binding  upon  me ;  but  I  do  not  think  it  is  different,  be- 
cause Vice-Chancellor  Bacon  is  directing  his  attention  to  the  point  de- 
cided in  Ex  parte  Garland,  that  is,  that  the  creditors  have  no  right  to 
go  beyond  assets  devoted  to  trade.  The  nature  of  the  right  as  against 
those  assets  is  not  adverted  to ;  that  is  plain  ;  for  after  saying  that  Ex 
parte  Garland  "contains  a  clear,  distinct,  and  luminous  exposition  of 
the  law  on  the  subject" — which  it  docs  upon  the  point  that  it  is  not 
the  general  estate  of  the  testator  which  is  liable,  but  only  so  much  as 
he  has  authorized  to  be  employed  in  the  business — the  Vice-Chancellor 
says  [page  139]  :  "The  court  will  give  effect  to  the  trust  which  has 
been  created  by  the  testator,  and  will  keep  separate  and  applicable 
only  to  purposes  of  the  trust  that  estate  which  the  testator  designated 
and  directed  to  be  employed  for  that  purpose."  It  is  merely  repeating 
Ex  parte  Garland  without  the  slightest  reference  to  the  mode  in  which 
the  claim  is  to  be  enforced. 

The  same  may  be  said  of  the  case  of  Fairland  v.  Percy  [L.  R.  3  P. 
&  D.  217].  I  dispose  of  that  by  saying  that  Sir  James  Hannen  goes 
no  further,  and  that  he  does  not  consider  the  second  point  at  all. 

The  question  raised  by  the  second  point — that  is,  what  is  the  right 
to  resort — is  not  treated  of,  as  far  as  I  can  see,  in  any  reported  de- 
cision except  in  the  case  of  Ex  parte  Edmonds.  I  think  it  is  inferen- 
tially  referred  to  in  Mr.  Justice  Eindley's  book,  where  I  think  he 
means  to  say  the  same  that  Lord  Justice  Turner  said,  although  I 
must  say,  with  great  deference  to  Mr.  Justice  Lindley,  it  might  have 
been  more  clearly  put.  Nothing  can  be  clearer  than  the  way  in  which 
Lord  Justice  Turner  puts  it ;  it  is  simply,  as  he  says,  the  right  to  re- 
sort for  indemnity  to  the  assets  actually  directed  to  be  employed ;  and 
the  creditor  is  entitled  to  the  benefit  of  that  right. 

What  i\lr.  Justice  Lindley  says  is  this  [Lindley  on  Partnership 
(3d  Ed.)  p.  1103]  :  [His  Lordship  then  read  the  passage  commencing 
"If  an  executor  of  a  deceased  partner,"  and  ending  "lien  on  the  assets 
of  the  deceased  employed  therein,"  and  continuedi:] 

I  am  not  sure  that  Mr.  Justice  Lindley  had  in  view  the  reinarks  of 
Lord  Justice  Turner  in  Ex  parte  Edmonds,  for  he  does  not  cite  the 
case ;  but  he  may  have  arrived  at  the  same  conclusion  independently. 

The  only  other  text-book  that  I  have  been  looking  at  on  this  point 
is  the  last  edition  of  Williams  on  Executors  [8th  Ed.,  p.  1798].  After 
stating  that  a  trade  is  not  transmissible,  but  is  put  an  end  to  by  the 
death  of  the  trader,  it  says :  "Executors,  therefore,  have  no  authority 
in  law  to  carry  on  the  trade  of  their  testator,  and  if  they  do  so,  unless 
under  the  protection  of  the  Court  of  Chancery,  they  run  great  risk, 
even  although  the  will  contains  a  direction  that  they  should  continue 


Sec.  7)  BY   ACT    OF   CKKDITOIiS.  3U1 

the  business  of  the  deceased."  Then  it  says  [p.  1800]  :  "The  testator 
may,  by  his  will,  qualify  the  power  of  his  executor  to  carry  on  trade, 
and  limit  it  to  a  specific  part  of  the  assets,  which  he  may  sever  from 
the  general  mass  of  his  property  for  that  purpose;  and  then  in  the 
event  of  the  bankruptcy  of  the  executor,  the  rest  of  the  assets  will  not 
be  affected  by  the  commission,  although  the  whole  of  the  executor's 
private  property  will  be  subject  to  its  operation."  Although  the 
author  cites  Ex  parte  Garland,  he  does  not  appear  to  me  to  deal  di- 
rectly with  the  question  I  have  to  deal  with,  which  is.  What  is  the 
nature  of  the  right  of  the  creditors  against  the  assets  specifically  ap- 
propriated by  the  testator  for  the  purpose  of  carrying  on  the  trade? 
I  am  therefore  really  thrown  back  on  the  authority  of  Lord  Justice 
Turner.  If  the  right  of  the  creditors  is,  as  is  stated  by  Lord  Justice 
Turner,  the  right  to  put  themselves,  so  to  speak,  in  the  place  of  a 
trustee,  who  is  entitled  to  an  indemnity;  of  course,  if  the  trustee  is  not 
entitled,  except  on  terms  to  make  good  a  loss  to  the  trust  estate,  the 
creditors  cannot  have  a  better  right.  They  do  get  some  additional 
benefit  so  as  to  avoid  a  supposed  injustice;  but  the  injustice  to  be 
avoided  is  the  injustice  of  the  cestui  que  trust  walking  off  with  the 
assets  which  have  been  earned  by  the  use  of  the  property  of  the  cred- 
itor ;  but  jvhere  the  cestui  que  trust  does  not  get  that  benefit,  there  is 
no  injustice  as  between  him  and  the  creditors,  and  there  is  no  reason 
for  the  court  interfering  at  the  instance  of  the  creditors  to  give  them 
a  larger  right  than  that  they  bargained  for,  namely,  their  personal 
right  against  the  trustee.  It  appears  to  me,  therefore,  that  if  the 
trustee  has  no  such  right  in  such  a  case,  they  have  none  here. 

The  particular  case  before  me  is  peculiar.  It  appears  by  the  evi- 
dence, and  it  is  the  fact,  that  the  executor  carried  on  the  Cambridge 
business  in  his  own  name,  and  not  in  the  name  of  the  infant,  which 
was  strictly  in  accordance  with  the  terms  of  the  will,  for  I  do  not  sup- 
pose he  could  carry  it  on  in  any  other  way.  By  the  will  the  testator 
allowed  him  to  make  use  of  one-eighth  of  the  residue  for  the  purpose 
of  carrying  on  the  business  on  behalf  of  the  legatee,  who  was  an  in- 
fant of  the  name  of  Neill,  during  his  minority;  that  Neill  on  his  at- 
taining twenty-one,  was  to  be  allowed  to  take  the  stock  in  trade,  if 
he  thought  fit,  not  at  its  then  value,  but  at  its  value  at  the  testator's 
death,  and  all  the  rest  fell  into  residue.  But  the  executor  and  trustee 
did  not  follow  the  will,  for,  as  I  said  before,  he  carried  on  business 
in  his  own  name  as  executor,  and  used  the  assets  then  in  the  business. 
He  did  not  do  what  the  testator  told  him  to  do,  namely,  collect  the 
book  debts  and  throw  them  into  general  residue  with  the  business, 
and  then  make  use  of  one-eighth  of  the  residue ;  he  kept  no  separate 
banking  account  so  as  to  shew  the  actual  sums  of  money  used  in  the 
business,  but  he  carried  on  the  business  as  it  had  been  carried  on  be- 
fore. Whether  that  makes  any  dift'erence  or  not  it  is  immaterial  now 
to  inquire,  but  that  is  what  he  actually  did.  He  carried  on  the  busi- 
ness, and  in  carrying  it  on  he  received  £764.  16s,  Id.  more  profits  than 


*>^ 


.'?02  TRANSFRR    OF    RI^SPECTIVi:    INTKUFSTS    OF    PAUTIES.  (CH.  3 

he  has  accounted  for,  and  this  amount  he  owes  the  estate.  Besides 
that  he  was  carrying  on  the  London  business  belonging-  to  the  estate. 
From  that  and  other  sources  he  has  received  £1668.  3s.  Id,  more  than 
he  has  accounted  for ;  so  that  he  is  a  very  large  defaulter.  It  is  mani- 
fest that  he  could  not  take  one  penny  out  of  this  estate  by  way  of 
indemnity  until  he  made  good  his  default. 

Therefore  unless  the  creditors  can  be  in  a  position  to  shew — as  to 
which  there  is  no  evidence  before  me— that  there  were  profits  from 
carrying  on  the  business  to  an  amount  exceeding  the  deficit,  so  that 
something  was  gained  by  the  use  of  these  assets,  it  does  not  appear  to 
me  that  they  can  be  entitled  to  anything. 

As  the  facts  on  this  point  do  not  appear  I  will  give  the  creditors 
liberty  to  present  a  petition  within  a  limited  time,  if  they  think  they 
can  support  it,  and  I  will  not  allow  the  assets  to  be  distributed  until 
they  have  had  time  to  present  their  petition.  I  do  not  think  it  is  a 
case  to  make  the  creditors  pay  costs. 

The  summonses  are,  therefore,  dismissed  without  costs.'* ^ 


In    re   GORTON. 
DOWSE  V.  GORTON. 

(Supreme   Court   of   Judicature,    Court  of   Apiteals,   1889.     Law   Reports  40 

("liaucery    Division,   0.3G.) 

This  was  an  appeal  from  a  decision  of  Sir  H.  F.  Bristowe,  Vice 
Chancellor  of  the  County  I'alatine  of  Lancaster. 

By  an  agreement  dated  the  25th  of  September,  1874,  Luke  Turner 
agreed  with  John  Gorton  and  another  person  named  Shemilt  for  the 
sale  to  them  of  his  business  of  an  elastic  cord  manufacturer,  in  Alan- 
chester,  and  his  interest  in  the  mill,  machinery  audi  plant,  for  il9,487., 
to  be  paid  in  instalments ;  and  it  was  agreed  that  the  purchasers  and 
the  survivor  of  them  should  carry  on  the  business  till  all  the  instal- 
ments were  paid.  L.  Turner  died  in  1874,  and  the  plaintiffs  were  his 
executors.  J.  Gorton  survived  Shemilt  and  died  in  December,  1883. 
At  that  time  £8,487.  was  due  for  principal  and  interest  to  the  executors 
of  Turner.  J.  Gorton  left  a  will  appointing  his  widow  and  J.  W. 
Gorton  his  executors  andi  trustees,  and  he  declared  that  it  should  be 
lawful  for  his  trustees,  in  case  they  should  in  their  uncontrolled  dis- 
cretion think  fit,  to  continue  for  such  period  as  they  might  think  fit 
any  business  in  which  he  might  be  engaged  at  his  death,  and  to  en- 
gage and  employ  in  any  such  business  such  part  of  his  estate  and  ef- 
fects as  they  should  think  desirable. 

51  Ex  parte  Kdmouds,  4  De  G.,  F.  &  J.  488,  408  (1802);  In  re  Evans,  L.  R. 
84  Ch.  Div.  rm  (1SS7);  INIason  v.  I'oineroy.  ].">1  ISIass.  304.  24  N.  E.  202,  7 
r>.  K.  A.  771  (1890) ;  In  re  Bluudell,  L.  K.  40  Ch.  Div.  370  (1888) ;  Cock  v. 
Carson,  45  Tex.  420  (1870). 


Sec.  7)  BY   ACT    OF   CREDITORS.  303 

The  executors  of  Gorton  carried  on  the  business,  using  therein  the 
assets  of  the  testator.  At  the  time  of  his  death  his  assets  were  suffi- 
cient to  discharge  all  his  liabilities ;  but  in  carrying  on  the  business  his 
executors  incurred  trade  debts  to  a  considerable  amount,  including  a 
debt  for  goods  sold  and  delivered  to  Messrs.  Riley  &  Sykes. 

At  the  present  time  the  assets  of  the  testator  in  the  hands  of  the  ex- 
ecutors were  insufficient  to  pay  the  debt  due  under  the  agreement  with 
Turner,  and  the  liabilities  incurred  by  the  executors  in  the  conduct  of 
the  business.  Turner's  executors  accordingly  brought  an  action  for 
the  administration  of  Gorton's  estate,  and  also  brought  an  originating 
motion  asking  that  the  following  questions  might  be  determined  by 
the  court : 

1.  Whether  the  executors  of  J.  Gorton  were  entitled,  as  against 
the  persons  to  whom  he  was  indebted  at  the  time  of  his  death,  to  be 
indemnified  out  of  his  estate,  or  any  part  thereof,  against  debts  and 
liabilities  incurred  by  the  executors  in  carrying  on  his  business. 

2.  Whether  ajl  his  book  debts,  stock,  and  the  assets  of  the  business 
carried  on  by  the  said  J.  Gorton  at  the  time  of  his  death,  and  now  due 
and  owing  in  respect  of  the  said  business,  or  belonging  to  the  same, 
ought  not  to  be  applied  in  payment  of  the  debts  due  by  the  said  J. 
Gorton  at  the  time  of  his  death,  in  priority  to  any  claim  of  his  ex- 
ecutors for  indemnity,  or  to  any  claim  of  the  persons  with  whom  such 
executors  dealt  in  carrying  on  the  said  business. 

The  motion  also  asked  for  administration  of  the  estate  in  accordance 
with  the  opinion  of  the  Court. 

The  Vice-Chancellor,  on  the  23d  of  November,  1887,  made  an  or- 
der on  the  motion  answering  the  second  question  in  the  affirmative, 
and  giving  no  answer  to  the  first  question ;  and  from  this  decision  the 
business  creditors  of  Gorton's  executors  appealed. 

Cotton,  L.  J.^-  This  is  an  appeal  against  so  much  of  the  decision 
of  the  Vice-Chancellor  as  declared  that  "the  book  debts,  stock,  and 
other  assets  of  the  business  carried  on  by  John  Gorton  at  the  time  of 
his  death,  and  now  due  and  owing  in  respect  of  the  said  businesses, 
or  either  of  them,  or  belonging  to  the  same,  ought  to  be  applied  in 
payment  of  the  debts  due  by  the  said  John  Gorton  at  the  time  of  his 
death  in  priority  to  any  claim  of  his  executors  or  administrators,  and 
then  gave  other  consequential  accounts." 

What  happened  was  this.  At  the  time  of  the  testator's  death  there 
were  certain  debts  due  and  owing  by  him,  but  there  are  very  few  now 
remaining,  the  principal  being  a  sum  due  in  respect  of  the  purchase- 
money  payable  by  him  to  the  executors  of  the  vendor  of  the  business 
which  he  carried  on.  By  his  will  he  empowered  his  executors  to  car- 
ry on  his  business,  and  they  did  carry  it  on ;  and,  in  carrying  on  that 
business,  they  became  liable  for  certain  sums  for  goods  sold  and  de- 
livered, and  other  matters.  The  trade  creditors  contend  that  they  are 
not  creditors  of  the  testator,  but  creditors  of  his  executors,  and  what 

52  A  part  of  the  opiuion  of  Lord  Justice  Liudley  is  omitted. 


304  TRANSFER  OF    RESPECTIVE   INTERESTS   OF   PARTIES.  (Cll.  3 

they  say  is,  in  my  opinion,  correct.  They  are  not  entitled  to  any  Hen 
at  all  against  the  assets  of  the  testator — those  which  were  his  at  the 
time  of  his  death— and  they  have  no  claim  against  anything  except  in 
this  way,  that  they  have  a  claim  against  the  executors  personally,  and, 
then,  if  those  executors  have  any  claim  of  indemnity  against  the  es- 
tate, they  are  entitled  to  have  that  indemnity  applied  for  their  benefit 
— that  is  to  say,  they  are  to  stand  in  the  place  of  the  executors  in  en- 
forcing the  indemnity.  That,  in  my  opinion  is  right.  Where  a  busi- 
ness is  carried  on  after  the  death  of  the  testator,  of  course  the  persons 
who  supply  goods,  are  in  no  way  creditors  of  the  testator.  They  can- 
not make  any  claim  against  the  executors  as  executors ;  but  they  can 
make  a  claim  against  the  executors  as  the  persons  who  dealt  with  them 
and  on  whose  order  they  supplied  the  goods.  Then  if  the  executors 
are  entitled  to  be  indemnified  they  will  stand  in  the  place  of  the  ex- 
ecutors in  enforcing  that  indemnity. 

What  is  contended  for  on  the  other  side  is  this :  They  say  that  the 
persons  who  dealt  with  the  executors  and  supplied  goods  which  came 
into  the  possession  of  the  executors  are  not  entitled  to  any  indemnity 
till  all  the  creditors  of  the  testator  are  paid.  It  seems  to  me  that  that 
is  not  right.  What  the  creditors  of  the  testator  seek  to  do  is  this : 
They  seek  to  have  the  benefit  of  those  services  supplied  by  the  trade 
creditors  of  the  executors  for  the  benefit  of  the  estate  without  making 
any  provision  for  them.  But  the  creditors  of  the  executors,  who  are 
not  creditors  of  the  testator,  cannot  make  any  claim  to  be  paid  any- 
thing out  of  what  estate  there  may  be  in  the  hands  of  the  executors 
if  the  executors  themselves  are  indebted  to  the  estate,  so  that  they 
have  got  in  their  own  pockets  that  out  of  which  they  ought  to  take 
their  indemnity ;  and  I  think  an  account  must  be  taken  so  as  to  ascer- 
tain what  claims  the  executors  have  by  way  of  indemnity  against  the 
estate.  So  far  as  concerns  the  original  assets  of  the  testator,  they  can- 
not, of  course,  claim  as  against  the  creditors  of  the  testator.  All 
they  could  claim  would  be  an  indemnity  against  their  expenses  in 
realizing  the  assets  of  the  testator.  That  there  is  no  doubt  about. 
They  will  only  be  liable  for  the  money  they  get  properly  from  real- 
izing those  assets.  WHiere  there  are  liabilities  undertaken  under  the 
direction  of  the  testator's  will  they  are  entitled  to  an  indemnity  in  re- 
spect of  them  out  of  the  assets  acquired  by  the  executors  after  the 
testator's  death.  The  creditors  of  the  testator  say,  these  are  assets 
of  our  testator,  and  he  could  not  by  declaring  a  trust  for  you  to  per- 
form, give  you  any  right  of  indenmity  against  the  property.  That  is 
not  correct. 

I  think  there  must  be  a  declaration  that  the  executors  of  the  tes- 
tator are  entitled,  in  priority  to  the  ])ersons  to  whom  he  was  indebted 
at  the  time  of  his  death,  to  be  indemnified  out  of  such  part  of  the  es- 
tate as  has  been  acquired  by  the  executors  since  his  death  against 
debts  or  liabilities  incurred  by  the  executors  in  carrying  on  this  busi- 
ness for  the  full  amount  of  such  debts  or  liybilities;  or,  if  the  ex- 


Sec.  7)  BY   ACT    OF   CREDITOKS. 


305 


editors  be  in  default  to  the  testator's  estate,  then  to  the  full  amount  of 
such  debts  or  liabilities  after  deducting  the  amount  in  respect  of  which 
the  executors  are  so  in  default.  That  is  to  say,  you  do  not  want  a 
separate  account  of  the  carrying  on  of  the  business,  but  the  executors 
must  have  their  accounts  taken ;  and  if,  in  taking  the  accounts,  it 
appears  they  are  indebted  to  the  estate,  then  they  have  got  in  their 
pocket  the  money  out  of  which  the  indemnity  to  which  they  are  en- 
titled ought  to  be  paid ;  but  if  they  are  not  indebted  to  the  estate  then 
they  have  a  right  to  be  indemnified.  Then  the  property  which  was 
the  testator's  at  his  death  must  go  in  favor  of  the  creditors  of  the 
testator,  and,  consequently,  the  directions  given  which  entitle  the  ex- 
ecutors to  an  indemnity  will  be  w^ithdrawn  from  their  claim  in  the 
administration  of  the  estate.     I  think  that  will  work  it  out. 

Then  this,  which  is  merely  of  course,  should  be  added,  that  the 
persons  with  whom  the  executors  dealt  in  carrying  on  the  business,  and 
to  whom  they  are  now  under  any  debts  or  liabilities  in  respect  there- 
of, may  be  declared  to  be  substituted  for,  or  entitled  to  the  right  of, 
the  executors  with  regard  to  the  said  indemnity  as  to  such  debts  or 
liabilities.  In  my  opinion  that  is  a  correct  declaration,  and  the  in- 
quiries or  accounts  for  carrying  that  into  effect,  if  they  are  not  already 
in  the  decree,  must  be  added.  That  is  the  correct  principle  on  which 
this  case  is  to  be  decided.  If  the  executors  have  dealt  with  the  es- 
tate so  as  to  make  a  large  sum  due  from  them  they  will  not  be  en- 
titled to  any  such  indemnity,  or  rather  they  will  be  entitled  to  an  in- 
demnity, but,  as  I  have  already  said,  they  have  got  the  money  in  their 
purse  to  satisfy  that. 

LiNDLEY,  L.  J.  The  question  raised  by  this  appeal  can  only  be  an- 
swered by  considering,  first  of  all,  the  rights  of  the  creditors  of  the  de- 
ceased, and,  secondly,  the  rights  of  those  who  have  become  creditors 
of  the  executors  since  his  death,  and  by  adjusting  those  two  rights 
where  they  appear  to  conflict. 

Now  what  is  the  right  of  the  creditor  of  the  deceased?  He  is  a 
creditor ;  he  has  no  equitable  rights  as  distinguished  from  legal  rights 
against  the  assets  of  the  deceased.  His  right  is  to  sue  the  executor 
at  law  and  get  a  judgment  at  law  de  bonis  testatoris,  and  under  that 
to  seize  under  a  fi.  fa.  the  assets  of  the  deceased  in  the  hands  of  the  ex- 
ecutors at  the  time  of  his  death.  But  he  has  nothing  to  do  with  fu- 
ture acquired  property.  That  is  his  right  at  law.  But  then,  if  the  ex- 
ecutor has  so  dealt  with  the  assets  as  to  have  increased  them,  the 
executor  cannot  put  the  accretion  into  his  own  pocket ;  neither  can  he 
hand  it  over  to  the  legatees  or  next  of  kin  so  long  as  the  debts  of  the 
testator  are  unpaid.  Therefore  I  think  it  is  plain  that  the  creditors 
oi.jhe  testator  can  get  the  subsequently  acquired  property,  but  not 
on  the  same  footing  that  they  could  get  the  property  of  the  testator 
which  were  assets  of  the  testator  at  the  time  of  his  death.  The  cred- 
itor of  the  testator  can  only  get  the  after  acquired  property  on  terms 
Ken.Tr.— 20 


30G  TUANSFKR   OF    RESPECTIVE   INTERESTS   OF   PARTIES.  (Cll.  3 

which  are  just.  He  cannot  take  the  property  from  the  executors  and 
make  the  executors  pay  for  it  out  of  their  own  pockets.  He  can  only 
have  the  property  subject  to  the  right  of  the  executors  to  indemnity, 
that  is  to  say,  he  cannot  throw  the  cost  of  getting  the  assets  on  tlie  ex- 
ecutors, and  take  the  assets  regardless  of  that  cost.  The  right  of  the 
executors  to  be  indemnified  out  of  the  subsequently  acquired  property 
lets  in  the  rights  of  those  to  whom  they  are  liable,  that  is  to  say,  the 
creditors  who  have  become  such  in  the  course  of  the  executors  trading 
or  carrying  on  the  l)usiness.  Such  are  the  rights  of  the  creditors  of 
the  deceased. 

Now,  let  us  look  at  the  rights  of  those  who  have  dealt  wath  the  ex- 
ecutors after  his  death.  The  right  of  those  is  to  sue  the  executors. 
I  believe  there  are  some  very  exceptional  cases  in  which  subsequent 
creditors  can  get  the  assets,  and  I  think  there  is  authority  for  saying 
tliat  funeral  expenses  can  be  got  out  of  the  assets  ;  but  with  those  ex- 
ceptions the  right  of  subsequent  creditors  is  to  sue  the  executors. 
They  have  nothing  to  do  with  the  assets  of  the  testator  at  all,  and  they 
can  only  get  at  them  by  the  circuitous  process  of  the  executors  being 
indemnified.  Now,  adjust  those  rights,  and  the  thing  is  perfectly 
plain.  Out  of  the  assets  of  that  part  of  the  estate  which  existed  at 
the  death  of  the  testator  his  creditors  come  first ;  the  executor  has  no 
right  of  indemnity  except  as  regards  debts  incurred  by  himself  as  ex- 
ecutor. Those  creditors  have  nothing  to  do  with  the  will ;  as  Mr. 
Buckley  said,  they  have  nothing  to  do  with  what  the  will  says  about 
carrying  on  the  business  or  anything  else.  They  ask  for  payment  out 
of  the  assets  of  the  testator  and  they  get  it.  When  you  come  to  other 
assets,  then,  as  I  say,  a  distinction  must  be  drawn  ;  whereas  they  claim 
the  assets  of  the  testator  free  from  all  rights  of  the  executors  to  be 
indemnified,  they  cannot  claim  the  subsequently  acquired  assets  ex- 
cept subject  to  the  rights  of  the  executors  to  indemnity.  That  is 
worked  out  by  the  variations  in  the  order  which  Lord  Justice  Cotton 
has  suggested,  and  which  we  propose  to  make.    *    *    * 

L/DPES^  L.  J.    I  am  of  the  same  opinion. 


CLACK  v.  HOLLAND. 

(In  Chancery,  before  Sir  John  Roniilly,  Master  of  the  Rolls,  1854.     19 

Beaviin,  2G2.) 

By  a  settlement  made  in  1806,  certain  real  and  personal  estate  was 
settled  upon  the  Rev.  Thomas  Clack  and  Elizabeth  Sadler,  succes- 
sively, for  life,  and  afterwards  for  the  benefit  of  the  issue  of  the  mar- 
riage. 

In  1823,  the  trustees,  under  a  power,  converted  the  trust  pro[)erty 
into  money  and  lent  il800,  part  of  it,  to  Mr.  Clack.  By  way  of  se- 
curity a  policy  of  assurance  for  il200,  effected  on  the   life  of  Mr. 


Sec.  7)  BY   ACT    OF   CUEUITOKS.  307 

Clack  in  the  names  of  Messrs.  Aberdein,  was  assig-ned  to  them.  Mr. 
Clack  covenanted  to  keep  up  the  policy,  and,  if  he  neglected  to  do  so,, 
the  trustees  were  authorized  to  keep  it  up.  Mrs.  Clack  died  in  1845. 
Holland,  one  of  the  trustees,  being  at  times  unable  after  Mrs.  Clack's 
death  in  1845  to  induce  ]\Ir.  Clack  to  pay  the  premiums,  with  Mr. 
Clack's  sanction,  borrowed  certain  sums,  from  time  to  time,  from 
Daniel  Cullington,  Samuel  Riles,  and!  Jane  Eden,  for  that  purpose,  and 
they  also  paid  some  of  the  premiums  and  Holland  gave  Cullington 
and  Riles  a  lien  on  the  policy  as  security  for  the  repayment. 

Mr.  Clack  died  in  1852,  insolvent  and  without  having  repaid  what 
he  had  borrowed  from  the  trustees.  Cullington  gave  notice  to  the 
office  of  his  claim  upon  the  policy,  and  the  plaintiffs,  the  cestuis  que 
trust  of  the  settlement,  also  gave  notice  that  they  claimed  it  and  filed 
their  bill  against  the  trustees  of  the  settlement,  Cullington,  Riles  and 
their  father's  representatives,  to  have  the  proceeds  of  the  policy  ap- 
plied to  pay  the  loan  to  Mr.  Clack.  The  defendants,  Holland,  Cul- 
lington and  Riles,  insisted  that  they  had  a  lien  upon  it,  Holland  for 
the  premiums  paid  by  him,  and  the  other  two  for  the  sums  advanced 
upon  the  security  of  the  policy.     ]\Iiss  Eden  disclaimed. 

The  Master  of  the  Rolls.^^  *  *  *  ^i-^^  ^^y.^  question  to  be 
considered  is,  what  is  the  position  of  Richard  Holland  with  reference 
to  this  policy.  In  the  first  place  he  was  the  assignee  of  the  policy  in 
trust  to  secure  the  repayment  of  the  debt  to  the  family.    *    *    * 

I  find  it  was  Thomas  Clack's  duty  to  pay  the  premiums,  and  that 
it  was  the  duty  of  Richard  Holland  to  compel  him  to  pay  them  if  he 
could.  Down  to  1845,  no  question  arises,  and  the  evidence  satisfies 
me,  that  from  that  time  down  to  September,  1852,  when  Thomas  Clack 
died,  Richard  Holland  had  abundant  means  of  paying  the  premiums 
on  this  policy.  *  *  *  Knowing  that  he  ought  to  keep  it  up,  the  evi- 
dence shows  me,  that  he  did  obtain  funds  which  he  ought  to  have  ap- 
plied for  that  purpose,  and  if  he  paid  to  Thomas  Clack  the  money  ap- 
plicable to  the  payment  of  the  premiums,  he,  by  so  doing,  committed 
a  breach  of  trust.  *  *  *  Assuming  it  to  have  been  invalid,  and 
that  Richard  Holland  had  not  funds  for  the  purpose,  and  could  not 
get  any  from  Thomas  Clack,  then  it  was  his  duty  to  have  sued  Thomas 
Clack  on  the  deed  for  the  amount  necessary  for  keeping  up  the  policy ; 
and  if  the  policies  were  liable  to  have  "been  lost  in  the  meantime,  by 
a  default  in  paying  the  premiums,  I  am  of  opinion,  that  if  he,  having 
no  trust  funds  for  that  purpose,  had  applied  his  own  money  for  keep- 
ing up  the  policy,  he  would  then  have  had  a  lien  on  the  policy,  for  the 
amount  advanced  by  him  for  the  purpose  of  keeping  it  on  foot.   *   *    * 

The  other  question  is  with  respect  to  the  £51.,  the  three  sums 
paid  for  the  premiums  on  the  policy.  I  felt  originally  some  difficulty 
on  this  point  of  the  case.  It  appeared  to  me,  in  the  first  instance, 
that  it  was  in  the  nature  of  salvage,  and  it  was  forcibly  put  by  ]Mr. 

63  A  part  of  the  opinion  is  omitted. 


308  TRANSFKli    OF    UESI'ECTIVK    INTEUKSTS    OF    PARTIES.  (Cll.  3 

Bird  in  the  only  way  in  whii^h.  if  at  all,  it  could  be  supported,  as  the 
case  of  the  trustee  sayins?,  "1  have  behaved  wrongly  and  have  forfeited 
the  money  given  to  me  for  this  purpose ;  will  you  advance  the  money 
and  save  the  policy  from  being  lost?"  But,  upon  further  considera- 
tion, I  am  of  opinion  that  this  is  not  the  case.  *  *  *  in  fact  it 
amounts  to  this :  A  trustee  has  received  money  for  the  purpose  of 
'  paying  premiums  on  a  policy  which  it  is  his  duty  so  to  apply ;  can  he, 
^  •  bv  misapplying  that  money  to  his  own  use,  and  borrowing  money  for 
the  purpose  of  keeping  the  policy  on  foot,  give  a  valid  security  to 
the  person  who  advances  money  for  that  purpose?  It  is  obvious  that 
if  he  can,  he  can  gain  an  advantage  by  his  own  breach  of  trust ;  in 
my  opinion  it  is  invalid,  and  the  same  question  as  that  in  Pinkett  v. 
Wright  [2  Hare,  120,  127;  12  CI.  cS:  Fin.  764].  There  can  be  no  ques- 
tion (as  I  have  already  stated),  that  if  the  trustee  has  no  funds  prop- 
erly applicable  to  keeping  up  the  policy,  he  may  do.  and  in  my  opin- 
ion it  is  his  duty  to  do  what  he  can  to  protect  the  policy,  and  advance 
or  obtain  money  for  the  purpose  of  paying  the  premium,  and  a  lien 
on  the  policy  will  then  be  obtained,  because  the  trustee  has  no  money 
applicable  for  the  purpose,  and  he  does  really  what  is  the  best  for  the 
cestui  que  trust  in  obtaining  money  for  that  purpose.  Therefore  the 
cestui  que  trust,  having  the  benefit  of  that  advance,  cannot  make  the 
trustee  pay  personally  that  of  which  he  has  received  the  benefit.  But 
if  the  cestui  que  trust  supply  funds,  or  if  the  trustee,  by  duly  perform- 
ing his  trust  ought  to  be  in  possession  of  funds  applicable  to  that  pur- 
pose, then  he  acquires  no  lien  on  the  policy,  and  cannot  confer  one 
on  another.     *     *     * 

The  result  of  this  case,  in  my  opinion,  is,  that  the  plaintififs  are  en- 
-?-"       titled  to  the  produce  of  the  policy,  and  I  must  make  a  declaration  to 
that  efifect.^* 

R4  Muir  V.  City  of  Cxlassow  Hank,  4  App.  Cns.  S.-^T,  355,  300,  :!G1,  3G2,  365, 
3G8.  3(>9,  370.  377,  3S.S  (1870)  :  Todd  v.  ^roorhouse.  I..  R.  19  Eq.  GO  (1874) : 
Caiui)l)ell  V.  Gordon  (Ct.  of  Session)  2  Dnnlop,  G30  (1840)  ;  Johnson  v.  Le- 
nuui,  131  111.  GOO.  23  N.  E.  435,  7  L.  R.  A.  G.jG.  10  Am.  St.  Rep.  G3  (1800); 
Glenn  v.  Allison,  .58  Md.  527  (1882);  Noyes  v.  Blakeman,  6  N.  Y.  567  (1852); 
New  V.  Nicoll,  73  X.  Y.  127,  20  Am.  Rep.  Ill  (1878);  Perry  v.  Board  of  Mis- 
sions, 102  N.  Y.  90,  G  N.  E.  IIG  (18S(;):  Van  Slyke  v.  F.nsli,  12.''.  N.  Y.  47,  25 
N.  E.  lOG  (1800)  ;  Stanton  v.  Kins,  8  Ilnn  (X.  Y.)  4  (187G).  affirmed  (!0  X.  Y. 
600  (1877);  Fowler  v.  Mntnal  Ins.  Co.,  28  Ilun  (X.  Y.)  195  (18^2);  Randall 
V.  Dusenhnry.  .30  N.  Y.  Snper.  Ct.  174  (1875),  affirmed  G:'.  X.  Y.  G45  (187.5). 

The  foreiroins  eases  recognize  the  right  of  a  trnstee  nnder  certain  circnm- 
stances  to  stipnlate  that  not  he  personally,  but  the  trust  estate  only,  shall 
be  liable.  But  according  to  the  principal  case  he  cannot  thus  bind  the  trust 
estate  so  long  as  he  is  in  default  to  the  trust. 


Sec.  7)  BY   ACT    OF   CREDITOUS. 


300 


II.  Creditors  of  the  Cestui  que  Trust. 

BEXXET  and  Another  v.   IKJX  and  Others. 
(In  Chancery,  before  Lord  Chancellor  Clarendon.  1602.    1  Chancery  Cases,  12.) 

Anno  15  ]s.c. — Ralph  Allen  piirchaseth  lands  in  his  own  name,  and 
in  the  name  of  Edward  Hammond,  in  trust  for  Ralph  Allen  and  his 
heirs,  and  Hammond  to  take  nothing  thereby;  but  the  trust  is  not  ex- 
pressed in  the  conveyance.  William  Allen,  senior,  did  borrow  i600. 
of  John  Bennet,  and  the  said  William  Allen,  Ralph  Allen,  and  William 
Allen,  Jr.,  son  and  heir  of  the  said  Ralph  Allen  (William  Allen.  Sr., 
being  first  bound  in  the  bond),  1630.  did  become  bound  unto  the  said 
John  Bennet,  since  deceased,  for  the  payment  of  the  said  £600.,  by 
bond  of  i  1,000.,  wherein  they  bound  themselves  and  their  heirs,  under 
whom  the  plaintiffs  are  well  entitled  to  the  debt  in  question.  And  one 
witness  deposeth,  that  Ralph  Allen  was  a  good  husband,  not  one  that 
contracted  any  debts  of  his  own,  and  believes  he  and  William  Allen, 
Jr.,  were  only  sureties  for  William  Allen,  senior.  Ralph  Allen  dies, 
and  Hammond  survives,  and  after  dies ;  then  William  Allen,  son  and 
heir  of  Ralph  Allen,  dieth  without  issue,  and  the  now  defendants,  as 
heirs  at  law,  bring  their  bill  against  the  heirs  of  Hammond,  who  had 
the  estate  in  law,  to  have  the  lands  conveyed  in  performance  of  the 
trust ;  which  is  decreed  to  them  accordingly,  and  the  lands  conveyed 
unto  them  as  heirs  at  law  of  Ralph  Allen. 

The  now  plaintiffs  bring  their  action  of  debt  at  law  against  Henry 
Box,  since  deceased,  and  the  now  defendants,  as  heirs  of  Ralph  Allen. 
The  defendants  thereunto  pleaded  riens  per  discent  praeter  a  third 
part  of  a  messuage  worth  £6.  13s.  4d.  per  annum. 

January,  1662.  The  now  plaintiffs  bring  their  bill  in  this  court 
against  the  defendants,  and  Henrv  Box.  the  defendant's  late  hus- 
band,  who  had  the  lands  decreed  and  conveyed  unto  them  as  heirs  of 
Ralph  Allen,  to  have  them  decreed  as  heirs,  to  pay  the  just  debts  of 
Allen,  or  to  have  the  said  lands  made  liable  to  pay  the  said  debts  as 
assets  in  equity. 

The  defendants.  Box  and  Stonehouse,  pleaded,  that  the  said  action 
still  depended,  which  is  a  double  vexation ;  and  demur,  and  demand 
judgment,  whether  they,  as  heirs,  shall  be  charged  in  equity,  without 
any  trust  or  agreement  further  than  the  law  chargeth  them. 

On  hearing  thereof,  a  case  was  stated  on  the  bill,  plea  and  demur- 
rer ;  and  afterwards  Henry  Box  died.  And  before  any  bill  of  re- 
vivor against  the  defendants,  it  was  ordered  May  12,  1653,  that  the 
defendants  do  answer  the  plaintift"s  bill ;  but  the  benefit  of  the  plea  to 
be  considered  at  the  hearing. 

The  defendants  deny  that  they  have  entered  into,  or  received  any 
of  the  profits  of  the  saidi  lands,  the  same  being  ever  since  7  Car.  ex- 
tended for  the  debts  of  Ralph  Allen,"  and  ever  since  held  by  Sir  John 


310  TRANSFER   OF    KESPECTIVE   INTERESTS   OF   PARTIES.  (Ch.  3 

Banks  and  his  executors,  and  formerly  before  the  extents  were  let 
at  £500.  per  annum,  and  after  at  £300.  per  annum,  and  now  but  at 
£400.  per  annum,  and  whcreout  above  £60.  is  deducted  for  the  charges 
of  the  Sea-Banks,  and  the  rest  will  not  pay  the  interest  of  the  prin- 
cipal debt,  as  the  extendors  allege. 

An  original  was  filed  by  the  plaintififs  against  Henry  Box  and  the 
other  defendants,  on  the  bond  in  question  in  the  Common  Pleas,  bear- 
ing teste  16  Feb.  1659. 

The  (lefendint,  Walter  Stonehouse,  did  for  £400.  bargain  and  sell 
his  third  part  of  the  reversion  in  fee  of  the  lands  in  question  to  Henry 
Box,  deceased,  by  deed  bearing  date  3d  Oct.  1660;  and  the  said  Henry 
paid  then  to  the  said  Walter  the  £400.  purchase  money  for  the  same, 
and  the  defendants,  as  they  swear  by  their  answer,  had  not  then,  or 
in  some  months  after,  any  notice  of  the  said  original,  and  no  notice 
proved  ;  and  one  witness  deposeth,  he  believeth  there  was  no  notice ; 
for  he  being  conversant  in  all  Mr.  Box's  affairs,  if  there  had  been 
any  notice,  he  should  have  heard  of  it,  as  he  verily  believes. 

The  defendant  George  Burdet,  after  the  other  defendants  were 
ordered  to  answer,  put  in  his  answer,  and  thereby  insisted  on  the 
same  matter  the  other  defendants  did  by  their  plea  and  demurrer,  and 
was  on  June  the  9lh  last  past,  served  with  process  ad  audiendum 
judicium  upon  21st  June  following,  but  appeared  not  at  the  hearing, 
or  any  for  him. 

1.  Question.  Whether  the  said  lands,  as  this  case  is,  shall  or  ought 
to  be  decreed  as  assets  in  equity? 

2dly.  Or  whether  the  plaintiffs  ought  to  have  any  decree  in  this 
case  against  the  defendants? 

Chief  Justice  Hyde,  Chief  Baron  Hales,  and  Justice  Windham, 
were  of  opinion,  on  hearing  counsel  on  both  sides,  that  the  lands  in 
the  said  case  and  bill  mentioned,  (as  the  case  is  stated)  are  not,  nor 
ought  to  be  decreed  as  assets  in  equity,  and  that  the  plaintiffs  ought 
not  to  have  any  decree  against  the  defendants. 

Afterwards  in  Hillary  Vacation,  1664,  the  bill  was  dismissed  upon 
the  judge's  certificate,  14th  Nov.  1664,  or  1661,  in  a  case  wherein 
Clark  was  plaintiff  against  Sir  Thomas  Fanshaw. 


PRAT  v.  COLT. 

(In  Chancery,  before  ImM  Keeper  Bridginnn,  1000.     1  Cases  in 
Chancery,  128.) 

The  plaintiff  had  a  judgment  against  George  Holt,  and  brought  his 
bill  against  his  heir,  to  subject  certain  lands  which  he  had  a  decree  of 
this  court  for,  upon  a  trust  for  his  father  and  his  heirs  to  satisfy  his 
debts ;  and  the  defendant  demurred,  and  this  demurrer  allowed :  and 
the  Lord  Keeper  conceived  it  all  one  with  Bennet  and  Box's  Case. 
But  quaere,  since  the  statutes  of  Frauds  and  Perjuries. 


Sec.  7)  BY  ACT    OB^   CUEDITORS.  311 

LORD  GREY  and  Others  v.  COLVILE  and  Others. 

(In   Chancery,    before  Lord   Finch,    Chancellor,    107S.     2   Reports   In 
Chancery,  143.) 

The  plaintiff  the  Lady  Grey's  bill  is  to  be  relieved  for  a  debt  of 
£1500.,  and  interest  on  bond,  wherein  John  Colvile  did  bind  himself 
and  his  heirs,  to  repay  the  same  unto  the  plaintiff  her  executors  and 
assigns,  that  the  same  might  be  paid  out  of  the  lands  which  were  pur- 
chased by  the  said  John  Colvile,  with  his  own  proper  money,  in  the 
names  of  himself  and  the  defendant's  wife,  to  hold  to  them  two  for 
their  lives,  and  then  to  the  heirs  of  Colvile,  and  the  rest  were  pur- 
chased in  the  names  of  the  said  defendants  Morris  and  Saunders,  in 
trust  for  the  said  John  Colvile  and  his  heirs ;  that  soon  after,  and 
before  the  £1500.  was  paid,  the  said  John  Colvile  died,  and  the  right 
and  equity  of  the  premises,  during  the  life  of  the  said  defendant's 
wife,  is  in  Josia  Colvile,  and  the  reversion  in  fee,  after  the  death  of 
the  said  wife,  will  descend  to  the  said  defendant  Josia  Colvile,  as 
son  and  heir  of  the  said  John  Colvile,  and  the  profits  are  received 
by  him  or  for  his  use;  that  the  said  John  Colvile  dying  intestate,  adl- 
ministration  is  granted  to  Dorothy  his  relict,  who  pleads  she  hath 
no  personal  estate,  whereupon  the  Lady  Grey  commenced  a  suit  at 
law,  by  filing  an  original  for  her  said  debt  against  the  defendant 
Josia,  as  son  and  heir  of  the  said  John  Colvile  and  hath  got  judgment 
thereon  to  have  satisfaction  for  the  said  debt,  out  of  the  reversion 
of  the  lands  of  John,  which  descended  in  fee  to  the  said  defendant 
Josia  Colvile,  and  ought  to  have  satisfaction  accordingly;  but  the 
said  defendant  Josia  pretendeth  he  hath  nothing  by  descent  in  pres- 
ent, but  the  reversion  of  the  lands  purchased  in  the  names  of  John 
Colvile  and  his  wife,  after  the  death  of  his  wife;  whereas  he  and 
the  other  tw^o  defendants  were  only  trustees  for  John  Colvile  and 
his  heirs ;  and  their  trust  being  now  come  to  the  defendant  Josia, 
they  are  liable  as  assets,  in  equity,  for  satisfaction  of  the  plaintift''s 
debts,  and  the  plaintiff  ought  to  be  let  into  the  immediate  possession, 
and  the  said  Josia  also  insists,  that  the  premises  are  incumbered  by 
a  former  judgment  of  one  lease  for  £800.,  and  the  plaintiff's  creditors, 
and  others  the  creditors  in  their  suit,  seeking  relief  against  the  same 
defendants,  upon  the  same  trust  and  equity,  and  to  have  their  debts 
paid  out  of  the  said  lands,  they  insisting  they  are  creditors  by  judg- 
ment, grounded  on  original  of  the  same  day  and  date  with  the 
said  Lady  Grey,  and  ought  to  be  satisfied,  in  equal  degree  and  time. 

The  plaintiff  Creed  and  the  other  creditors,  insist,  that  they  for 
so  much  as  the  estate  in  law  of  Wise  is  in  the  heir,  that  their  judg- 
ments ought  to  attach  the  lands  according  to  priority  of  originals, 
and  though  the  said  Leke  hath  obtained  a  decree,  prior  to  the  cred- 
itors in  these  suits,  yet  the  same  is  to  be  subject  to  the  direction  of 
this  court,  and  ought  not  to  take  place,  but  according  to  the  date  of 
their  originals. 


312  TRANSFKR   OF    UESPECTIVE   INTERESTS   OF   PARTIES.  (Cll.  3 

This  court  (it  being  admitted  by  all,  that  the  oric^inal  on  which  the 
said  Leke's  judgment  is  grounded,  is  prior  to  all  the  other  creditors' 
originals,  and  that  the  plaintiff  the  Lady  Grey's  and  Creed's  originals 
are  next  in  priority,  and  bear  the  same  date  one  with  another,  and 
ought  next  to  be  satisfied  with  other  judgments,  who  originally  bear 
the  same  date)  declared,  that  the  estate  purchased  in  the  names  of  the 
defendant's  wife  as  aforesaid,  was  a  trust  for  life,  attending  the 
reversion,  and  so  liable  to  make  the  several  plaintiff's  satisfaction  for 
their  debts,  and  should  be  enjoyed  by  the  plaintiffs,  against  the  said 
Wise  and  Josia  Colvile  the  heir;  and  the  court  decreed  that  if  the 
estate  of  Wise,  as  aforesaid,  was  not  sufificient,  then  the  said  rever- 
sionary lands,  purchased  in  the  names  of  the  said  Morris  and  Saun- 
ders, after  the  death  of  Sir  John  Tufton,  who  hath  an  estate  for  life  in 
the  said  lands,  should  go  towards  satisfaction  of  the  said  debts. 


CREED  V.  COLVILLE. 

(In  riiancery,  before  Lord  Keeper  North,  IGS.'?.     1  Vernon,  172.) 

The  single  point  of  this  case  was,  whether  the  trust  of  an  estate 
in  fee  descended  upon  the  heir  is  liable  in  equity  to  the  satisfaction 
of  a  debt  by  bond,  wherein  the  heir  is  expressly  bound? 

The  late  Lord  Chancellor  had  decreed  it  assets  ;  but  upon  a  re- 
hearing before  the  Lord  Keeper,  he  seemed  doubtful. 

For  the  heir  against  the  decree  it  was  said,  that  this  point  had 
formerly  been  settled  upon  great  advice  in  the  case  of  Box  v.  Ben- 
nett, which  was  heard  by  the  Lord  Chancellor,  with  the  assistance 
of  the  Lord  Chief  Justice  Hales,  and  Mr.  Justice  Wadham  Windham. 
And  that  this  decree  was  unreasonable,  in  that  an  account  of  the 
profits  was  decreed  during  the  infancy;  whereas,  at  law,  if  the  heir 
is  bound  in  the  bond  of  the  ancestor,  and  after  the  death  of  his  an- 
cestor is  sued  during  his  infancy,  the  parol  must  demur,  and  th.e 
plaintiff  cannot  have  judgment  against  the  infant,  neither  are  the 
profits  liable  during  his  minority. 

But  for  the  decree  it  was  argued,  that  the  precedent  of  r)Ox  and 
Bennett  was  looked  upon  as  a  hard  case,  and  had  never  carried  any 
great  authority  with  it;  it  being  a  precedent  of  the  judges'  making, 
who  look  upon  the  Court  of  Chancery  as  precarious  in  its  jurisdic- 
tion, and  therefore,  as  much  as  may  be,  are  for  restraining  it  to  the 
rules  of  law  ;  but  a  trust,  being  a  creature  of  this  court,  ought  to  be 
governed  solely  by  the  rules  of  equity,  and  e(|uity  ought  to  be  con- 
formable throughout ;  and  therefore  why  should  not  the  trust  of  an 
inheritance  be  assets,  as  well  as  the  trust  of  a  term?  an  equity  of 
redemption  is  every  day  made  assets  in  equity ;  and  what  reason 
can  be  given,  why  in  equity  a  trust  of  an  inheritance  should  not  be 
assets,  where  the  inheritance  itself,  had  it  not  been  in  trust,  would 
have  been  assets  at  law  ? 


Sec.  7)  BY   ACT    OF   CREDITORS.  313 

As  to  the  profits  during  minority,  they  said,  that  was  not  insisted 
on  by  them,  though  they  had  no  precedent  in  equity,  that  the  parol 
should  demur;   but  infants  were  there  suable. 

Lord  Keici'Kr.  I  know  the  case  of  Box  and  Bennett  has  had  hard 
words  given  it,  and  been  much  railed  at ;  but  the  decree  in  that 
cause  was  made  upon  great  advice,  and  he  did  not  know,  how  he  could 
be  better  advised  now ;  and  said,  there  was  a  difiference  between  the 
case  of  an  heir,  and  the  case  of  an  executor ;  and  therefore  the  trust 
of  a  term  and  the  trust  of  an  inheritance  are  not  the  same  thing,  as 
to  this  point ;  for  whatever  money  comes  to  the  hands  of  tlie  exec- 
utor, either  by  sale  of  the  term,  or  if  money  be  decreed  to  him,  in 
this  court,  will  be  assets ;  but  if  an  heir,  before  an  action  brought, 
sells  and  aliens  the  assets,  the  money  is  not  at  law  liable  in  his  hands  ; 
unless  the  sale  were  with  fraud  or  collusion ;  as  if  an  heir  sell  and 
buy  again,  there  the  new  purchased  lands  will  be  assets.  And  as  to 
an  equity  of  redemption,  he  said,  that  if  a  man  had  a  mortgage  and 
a  bond;  before  the  mortgage  should  be  redeemed  by  the  heir  the 
bond  ought  to  be  satisfied ;  but  he  did  not  know  that  an  equity  of 
redemption  should  be  assets  in  equity  to  all  creditors :  and  mentioned 
Mr.  Baron  Weston's  case  against  Mrs.  Danby  which  was  thus : 

Baron  Weston  had  a  debt  due  to  him  by  bond,  wherein  the  heir 
was  bound,  but  it  happened  that  for  three  descents  the  heir  was  still 
an  infant,  so  the  parol  demurred  at  law,  till  the  interest  much  ex- 
ceeded the  penalty  of  the  bond ;  and  Mrs.  Danby  having  been  all 
along  guardian  to  these  infants,  and  received  the  profits  of  the  estate 
without  paying  any  debts,  and  converted  them  to  her  own  use.  the 
Baron  therefore  brought  an  action  against  her,  and  called  her  admin- 
istrator to  these  children  ;   but  the  Baron's  policy  did  not  prevail. 

As  to  the  case  in  question,  his  Lordship  said,  he  would  not  throw 
such  a  cause  out  of  court  without  good  consideration  first  had,  and 
that  he  should  be  much  governed  by  the  precedent  of  Box  and  Ben- 
nett, unless  they  could  shew  that  the  latter  precedents  had  been  other- 
wise ;  and  directed  them  to  attend  him  with  precedents  towards  the 
latter  end  of  the  term. 


FREEDMAN'S  SAVINGS  &  TRUST  CO.  v.  EARLE. 

(Supreme  Coiu-t  of  the  United  States.  1SS4.     110  U.  S.  710,  4  Sup.  Ct.  226, 

28  L.  Ed.  301.) 

Appeal  from  the  Supreme  Court  of  the  District  of  Columbia. 

The  appellee  recovered  a  judgment  against  Robert  P.  Dodge  in  the 
supreme  court  of  the  District  of  Columbia  on  January  4,  187S,  for 
$7,700,  with  interest  and  costs,  which  was  revived  April  2,  1879,  and 
on  which  a  fi.  fa.  was  issued  April  9.  1879,  and  returned  nulla  bona. 

On  June  1,  1877,  Dodge,  the  judgment  debtor,  being  then  seized  in 
fee-simple  of  certain   real  estate  in   the  city  of  Georgetown,  in  this 


314  TRANSFER  OF    RESPECTIVE   INTERESTS  OF  PARTIES.  (Ch.  3 

district,  conveyed  the  same  by  deed  duly  recorded  to  Charles  H.  Cra- 
gin,  Jr.,  in  trust,  to  secure  to  Nannie  B.  Blackford  payment  of  the  sum 
of  $2,000,  with  interest,  according  to  certain  promissory  notes  given 
therefor,  and  which  were  indorsed  to  Charles  H.  Cragin. 

On  April  10,  1879.  the  appellee  filed  his  bill  in  equity,  to  which 
Dodge,  Charles  H.  Cragin,  Jr.,  Charles  H.  Cragin,  and  Nannie  B. 
Blackford  were  made  defendants,  the  object  and  prayer  of  which  were 
to  take  an  account  of  the  debt  secured  by  the  trust  deed,  and,  subject 
thereto,  to  have  the  premises  sold  and  the  proceeds  of  the  sale  ap- 
plied to  the  satisfaction  of  the  appellee's  judgment. 

The  defendants  having  appeared  and  answered,  a  decree  according 
to  the  prayer  of  the  bill  was  rendered  June  11,  1879. 

On  December  27,  1879.  leave  therefor  having  been  obtained,  the 
appellants  filed  a  petition  in  the  cause,  setting  forth  the  recovery  of 
a  judgment  in  their  favor  against  the  defendant  Dodge,  in  the  sum 
of  $7^386.47,  with  interest  and  costs,  on  February  11,  1879,  in  the 
supreme  court  of  the  District  of  Columbia,  and  that  on  December  2d 
a  fi.  fa.  had  been  issued  thereon,  and  returned  mdla  bona  December 
19,  1879 ;  and  praying  that  they  may  be  made  parties  complainant  in 
the  cause;  that  the  equitable  interest  of  Dodge  in  the  real  estate 
described  be  subjected  to  the  satisfaction  of  their  judgment;  that  the 
same  be  sold,  and  the  proceeds  of  sale  be  brought  into  court  and  dis- 
tributed! according  to  law.  To  this  petition  Dodge  answered,  admit- 
ting the  recovery  of  the  judgment  as  alleged. 

On  May  25,  1880,  the  trustee  appointed  for  that  purpose  under  the 
decree  of  June  11,  1879,  reported  a  sale  of  the  premises  for  $5,525, 
and  the  same,  on  June  25,  1880,  was  confirmed.  The  cause  was  then 
referred  to  an  auditor  to  state  the  account  of  the  trustee  to  sell,  whose 
report  showed  an  appropriation  of  the  proceeds  of  the  sale,  after 
payment  of  costs,  in  payment  to  that  extent  of  the  appellee's  judg- 
ment. On  exceptions  to  this  report,  a  final  decree  confirming  the 
same  was  made  September  14,  1880,  wdiich  decree,  on  appeal  to  the 
general  term,  was  affirmed  December  10,  1880.  From  that  decree 
this  appeal  is  prosecuted. 

Mr.  Justice  Matthews  delivered  the  opinion  of  the  Court.  After 
reciting  the  facts  in  the  foregoing  language  he  continued : 

As  ground  of  reversal,  it  is  assigned  by  the  appellant  that  the  pro- 
ceeds of  the  sale  of  the  equitable  interest  of  Dodge,  the  judgment 
debtor,  should  have  been  distributed  pro  rata  between  the  appellees 
and  the  appellants,  instead  of  having  been  awarded  exclusively  to 
the  appellee.  It  is  contended  on  behalf  of  the  appellants  that  the  in- 
terest of  the  judgment  debtor  in  the  land  being  an  equity  merely,  is 
not  subject  to  execution  at  law;  and  as  it  can  be  reachcdl  by  judg- 
ment creditors  only  through  the  intervention  and  by  the  aid  of  a  court 
of  equity,  it  becomes  of  the  nature  of  equitable  assets,  and  when  sold 
the  proceeds  will  be  applied,  according  to  the  maxim  that  equality  is 
equity,  ratably  among  the  creditors. 


Sec.  7)  BY  ACT    OF  CREDITORS.  315 

In  the  case  of  Morsell  v.  First  Nat.  Bank,  91  U.  S.  357,  23  L.  Ed. 
436,  it  was  decided  that  under  the  laws  of  Maryland  in  force  in  this 
district,  judgments  at  law  were  not  liens  upon  the  interest  of  judg- 
ment debtors  who  had  previously  conveyed  lands  to  a  trustee  in  trust 
for  the  payment  of  a  debt  secured  thereby.  Air.  Justice  Swayne  said, 
(page  361 :)  "The  judgments  in  nowise  affected  the  trust  premises 
until  the  bill  was  filed.  That  created  a  lien  in  favor  of  the  judgment 
creditors.  There  was  none  before."  And  it  was  accordingly  held 
that  in  the  distribution  of  the  proceeds  of  sale  the  judgments  must 
be  postponed  to  debts  secured  by  other  deeds  of  trust  made  before 
the  filing  of  the  bill,  but  subsequent  to  the  rendition  of  the  judgments. 
But  that  decision  leaves  open  the  question  arising  here  between  judg- 
ment creditors  seeking  satisfaction  in  equity  out  of  the  debtor's  equi- 
table estate.  It  becomes  necessary,  therefore,  to  determine  the  nature 
of  the  right  and  the  principle  of  distribution  which  arises  from  it. 

At  common  law  executions  upon  judgments  could  not  be  levied 
upon  estates  merely  equitable,  because  courts  of  law  did  not  recognize 
any  such  titles  and  could  not  deal  with  them.  They  could  not  be  levied 
upon  the  estate  of  the  trustee  when  the  judgment  was  against  the 
cestui  que  trust  for  the  same  reason;  and  when  the  judgment  was 
against  the  trustee,  if  his  legal  estate  should  be  levied  on,  the  exe- 
cution creditor  could  acquire  no  beneficial  interest,  and  if  the  levy 
tended  injuriously  to  afifect  the  interest  of  the  cestui  que  trust,  the  lat- 
ter would  be  entitled  to  relief,  by  injunction  or  otherwise,  in  equity. 
Lewin,  Trusts,  171,  186;   2  Spence,  Eq.  Jur.  39. 

But  as  courts  of  equity  regarded  the  cestui  que  trust  as  the  true 
and  beneficial  owner  of  the  estate,  to  whose  uses,  according  to  the 
terms  of  the  trust,  the  legal  title  was  made  subservient,  so  in  its 
eyes  the  estate  of  the  cestui  que  trust  came  to  be  invested  with  the 
same  incidents  and  qualities  which  in  a  court  of  law  belonged  to  a 
legal  estate,  so  far  as  consistent  with  the  preservation  and  admin- 
istration of  the  trust.  This  was  by  virtue  of  a  principle  of  analogy, 
adopted  because  courts  of  equity  were  unwilling  to  interfere  with  the 
strict  course  of  the  law,  except  so  far  as  was  necessary  to  execute 
the  just  intentions  of  parties,  and  to  prevent  the  forms  of  the  law  from 
being  made  the  means  and  instruments  of  wrong,  injustice,  and  op- 
pression. 

Thus  equitable  estates  were  held  to  be  assignable  and  could  be  con- 
veyed or  devised;  were  subject  to  the  rules  of  descent  applicable  to 
legal  estates;  to  the  tenancy  by  curtesy,  though  not  to  dower,  by 
an  anomalous  exception  afterwards  corrected  by  statute  3  &  4  Wm. 
IV,  c.  105  ;  and  were  ordinarily  governed  by  the  rules  of  law  which 
measure  the  duration  of  the  enjoyment  or  regulate  the  devolution  or 
transmission  of  estates;  so  that,  in  general,  whatever  would  be  the 
rule  of  law,  if  it  were  a  legal  estate,  was  applied  by  the  court  of 
chancery  by  analogy  to  a  trust  estate.    1  Spence,  Eq.  Jur.  502. 


316  TRANSFER   OF    RESrECTIVE    INTERESTS   OF   PARTIES.  (Cll.  3 

As  judgment  creditors,  after  the  statute  of  Westminster,  13  Edw., 
c.  18,  were  entitled,  by  the  writ  of  elegit,  to  be  put  in  possession  of 
a  moiety  of  the  lands  of  the  debtor,  until  satisfaction  of  the  judgment; 
and  as  it  would  be  contrary  to  equity  to  permit  a  debtor  to  withdraw 
his  lands  from  liability  to  his  judgment  creditors,  this  analogy  was 
at  an  early  date  extended,  so  as  to  give  to  judgment  creditors  similar 
benefits  in  respect  to  the  equitable  estate  of  their  debtors;  and  as 
the  remedies  in  favor  of  judgment  creditors  by  way  of  execution  upon 
the  legal  estate  of  their  debtors  have  been  enlarged,  they  have  been 
imitated  by  a  corresponding  analogy  as  to  equitable  estates  by  courts 
of  equity.  This  is  in  pursuance  of  the  principle  stated  in  a  pregnant 
sentence  by  Lord  Northington,  in  Burgess  v.  Wheate,  1  Eden,  177- 
261,  where  he  said:  "For  my  own  part,  I  know  no  instance  where 
this  court  ever  permitted  the  creation  of  a  trust  to  affect  the  right 
of  a  third  party."  Id.  151.  It  is  embodied  in  the  maxim,  requitas 
sequitur  legem. 

It  was  accordingly  held  by  Lord  Nottingham,  in  the  anonymous 
case  cited  in  lialch  v.  Wastall.  1  P.  Wm.  445,  "that  one  who  had  a 
judgment,  and  had  lodged  a  fieri  facias  in  the  sheriff's  hands,  to  which 
nulla  bona  was  returned,  might  afterwards  bring  a  bill  against  the 
defendant,  or  any  other,  to  discover  any  of  the  goods  or  personal 
estate  of  the  defendant,  and  by  that  means  to  effect  the  same ;"  and 
although  Lord  Keeper  Bridgman,  in  Pratt  v.  Colt.  Frecm.  Cas.  Ch., 
by  Hovenden.  13').  refused  to  permit  a  trust  estate,  which  had  de- 
scended to  the  heir,  to  be  extended  upon  an  elegit  on  a  judgment 
against  his  ancestor,  the  reporter  adds:  "But  note  that  this  hath  not 
been  taken  to  be  a  good  demurrer  by  the  old  and  best  practicers,  as 
little  according  with  good  reason,  for  the  heir  at  law  is  as  much 
chargeable  with  the  ancestor's  judgment  as  the  executor  with  the 
testator's  debts,  and  so  equity  ought  to  follow  the  law."  Three  years 
subsequently  to  this  decision  the  statute  of  frauds,  29  Car.  11,  c.  3, 
was  enacted,  the  10th  section  of  which  made  trust  estates  in  fee- 
simple  assets  for  the  payment  of  debts,  and  subject  to  an  elegit  upon 
judgment  against  the  cestui  que  trust.  But  this  statute  did  not  ex- 
tend to  chattels  real,  to  trusts  under  which  the  debtor  had  not  the 
whole  interest,  to  equities  of  redemption,  or  to  any  equitable  interest 
which  had  been  parted  with  before  execution  sued  out.  Forth  v. 
Duke  of  Norfolk.  4  Madd.  503.  The  statute  of  5  Geo.  II.  c.  7,  which 
made  lands  within  the  English  colonies  chargeable  with  debts,  and 
subject  to  the  like  process  of  execution  as  personal  estate,  was  in 
force  in  Maryland ;  but  as  it  did  not  interfere  with  the  established 
distinction  between  law  and  equity,  it  did  not  permit  an  equitable  in- 
terest to  be  seized  under  a  fieri  facias.  Lessee  of  Smith  v.  AlcCann, 
24  How.  398,  16  L.  Ed.  714.  Pnit  as  the  effect  of  these  statutes  was 
to  enlarge  the  operation  of  executions  upon  legal  estates,  so  the  cor- 
responding equitable  remedy  as  to  equitable  estates  was  also  enlarged, 
andl  as  to  them  equitable  executions  were  enforced  to  the  same  extent 


Sec.  7)  BY   ACT    OF   CREDITORS.  317 

to  which  executions  at  law  were  enforceable  upon  estates  subject  to 
seizure  under  them. 

This  mere  equity,  consisting  in  the  right  to  obtain  the  aid  of  the 
court  in  subjecting  the  equitable  interest  of  the  debtor,  not  being  a 
lien  at  law  or  a  specific  charge  in  equity,  nevertheless  constitutes  such 
an  interest,  and  creates  such  a  privity,  as  entitles  the  judgment  cred- 
itors to  redeem  a  prior  mortgage,  and  succeeding  thus  to  the  rights  of 
the  mortgagee  in  England,  where  the  doctrine  of  tacking  prevailed, 
he  was  permitted  to  hold  the  whole  estate  as  security  for  his  judg- 
ment also,  even  when  by  virtue  of  an  elegit  at  law,  he  would  be  en- 
titled only  to  a  moiety  of  the  debtor's  land.  And  he  could  file  his 
bill  to  redeem  without  previously  issuing  an  execution,  Neate  v. 
Duke  of  Marlborough,  3  Mylne  &  C.  407.  The  reason  for  this,  as- 
signed by  Lord  Cottenham  in  the  case  just  cited,  is  that,  inasmuch 
as  the  court  finds  the  creditor  in  a  condition  to  acquire  a  power  over 
the  estate  by  suing  out  the  writ,  it  does  what  it  does  in  all  similar  cases 
— it  gives  to  the  party  the  right  to  come  in  and  redeem  other  incum- 
brances upon  the  property. 

But  in  other  cases,  when  the  object  of  the  bill  is  to  obtain  satis- 
faction of  the  judgment,  by  a  sale  of  the  equitable  estate,  it  must 
be  alleged  that  execution  has  been  issued.  This  is  not  supposed  to 
be  necessary  wholly  on  the  ground  of  showing  that  the  judgment 
creditor  has  exhausted  his  remedy  at  law ;  for,  if  so,  it  would  be 
necessary  to  show  a  return  of  the  execution  unsatisfied,  which,  how- 
ever, is  not  essential.  Lewin  on  Trusts.  513.  But  the  execution  must 
be  sued  out ;  for,  if  the  estate  sought  to  be  subjected  is  a  legal  es- 
tate, and  subject  to  be  taken  in  execution,  the  ground  of  the  juris- 
diction in  equity  is  merely  to  aid  the  legal  right  by  removing  ob- 
stacles in  the  way  of  its  enforcement  at  law.  Jones  v.  Green,  1  Wall. 
330,  17  L.  Ed.  553.  And  if  the  estate  is  equitable  merely,  and  there- 
fore not  subject  to  be  levied  on  by  an  execution  at  law,  the  judg- 
ment creditor  is  bound,  nevertheless,  to  put  himself  in  the  same  posi- 
tion as  if  the  estate  were  legal,  because  the  action  of  the  court  con- 
verts the  estate,  so  as  to  make  it  subject  to  an  execution,  as  if  it 
were  legal.  The  ground  of  the  jurisdiction,  therefore,  is  not  that  of 
a  lien  or  charge  arising  by  virtue  of  the  judgment  itself,  but  of  an 
equity  to  enforce  satisfaction  of  the  judgment  by  means  of  an  equi- 
table execution.  And  this  it  effects  by  a  sale  of  the  debtor's  interest 
subject  to  prior  incumbrances,  or  according  to  circumstances,  of  the 
whole  estate,  for  distribution  of  the  proceeds  of  sale  among  all  the 
incumbrancers,  according  to  the  order  in  which  they  may  be  entitled 
to  participate.     Sharpe  v.  Earl  of  Scarborough.  4  Ves.  538. 

It  is  to  be  noted,  therefore,  that  the  proceeding  is  one  instituted 
by  the  judgment  creditor  for  his  own  interest  alone,  unless  he  elects 
to  file  the  bill  also  for  others  in  a  like  situation,  with  whom  he  chooses 
to  make  common  cause ;  and  as  no  specific  lien  arises  by  virtue  of 
the  judgment  and  execution  alone,  the  right  to  obtain  satisfaction  out 


.'>18       TRANSFER  OF  RESPECTIVE  INTERESTS  OF  PARTIES.     (Ch.  3 

of  the  specific  property  soug-ht  to  be  subjected  to  sale  for  that  pur- 
pose dates  from  the  fihng-  of  the  bill.  "The  creditor,"  says  Chancel- 
lor Walworth,  in  Edmeston  v.  Lyde,  1  Paige  (N.  Y.)  637-640,  19  Am. 
Dec.  454,  "whose  leg-al  diligence  has  pursued  the  property  into  this 
court,  is  entitled  to  a  preference  as  the  reward  of  his  vigilance;"  and 
it  w^ould  "seem  unjust  that  the  creditor  who  has  sustained  all  the  risk 
and  expense  of  bringing-  his  suit  to  a  successful  termination  should 
in  the  end  be  obliged  to  divide  the  avails  thereof  with  those  who  have 
slept  upon  their  rights,  or  who  have  intentionally  kept  back  that  they 
might  profit  by  his  exertions  when  there  could  no  longer  be  any  risk 
in  becoming  parties  to  the  suit."  As  his  lien  begins  with  the  filing 
of  the  bill,  it  is  subject  to  all  existing  incumbrances,  but  is  superior 
to  all  of  subsequent  date.  As  was  said  by  this  court  in  Day  v.  Wash- 
burn, 24  How.  352,  16  L.  Ed.  712 :  "It  is  only  when  he  has  obtained 
a  judgment  and  execution  in  seeking  to  subject  the  property  of  his 
debtor  in  the  hands  of  third  persons,  or  to  reach  property  not  ac- 
cessible to  an  execution,  that  a  legal  preference  is  acquired  which  a 
court  of  chancery  will  enforce."  This  is  in  strict  accordance  with 
the  analogy  of  the  law,  as  it  was  recognized  that  the  judgment  cred- 
itor who  first  extends  the  land  by  elegit  is  thereby  entitled  to  be  first 
satisfied  out  of  it.  It  is  the  execution  first  begun  to  be  executed,  un- 
less otherwise  regulated  by  statute,  wdiich  is  entitled  to  priority. 
Rockhill  v.  Manna,  15  How.  189,  195,  14  L.  Ed.  656;  Payne  v.  Drewe, 
4  East,  523.  The  filing  of  the  bill,  in  cases  of  equitable  execution, 
is  the  beginning  of  executing  it. 

The  passage  cited  from  the  opinion  in  Day  v.  Washburn,  supra, 
speaks  of  the  preference  thus  acquired  by  the  execution  creditor  as 
a  legal  preference.  It  was  distinctly  held  so  to  be  by  Chancellor  Kent 
in  McDermutt  v.  Strong,  4  Johns.  Ch.  (N.  Y.)  687.  He  there  said: 
"But  this  case  stands  on  stronger  ground  than  if  it  rested  merely  on 
the  general  jurisdiction  of  this  court,  upon  residuary  trust  interests 
in  chattels,  for  the  plaintiffs  come  in  the  character  of  execution  cred- 
itors, and  have  thereby  acquired,  by  means  of  their  executions  at 
law,  what  this  court  regards  as  a  legal  preference,  or  lien  on  the 
property  so  placed  in  trust;"  and  "admitting  that  the  plaintiffs  had 
acquired,  by  their  executions  at  law,  a  legal  preference  to  the  assist- 
ance of  this  court,  (and  none  but  execution  creditors  at  law  are  en- 
titled to  that  assistance,)  that  preference  ought  not,  in  justice,  to 
be  taken  away.  Though  it  be  the  favorite  policy  of  this  court  to  dis- 
tribute assets  equally  among  creditors,  pari  passu,  yet,  whenever  a 
judicial  preference  has  been  established  by  the  superior  legal  dili- 
gence of  any  creditor,  tliat  ])reference  is  always  preserved  in  the 
distribution  of  assets  by  this  court."  The  decision  in  that  case  was 
made,  giving  the  priority  to  the  execution  creditors  who  filed  the  bill, 
when,  otherwise,  by  virtue  of  an  assignment  by  the  debtor  who  was 
insolvent,  the  proceeds  of  the  equitable  interest  sought  to  be  sub- 
jected wcnild  have  been  distributed  ratably  among  all  creditors. 


Sec.  7)  BY   ACT    OF   CREDITORS,  319 

This  case,  often  cited  and  never  questioned,  shows  that  the  doctrine 
of  equitable  assets,  to  which  we  are  referred  by  the  appellant  as  the 
ground  of  his  claim,  has  no  application  to  the  case.  Ordinarily  and 
strictly,  the  term  "equitable  assets"  applies  only  to  property  and  funds 
belonging  to  the  estate  of  a  decedent,  which  by  law  are  not  subject 
to  the  payment  of  debts,  in  the  course  of  administration  by  the  per- 
sonal representatives,  but  which  the  testator  has  voluntarily  charged 
with  the  payment  of  debts  generally,  or  which,  being  non-existent 
at  law,  have  been  created  in  equity,  under  circumstances  which  fasten 
upon  them  such  a  trust.  Adams  on  Equity,  254.  But,  as  was  said 
by  Chancellor  Kent  in  Williams  v.  Brown,  4  Johns.  Ch.  (N.  Y.)  682, 
the  doctrine  "does  not  apply  to  the  case  of  a  debtor  in  full  life,  for 
there  is  no  equitable  trust  created  and  attached  to  the  distribution 
of  the  effects  in  the  latter  case."  Property  held  by  a  trustee  for  the 
testator  is  legal  assets,  for,  although  the  benefit  of  the  trust,  if  re- 
sisted, cannot  be  enforced  without  equitable  aid,  yet  the  analogy  of 
the  law  wall  regulate  the  application  of  the  fund.  To  constitute  equi- 
table assets,  the  trust  imposed  by  the  party,  or  by  the  court,  must  be 
for  the  benefit  of  creditors  generally. 

It  is  true  that  in  Moses  v.  Murgatroyd,  1  Johns.  Ch.  (N.  Y.)  119, 
7  Am.  Dec.  478,  Chancellor  Kent  held  surplus  money  arising  from  the 
sale  of  mortgaged  premises  to  be  equitable  assets,  but  that  was  in  a 
case  where  the  mortgagor  was  deceased  and  the  fund  was  in  a  court 
of  equity  for  distribution,  and  when  the  judgment  to  which  priority 
was  refused  was  confessed  by  the  administrator. 

In  Purdy  v.  Doyle,  1  Paige  (N.  Y.)  558,  the  rule  was  stated  by 
Chancellor  Walworth,  in  these  words:  "If  it  is  such  property  as  the 
judgment  creditors  could  obtain  a  specific  or  general  lien  on  at  law, 
they  are  entitled  to  the  fruits  of  their  superior  vigilance,  so  far  as 
they  have  succeeded  in  getting  such  lien.  But  if  the  property  was 
in  such  a  situation  that  it  could  not  be  reached  by  a  judgment  at  law, 
and  the  fund  is  raised  by  a  decree  of  this  court,  and  the  creditors  are 
obliged  to  come  here  to  avail  themselves  of  it,  they  will  be  paid  on  the 
footing  of  equity  only." 

But  a  specific  lien,  whether  legal  or  equitable,  on  property  liable 
as  equitable  assets,  was  always  respected  by  courts  of  equity.  Free- 
moult  V.  Dedire,  1  P.  Wms.  429;  Finch  v.  Earl  of  Winchelsea,  Id. 
277;  Ram  on  Assets,  318.  And  Lord  Chancellor  Parker,  in  Wilson 
v.  Fielding,  2  Vern.  763,  10  Mod.  426,  drew  the  distinction  between 
property  which  is  assets  in  a  court  of  equity  only  and  certain  prop- 
erty which  a  creditor  cannot  come  at  without  the  aid  of  a  court  of 
equity.  In  that  case  the  mortgage  debt  had  been  paid  out  of  the 
personal  estate  by  the  executor,  thus  exonerating  the  mortgaged  prem- 
ises which  had  descended  to  the  heir.  The  unsatisfied  creditors  filed 
a  bill  to  require  the  heir  at  law  to  refund,  which  was  "a  matter  purely 
in  equity  and  a  raising  of  assets  where  there  were  none  at  law." 

And  see  Atlas  Bank  v.  Nahant  Bank,  3  Mete.   (Mass.)  581;    Cod- 


320  TUANSFER   OF    RESPIX'TIVE   INTEUKSTS   OF   I'AUTIES.  (Ch.  3 

wise  V.  Gelston.  10  Johns.  (X.  Y.)  507,  522;  Tennant  v.  Stoney,  1 
Rich.  Eq.  222,  44  Am.  Doc.  213;  1  Story,  Eq.  Jur.  §  553;  2  White  & 
T.  Lead.  Cas.  Eq.  pt.  1,  p.  390. 

We  have  already  seen  that  the  hVmg  of  a  bill  by  an  execution 
creditor  to  subject  the  equity  of  the  debtor  in  his  life-time,  created 
a  lien  and  gave  him  a  legal  preference.  And  in  the  English  chancery, 
although  equities  of  redemption  after  the  death  of  the  mortgagor  are 
classed  as  equitable  assets,  the  rule  of  distribution,  pari  passu,  is 
modified  in  its  application  to  them  in  respect  to  judgment  creditors 
by  permitting  them  to  retain  their  priority  over  other  claims,  be- 
cause, if  such  priority  were  not  allowed,  the  judgment  creditor  might 
acquire  it  by  redeeming  the  mortgage.  Adams,  Eq.  256.  Legal  as- 
sets, according  to  the  definition  of  Mr.  Justice  Story,  (Eq.  Jur.  § 
551,)  "are  such  as  come  into  the  hands  and  power  of  an  executor  or 
administrator,  or  such  as  he  is  intrusted  with  by  law  virtute  officii  to 
dispose  of  in  the  course  of  his  administration.  In  other  words,  what- 
ever an  executor  or  administrator  takes  qua  executor  or  administrator, 
or  in  respect  to  his  office,  is  to  be  considered  legal  assets."  And  this 
is  the  modern  doctrine  in  England.  In  Lovegrove  v.  Cooper,  2  Smale 
&  G.  271,  it  was  held,  for  that  reason,  that  the  proceeds  of  real  es- 
tate directed  to  be  soldi  for  the  payment  of  debts,  and  paid  by  the  pur- 
chaser into  court,  were  legal  and  not  equitable  assets. 

It  follows  from  this, 'that  in  this  country  generally,  where  the  real 
estate  of  a  decedent  is  chargeable  w^ith  the  payment  of  debts,  and, 
in  case  of  a  deficiency  of  personal  property  for  that  purpose,  may  be 
subjected  to  sale  and  distribution  as  assets  by  the  personal  representa- 
tive in  the  ordinary  course  of  administration,  the  distinction  between 
legal  and  equitable  assets  has  ceased  to  be  important.  In  every  such 
case  the  equity  of  redemption  could  only  be  applied  after  sale  by 
the  executor  or  administrator  in  the  ordinary  course  of  administra- 
tion, subject  to  whatever  liens  may  have  been  imposed  upon  it  in  the 
life-time  of  the  mortgagor,  and  among  them,  as  we  have  seen,  is 
that  of  an  execution  creditor  who  has  filed  his  bill  to  subject  it  to  the 
payment  of  his  judgment.  So,  in  other  cases  where  the  rule  of 
equality  in  distribution,  as  to  equitable  assets,  applies,  as  in  cases  of 
assignments  by  the  debtor  himself  for  the  payment  of  debts  generally, 
and  in  cases  of  bankruptcy  and  insolvency,  except  as  otherwise^  ex- 
pressly provided  by  statute,  the  estate  passes,  subject  to  existing  liens, 
including  that  of  an  execution  creditor  who  had  previously  filed  a 
bill  to  subject  the  equitable  interest  of  the  debtor,  and  his  priority  is 
respected  and  preserved.  The  lien  is  given  by  the  court  in  the  ex- 
ercise of  its  jurisdiction  to  entertain  the  bill  and  to  grant  the  relief 
prayed  for ;  and  to  distribute  the  proceeds  of  the  sale  for  the  benefit 
of  others,  equally  with  the  execution  creditor  first  filing  the  bill,  would 
be  to  contradict  the  very  principle  of  the  jurisdiction  itself,  and  de- 
feat the  very  remedy  it  promised  ;  for  the  fruits  of  litigation,  accord- 
ing to  the  rule  of  equality,  would  have  to  be  divided,  not  only  with 


Sec.  7)  BY   ACT    OF   CKEDITOKS,  321 

other  judg-mcnt  and  execution  creditors,  but,  as  well,  with  all  cred- 
itors, whether  their  claims  had  been  reduced  to  judgment  or  not. 
For  these  reasons  the  decree  appealed  from  is  affirmed.^^. 


STATUTE  29  CAR.  II  (1676)  c.  3,  §  10. 

Sec.  10.  And  be  it  further  enacted  by  the  authority  aforesaid,  that 
from  and  after  the  said  four  and  twentieth  day  of  June  it  shall  and 
may  be  lawful  for  every  sheriff  or  other  officer  to  whom  any  writ 
or  precept  is  or  shall  be  directed,  at  the  suit  of  any  person  or  persons, 
of,  for  and  upon  any  judgment,  statute  or  recognizance  hereafter  to 
be  made  or  had,  to  do,  make  and  deliver  execution  unto  the  party  in 
that  behalf  suing,  of  all  such  lands,  tenements,  rectories,  tithes,  rents 
and  hereditaments,  as  any  other  person  or  persons  be  in  any  manner 
or  wise  seized  or  possessed,  or  hereafter  shall  be  seized  or  possessed, 
in  trust  for  him  against  whom  execution  is  so  sued,  like  as  the  sheriff 
or  other  officer  might  or  ought  to  have  done,  if  the  said  party  against 
whom  execution  hereafter  shall  be  so  sued,  had  been  seized  of  such 
lands,  tenements,  rectories,  tithes,  rents  or  other  hereditaments  of  such 
estate  as  they  be  seized  of  in  trust  for  him  at  the  time  of  the  said 
execution  sued;  (2)  which  lands,  tenements,  rectories,  tithes,  rents 
and  other  hereditaments,  by  force  and  virtue  of  such  execution,  shall 
accordingly  be  held  and  enjoyed  freed  and  discharged  from  all  in- 
cumbrances of  such  person  or  persons  as  shall  be  so  seized)  or  pos- 
sessed in  trust  for  the  person  against  whom  such  execution  shall  be 
sued;  (3)  and  if  any  cestui  que  trust  hereafter  shall  die,  leaving  a 
trust  in  fee  simple  to  descend  to  his  heir,  there  and  in  every  such 
case  such  trust  shall  be  deemed  and  taken,  and  is  hereby  declared  to 
be,  assets  by  descent,  and  the  heir  shall  be  liable  to  and  chargeable 
with  the  obligation  of  his  ancestors  for  and  by  reason  of  such  assets, 
as  fully  and  amply  as  he  might  or -ought  to  have  been,  if  the  estate 
in  law  had  descended  to  him  in  possession  in  like  manner  as  the 
trust  descended ;  any  law,  custom,  or  usage  to  the  contrary  in  any 
wise  notwithstanding. 


LEDBETTER  v.  ANDERSON  and  Others. 

(Supreme  Coiu-t  of  North  Carolina,  ISGS.     62  N.   C.  323.) 

Bill  filed  to  Fall  Term,  1862,  of  the  Court  of  Equity  for 
Rutherford,  and  at  Fall  Term,  1866,  set  for  hearing  upon  the  plead- 
ings and  proofs,  and  transmitted  to  this  court. 

The  complainant  alleged  that  he  hatl  purchased  at  execution  sale 

65  See  Newell  v.  Morgan,  2  Ilarr.  (Del.)  22,5  (1837). 
Kex.Tr.— 21 


822  TRANSFER  OF    RESPECTIVE  INTERESTS   OF   PARTIES.  (Cll.  3 

the  interest  of  the  defendant  Anderson  in  a  certain  tract  of  land,  and 
had  received  a  sheriff's  deed  therefor;  that  Anderson's  interest  was 
by  virtue  of  a  bond  for  title  from  the  defendant  Frazer ;  that  he 
had  offered  to  pay  Frazer  the  balance  due  to  him  upon  such  bond, 
and  now  brings  the  same  into  court  for  the  same  purpose;  that  Frazer 
and  Anderson  had  conspired  to  defraud  him,  etc. 

The  prayer  was  that  Frazer  be  compelled  to  take  the  money  and 
make  a  title,  or  that  the  land  be  sold  for  the  plaintiff's  indemnity,  and 
for  other  relief. 

The  answers  admitted  that  Anderson's  title  was  under  a  bond  from 
Frazer,  and  that  a  large  portion  of  the  purchase  money  was  still  due. 
After  other  statements  which  are  immaterial  here,  they  denied!  the 
charge  of  conspiracy,  and  submitted  to  the  court  whether  the  bill 
disclosed  any  equity. 

Readiv,  J.'  From  the  bill,  as  well  as  from  the  answers,  it  appears 
that  the  defendant  Anderson  had  only  a  bond  for  title  to  the  land 
levied  upon  by  the  sheriff  under  whose  sale  the  plaintiff  purchased, 
and  that  Anderson  had  paid  only  a  part  of  the  purchase  money. 

It  is  well  settled  that  a  purchaser  of  land  holding  only  a  bond  for 
title,  without  having  paid  the  whole  of  the  purchase  money,  has  no 
such  interest  in  the  land  as  is  subject  to  execution.  The  plaintiff 
therefore  obtained  no  title  by  his  purchase. 

The  case  is  not  altered  by  his  oft'ering  to  pay  the  balance  due,  nor 
by  his  bringing  the  money  into  Court.  Having  acquired  no  interest 
in  the  land,  his  offering  to  pay  for  it  is  no  more  than  if  he  were 
to  offer  a  certain  price  for  any  other  tract  of  land  and  then  file  a 
bill  to  obtain  a  title. 

The  bill  must  be  dismissed,  with  costs.^^ 

Per  Curiam.    Decree  accordingly. 

5fi  Section  10  of  the  statute  of  frauds  applies  only  where  the  cestui  que 
trust  the  judgment  debtor,  has  the  entire  equitahle  interest.  Forth  v.  Duke 
of  Norfolli.  4  Mad.  503  (1820);  Doe  v.  Greenhill,  4  B.  &  Al.  6S4  (1S21) ; 
Harris  v.  Booker,  4  Bing.  96  (1827);  Pettit  v.  Johnson.  15  Ark.  55  (18.^4); 
Pope  V.  Boyd.  22  Ark.  535,  538,  539  (1801)  ;  Pitts  v.  McWhorter,  3  (Jn.  5, 
46  Am.  Dec.  405  (1847);  Akin  v.  Freeman,  49  Ga.  51,  65,  66  (1873);  Bosert  v. 
Perry,  17  Johns.  (N.  Y.)  351,  8  Am.  Dee.  411  (1819)  ;  Id.  1  Johns.  Ch.  (N.  Y.) 
52  (1814)  •  Jackson  v.  Bateman,  2  Wend.  (N.  Y.)  570,  573  (1829) ;  Lynch  v. 
Utica  Ins.  Co.,  18  Wend.  (N.  Y.)  236  (1837);  Ontario  Bank  v.  Root,  3  Paige 
(N  Y.)  478  (1832);  Kellogg  v.  Wood,  4  Paige  (N.  Y.)  578.  619  (18.34);  Brew- 
ster V.  Power,  10  Paige  (N.  Y.)  502  (1844);  Brown  v.  Graves,  11  N.  C.  342 
(1826) ;  Mordeeai  v.  Parker,  14  N.  C.  425  (1832) ;  Battle  v.  Petway,  27  N.  C. 
576,  44  Am.  Dec  .59  (184.5);  Thompson  v.  Ford,  29  N.  C.  418  (1847);  Tally  v. 
Reed,  72  N.  C.  336  (1875);  White  v.  Kavanagh.  8  Rich.  Daw  (S.  (\)  377 
(1855);  Bristow  v.  McCall,  16  S.  G.  545  (1881);  Sniitheal  v.  Gray,  1  Ilnmpli. 
(Tenn.)  491,  34  Am.  Dec.  664  (1840);  Coutts  v.  Walker,  2  Leigh  (Va.)  268 
(1S.30).  ,     ^ 

"Three  vears  subsequently  to  this  decision  [Prat  v.  Colt,  Freeman  s  Cas. 
in  Ch.  1391.  the  Statute  of  Frauds,  29  Charles  II,  c.  3,  was  enacted,  the  10th 
section  of  which  made  trust  estates  in  fee  simple  assets  for  the  payment  of 
debts  and  sul)iect  to  an  elegit  upon  judgment  against  the  cestui  que  trust. 
J',ut  this  statute  did  not  extend  to  chattels  real,  to  trusts  under  which  the 
debtor  had  not  the  whole  interest,  to  eciuities  of  redemption,  or  to  any  equi- 


Sec.  7)  BY  ACT    OF   CREDITORS.  323 


The  Case  of  the  Creditors  of  Sir  CHARLES  COX.f 

(In  Chancery,  before  Sir  Joseph  Jekyll,  Master  of  the  llolls,  1734.    3  Peere 

Williams,  341.) 

Another  part  of  this  case  was  reserved  for  the  further  considera- 
tion of  the  court,  and  was  as  follows : 

Sir  Charles  Cox  possessed  of  a  term  for  years  made  a  mortgage 
thereof,  and  died  possessed  of  the  equity  of  redemption  of  the  saidi 
mortgage,  and  leaving  greater  debts  due  from  him  at  his  death  than 
his  estate  would  extend  to  pay.  Whereupon  the  question  was, 
whether  this  mere  equity  of  redemption  was  only  equitable  assets,  and 
distributable  equally  pro  rata,  among  all  the  creditors,  without  re- 
gard to  the  degree  or  quality  of  their  debts ;  or  whether  it  should  be 
applied  in  a  course  of  administration ;  in  which  last  case  the  bond 
creditors  would  swallow  up  all  the  assets,  without  leaving  anything 
for  the  simple  contract  creditors. ^^ 

And  His  Honour,  after  time  taken  to  consider  of  it,  delivered  his 
opinion  with  solemnity ;  that  this  equity  of  redemption  was  equitable 
assets  only,  the  mortgage  being  forfeited  at  law,  and  the  whole  es- 
tate thereby  vested  in  the  mortgagee ;  and  it  being  now  become  pre- 
carious and  doubtful,  whether  it  would  prove  worth  redeeming;  also, 
for  that  the  quantum  of  the  money  due  on  the  mortgage  was  un- 
certain, forasmuch  as,  when  the  executors  of  the  mortgagor  should 

table  interest  which  had  been  parted  with  before  execution  sued  out."  Mr. 
Justice  Matthews  in  Freednian's  Savings  &  Trust  Co.  v.  Earle.  110  U.  S. 
710,  714,  4  Sup.  Ct.  226,  28  L.  Ed.  301  (1884). 

In  Scott  V.  Scholey  and  Another,  S  East,  467  (1807),  plaintiff  sued  defendant, 
as  sheriff  of  Middlesex,  for  a  false  return  of  nulla  bona  to  a  writ  of  fieri 
facias.  The  question  was  whether  an  equitable  interest  in  a  term  of  years 
could  be  sold  under  a  fieri  facias.  The  Court  of  King's  Bench  held  that  it 
could  not. 

Lord  Ellenborough,  C.  J.,  said:  "But  the  very  silence  of  that  statute 
[statute  of  frauds],  which,  while  it  expressly  introduces  a  new  provision  in 
respect  to  lands  and  tenements  held  in  trust  for  the  person  against  whom 
an  execution  is  sued,  says  nothing  as  to  trusts  of  chattel  interests,  affords 
a  strong  argument  that  those  interests  were  meant  to  continue  in  the  same 
situation  and  plight,  in  respect  of  executions,  in  which  both  freehold  and 
leasehold  trust  interests  equally  stood  prior  to  the  passage  of  that  statute. 
In  the  absence,  therefore,  of  any  authority  in  favor  of  the  sale  of  such  an 
equitable  interest  under  a  common  law  execution  against  goods,  we  are  of 
opinion,  upon  the  grounds  already  stated,  that  the  sheriff's  return  of  nulla 
bona  in  this  case,  where  the  defendant  in  the  execution  had  no  other  property 
besides  the  trust  property  in  question,  was  not  a  false  return ;  and  of  course 
the  verdict  which  has  been  obtained  by  the  plaintiff  against  the  sheriff  in 
this  case,  must  be  set  aside,  and  a  new  trial  granted." 

"Neither  the  statute  of  uses,  nor  the  10th  section  of  the  statute  of  frauds, 
embrace  personal  propertv."  Dunkin.  Ch.,  in  Rice  v.  Burnett,  Speer.  Eq. 
(S.  C.)  579,  42  Am.  Dec.  336.  588  (1844). 

t  The  title  of  the  cause  was  Spencer  v.  Cox,  Reg.  Lib.  B.  1734,  fol.  113, 
and  was  probably  the  same  cause  as  Spencer  v.  Biffen,  cited  in  2  Atk.  291,  as 
it  appears  by  the  register's  book,  that  Biffen  was  the  maiden  name  of  Sir 
Charles'  second  wife. 

5T  A  part  of  the  opinion  is  omitted. 


324  TRANSFER   OF    RESrECTIVE   INTERESTS   OF   PARTIES.  (Cll.  3 

be  admitted  to  redeem,  they  must  pay  costs,  which  in  equity  are  con- 
siderable ;  so  that  it  cannot  now  be  known  what  the  surphis  money 
on  the  redemption  would  amount  to  upon  the  account  taken.  Where- 
fore this  rii^ht  of  redemption  being-  barely  an  equitable  interest,  it 
was  reasonable  to  construe  it  equitable  assets,  and  consequently  dis- 
tributable amongst  all  the  creditors  pro  rata,  without  having  respect 
to  the  decree  or  quality  of  their  debts ;  all  debts  being  in  a  con- 
scientious regard  equal,  and  equality  the  highest  equity;  accordingly 
it  was  so  decreed.    But, 

Secondly.  The  court  declared,  that  where  a  bond  is  due  to  A, 
but  taken  in  the  name  of  B  in  trust  for  A,  and  A  dies ;  this  must 
be  paid  [Wilson  v.  Fielding,  2  Vern.  763]  in  a  course  of  administra- 
tion ;  for  in  such  case  there  can  hardly  be  any  dispute  touching  the 
quantum  of  the  debt,  seeing  the  i^rincipal,  interest  and  also  the  costs, 
must  be  paid  to  the  obligee  in  the  bond  ;  whereas  in  the  other  case, 
the  costs  must  be  paid  by  the  party  coming  to  redeem.  For  the  same 
reason,  if  a  term  for  years  be  taken  in  the  name  of  B.  in  trust  for  A, 
this,  on  the  death  of  A,  the  cestui  que  trust,  will  be  legal  assets ; 
for  here  the  right  to  tlie  thing  is  plain  ;  and  if  the  trustee  contests  it, 
he  must,  prima  facie,  do  it  on  the  peril  of  paying  costs. ^^     *     *     * 


COOK  V.  GREGSON. 

(In  Chancery,  before  Vice  Cli;in(ellor  Kindersley,  1S5G.     3  Drewry,  547.) 

In  this  cause,  which  was  a  suit  instituted  by  a  simple  contract  cred- 
itor for  the  administration  of  the  estate  of  E.  McDonnell,  the  prin- 
cipal question  was,  whether  certain  property  of  the  testator,  con- 
sisting of  the  equity  of  redemption  of  an  equitable  interest  in  a  sum 
(charged  upon  real  estate)  which  the  testator  had  mortgaged,  was 
equitable  assets,  and  therefore  distributable  ratably  among  the  cred- 
itors of  different  degrees ;    or  whether  it  was  legal  assets,  in  which 

5  8  This  decision  was  followed  by  Lord  ITardwicke  in  Hartwell  v.  Chittors, 
Ambler,  308  (1756),  and  approved  by  Bay  ley,  J.,  in  Clay  v.  AVillis,  1  B.  &  C, 
304,  372  (1823). 

In  Sharpe  v.  Earl  of  Scarboronsh.  4  Yes.  Jr.  538  (1799),  the  Solicitor 
General,  Sir  John  Mitford  (afterwards  Lord  Kedesdale),  is  reported  to  have 
said  in  arjiunient:  "The  Case  of  Sir  Charles  Cox's  Creditors  and  Hartwell 
V.  Chlttcrs,  have  been  considered  as  overruled.  Acconlhii^  to  them  every 
decree  in  the  conunon  administration  of  assets  in  this  court  is  wronjj;.  If 
leasehold  estates  are  subject  to  mort,iia.ws,  there  is  no  conception,  that  credi- 
tors by  specialty  have  not  a  right  to  come  upon  the  produce  of  them,  sub- 
ject to  the  mortgases.  The  equity  of  redemption  of  a  leasehold  estate  is 
clearly  assets  at  law;  and  the  executor  is  charged  there  with  the  difference 
between  the  value  of  the  estate  and  the  sum  he  paid  in  the  redemption  of  it. 
In  the  case  of  a  mortgage  of  a  freehold  estate  the  equity  of  redemption  is 
assets  at  law;  and  it  cannot  be  suggested  that  the  si)ecialty  creditors  are 
not  entitled  to  their  remedy  against  tho-e  estates  descended  as  legal  assets; 
though  they  cannot  be  got  at  iait  through   the  medium  of  a  court  of  equity." 


Sec.  7)  BY   ACT    OF   CREDITORS.  325 

case  the  specialty  creditors  would  absorb  it.  The  security  had  been 
realized,  the  mortgage  paid  off,  and  there  was  a  surplus,  which  was 
in  court. 

The  Viciv  Chancellor.  Much  difficulty  has  sometimes  arisen  in 
determining  the  precise  distinction  between  legal  and  equitable  as- 
sets. The  general  proposition  is  clear  enough,  that  when  assets  may 
be  made  available  in  a  court  of  law,  they  are  legal  assets,  and  when 
they  can  only  be  made  available  through  a  court  of  equity,  they  are 
equitable  assets.  This  proposition  does  not,  however,  refer  to  the 
question  whether  the  assets  can  be  recovered  by  the  executor  in  a 
court  of  law  or  in  a  court  of  equity.  The  distinction  refers  to  the 
remedies  of  the  creditor  and  not  to  the  nature  of  the  property.  The 
question  is  not  whether  the  testator's  interest  was  legal  or  equitable, 
but  whether  a  creditor  of  the  testator,  seeking  to  get  paid  out  of  such 
assets,  can  obtain  payment  thereout  from  a  court  of  law,  or  can  only 
obtain  it  through  a  court  of  equity.  This,  I  apprehend,  is  the  true 
distinction.  If  a  creditor  brings  an  action  at  law  against  the  executor, 
and  the  executor  pleads  plene  administravit,  the  truth  of  the  plea  must 
be  tried  by  ascertaining  what  assets  the  executor  has  received,  and 
whatever  assets  the  court  of  law,  in  trying  that  question,  would  charge 
the  executor  with,  must  be  regarded  as  legal  assets ;  all  others  would 
be  equitable  assets. 

Supposing,  however,  this  distinction  to  be  well  founded,  there  still 
remains  the  question,  what  property  come  to  the  hands  of  the  executor 
would  a  court  of  law  consider  properly  to  be  taken  into  account  as 
assets,  in  trying  the  truth  of  the  plea  plene  administravit.  I  think  the 
general  principle  is  that  a  court  of  law  would  treat  as  assets  every 
item  of  property  come  to  the  hands  of  the  executor,  which  he  had  re- 
covered, or  had  a  right  to  recover,  merely  virtute  officii,  i.  e.,  which 
he  would  have  had  a  right  to  recover  if  the  testator  had  merely  ap- 
pointed him  executor  without  saying  anything  about  his  property  or 
the  application  thereof.  That  I  think  is  the  test  which,  upon  prin- 
ciple, a  court  of  law  would  apply. 

Assuming  that  to  be  the  true  principle,  suppose,  first,  that  the  tes- 
tator was  at  his  death  entitled  to  a  sum  of  money  equitably  charged  on 
land ;  as  the  executor  could  recover  this  merely  virtute  officii,  as  ex- 
ecutor, I  apprehend  that,  when  recovered  by  the  executor,  it  would 
be  legal  assets  in  his  hands. 

Next,  let  the  same  principle  be  applied  to  an  equity  of  redemption. 
When  the  time  fixed  for  payment  of  the  mortgage  money  has  passed, 
what  is  the  right  of  the  mortgagor?  It  is  suggested  that  it  is  merely 
a  right  to  repurchase.  That  certainly  is  not  the  view  taken  of  the  law 
in  modern  times ;  the  unvarying  tendency  of  modern  decisions  is  to 
treat  a  mortgage  merely  as  a  security,  and  to  treat  the  mortgagor  as 
being  still  the  real  owner.  And  I  think  that  the  view  which  Went- 
wortli  takes  in  the  passage  referred  to  by  the  learned  counsel  for  the 


:^.26  TRANSFER   OF    RESPECTIVE   INTERESTS   OF   PARTIES.  (Ch.  3 

plaintiff  must  be  considered  as  much  affected  by  the  different  hght  in 
which  the  position  of  the  mortgagor  was  regarded  in  former  times. 
An  equity  of  redemption  is  not  now  considered  as  a  matter  of  indul- 
gence; it  is  now  a  matter  of  absolute  right.  And  is  it  not  merely  by 
virtue  of  his  office  that  the  executor  of  a  mortgagor  who  has  mort- 
gaged a  chattel,  comes  to  this  court  to  redeem  ?  I  think  it  clearly  is. 
If  there  were  nothing  in  the  will  but  the  appointment  of  executor, 
would  not  the  executor  be  entitled  simply  virtute  officii  to  ask  for  re- 
demption? Clearly  he  would.  A  mere  administrator  might  demand 
it.  If  so,  I  confess  it  appears  to  me  that  the  general  principle  as  I 
have  stated  it,  applies  to  an  equity  of  redemption  of  a  chattel  interest, 
whether  real  or  personal ;  and  that  such  an  equity  of  redemption  would 
be  legal  assets. 

Now  whether  those  cases  which  have  been  cited  with  respect  to 
the  equity  of  redemption  of  a  mortgaged  term  of  years  are  to  be  con- 
sidered an  exception,  it  is  not  absolutely  necessary  for  me  to  deter- 
mine. If  I  were  called  upon  to  do  so,  I  should  say  that,  in  my  opin- 
ion, those  cases  are  not  sustainable,  and  ought  not  at  this  day  to  be 
followed. 

In  this  case,  it  is  an  equity  of  rcdcmi)tion  of  an  equitable  charge  of 
a  sum  of  money  on  real  estate,  which  the  executor  has  clearly  in  my 
opinion  a  right,  in  his  mere  character  of  executor,  first  to  redeem, 
and  then  to  enforce  payment  of.  It  is  said  it  is  a  sort  of  double- 
distilled  equity ;  first,  there  is  a  mere  equity  as  a  charge,  and  then 
there  is  a  mortgage  of  that,  and  the  testator's  interest  consists  of  the 
equity  of  redemption  of  that  mortgaged  equity.  That  does  not.  as  it 
appears  to  me,  at  all  prevent  the  executor  being  entitled  virtute  of- 
ficii to  redeem  and  recover  the  sum  charged  ;  and  I  am  therefore  of 
opinion  that  the  assets  here  recovered  are  legal. 

The  decree  was  accordingly. 


CHRISTY  v.  COURTENAY. 

(In  Chancery,  before  Sir  John  Romilly,  Master  of  the  Rolls,  1858.    26 

Beavan,    140.) 

Part  of  the  testator's  estate  consisted  of  chambers  in  the  Temple, 
held  for  lives.  These  were  in  1836  mortgaged  to  Messrs.  Milne  for 
£8,000. 

By  the  decree,  the  chambers  were  ordered  to  be  sold,  free  from  the 
mortgages,  in  case  the  mortgagees  consented,  and  the  surplus  of  the 
produce,  after  paying  the  mortgagees,  was  ordered  to  be  paid  into 
Court,  and  "that  the  question  whether  such  proceeds  of  sale  consti- 
tute legal  or  equitable  assets  be  reserved." 

The  cause  now  came  on  for  further  consideration. 


Sec.  7)  BY  ACT    OF  CREDITORS.  327 

Ths  Master  of  the  Rolls  °®  held  *  *  *  that  the  surphis 
produce  of  the  chambers  formed  part  of  the  legal  assets  of  the  tes- 
tator, and  directed  the  plaintiff's  costs  to  be  paid  out  of  the  funds, 
and  the  residue  to  be  applied  amongst  the  specialty  creditors.^" 


DUNDAS  V.  DUTENS. 

(In  Chancery,  before  Lord  Chancellor  Thurlow,  1790.    Cited  from  Opinion  of 

Lord  Chancellor  Manners  in  Grocan  v.  Cooke,  2  Ball  &  Beatty, 

230,  233  [1812].) 

In  the  case  of  Dundas  v.  Dutens,  1  Ves.  Jr.  196,  2  Cox,  Eq.  Cas. 
235,  the  question  was,  whether  stock  that  had  been  settled,  could  be 
brought  within  the  reach  of  creditors ;  I  have  a  note  of  that  case, 
which,  on  this  point,  is  more  full  than  the  printed  report  of  it,  which 
I  will  briefly  state.  Lord  Thurlow  says :  "Is  there  any  case  where 
stock  standing  in  a  trustee's  name,  can  be  made  available  to  pay 
debts,  or  that  debts  (and  stock  is  a  chose  in  action)  shall  be  transfer- 
red! to  creditors  for  that  purpose?  You  cannot  have  an  execution  at 
law  against  such  effects.  The  opinion  in  Horn  v.  Horn  [Ambler,  79], 
is  so  anomalous  and  unfounded,  that  forty  such  opinions  would  not 
satisfy  me.  It  would  be  preposterous  and  absurd  to  set  aside  an 
agreement,  which,  if  set  aside,  leaves  the  stock  in  the  name  of  a  per- 
son where  you  could  not  touch  it."  ®^ 

59  A  part  of  the  opinion  is  omitted. 

6  0  See  Shee  v.  French,  3  Drew.  716  (1857);  Miitlow  v.  Mutlow,  4  De  G. 
&  J.  539  (1859). 

It  seems,  in  view  of  these  later  decisions,  safe  to  say  that  all  equitable  in- 
terests coming  to  a  legal  representative  or  heir  as  such  are  distributable  in 
the  same  manner  as  legal  interests,  on  the  principle  that  equity  follows  the 
law. 

Equitable  assets,  that  is,  assets  distributable  e(iually  among  all  the  cred- 
itors of  a  deceased  person,  could  be  created  only  in  the  case  of  realty,  when 
the  same  was  either  devised  in  trust  to  be  sold  to  pay  the  debts  of  the  testa- 
tor, or  charged  with  payment  of  such  debts. 

For  a  long  time  it  was  held  that,  if  the  devise  were  to  the  executor  or  heir 
of  the  testator,  the  assets  would  be  legal,  and  not  equitable.  Dethicke  v.  Car- 
avan, 1  Lev.  224  (1667) ;  Girling  v.  Lee,  1  Yern.  63  (1682) ;  Hawker  v.  Buck- 
land,  2  Vern.  106  (1689);  Blatch  v.  Wilder,  1  Atk.  420  (1738);  Flunket  v. 
Penson,  2  Atk.  290  (1742);  Fremoult  v.  Dedire,  1  P.  Wms.  429  (1718);  Allam 
V.  Heber,  2  Stra.  1270  (1748);  Cutterback  v.  Smith,  Free.  Chy.  127  (1700); 
Bickham  v.  Freeman,  Free.  Chy.  136  (1700). 

These  cases  have  been  overruled,  and  land  devised  to  any  one  for  the  pay- 
ment of  debts  must  be  applied  equally  among  all  ci'editors.  Silk  v.  Prime,  1 
Bro.  C.  C,  138,  note  (1768);  Newton  v.  Bennet.  Bro.  C.  C.  1.35  (1782);  Bailey 
V.  Ekins.  7  Ves.  Jr.  319  (1802)  ;  Shiphard  v.  Lutwidge,  8  Ves.  Jr.  26  (1802)  ; 
Helm  v.  Darby's  Adm'r,  3  Dana  (Ky.)  185  (18.35) :  Cloudas'  Ex'x  v.  Adams. 
4  Dana  (Ky.)  603  (1836)  ;  Speed's  Ex'r  v.  Nelson's  Ex'r,  8  B.  Mon.  (Ky.)  499 
(1848) :  Benson  and  Others,  Ex'rs,  v.  Le  Roy  and  Others,  4  Johns.  Ch.  (N. 
Y.)  651  (1820). 

siCaillaud  v.  Estwick.  2  Anst.  3S1.  384.  385  (1794);  Nantes  v.  Corrock. 
9  Ves.  Jr.  182  (1803) ;    Rider  v.  Kidder,  10  Ves.  Jr.  360  (1805) ;    Flasket  v. 


328  TUAN.SFKR   OF    KESriXTIVE   INTEUF.STS   OF   PARTIES.  (Ch.  3 

Lord  Dillon,  1  Ilogaii,  324  (lS2u).  Contra:  McCarthy  v.  Goold,  1  B.  &  B. 
387  (1810). 

Horn  V.  Horn,  Ambler.  70  (1740) ;  Taylor  v.  Jones,  2  Atk.  600  (1743) ; 
Iladdcn  v.  Spader,  20  .Johns.  (N.  Y.)  554  (1S22),  s.  c.  5  Johns.  Ch.  (N.  Y.) 
2S(>  (1S2I);  Storm  v.  Waddell.  2  Sands.  Ch.  (N.  Y.)  404  (1845).  See,  however, 
Donovan  v.  Finn,  Ilopk.  Ch.  .50  (iss',). 

In  England  a  debtor's  interest  in  a  legal  chose  in  action  could  be  reach- 
ed by  his  creditors  neither  at  law  nor  in  equity.  Bank  of  England  v.  Dunn, 
15  Ves.  Jr.  5«;o  dSOO)  ;  Guy  v.  Pearkes,  18  Yes.  Jr.  100  (1811);  Crogan  v. 
Cooke,  2  Ball  &  Beatty,  2.30  (1812) ;  Cockrane  v.  Chambei-s,  Ambler,  70.  note 
(1)  (1825) ;  Sims  v.  Thomas,  12  A.  &  E.  530  (1840)  ;  Utley  v.  Lines,  7  Price, 
274  (IST.)). 

The  English  rule  was  adoi)ted  in  the  following  cases:  Shaw  v.  Aveline,  5 
Ind.  380  (1854);  Stewart  v.  English,  0  Ind.  170  (18.55);  Williams  v.  Reynolds, 
7  Ind.  022  (18.50);  Bnford  v.  Buford.  1  P.ibb  (Ky.)  .•;05  (1808);  Winebrinner 
v.  Weisi<,'er,  3  J.  B.  Mon.  (Ky.)  .32  (1825)  ;  .Mcl'erran  v.  Jones,  2  Litt.  (Ky.) 
210  (1822)  ;  Cosby  v.  Boss'  Adni'r,  3  J.  J.  Marsh.  (Ky.)  200,  20  Am.  Dec.  140 
(1830);  Ilardenburgh  v.  Blair,  .30  N.  J.  E(i.  047  (1870);  Greene  v.  Keene,  14 
R.  I.  388,  51  Am.  Kep.  400  (1884);  Maxon  v.  Gray.  14  K.  I.  ()41  (1885);  Ewing 
v.  Cantrell,  Meigs  (Tenn.)  304  (18.38)  ;  Erwin  v.  Oldham,  0  Yerg.  (Tenn.)  185, 
27  Am.  Dec.  458  (1834);  White  Sewing  Mach.  Co.  v.  Atkeson,  75  Tex.  330, 
12  S.  W.  812  (1880);  Carter  Bros.  &  Co.  v.  lligbtower,  70  Tex.  135,  15  S.  W. 
223  (1800). 

In  the  following  cases  a  legal  chose  in  action  was  reached  by  a  bill  for 
an  equitable  execution:  Walkins  v.  Dorsett,  1  liland.  (Md.)  5:'.()  (1828);  Sar- 
gent V.  Salmond.  27  Me.  5.30  (1847):  Drake  v.  Rice,  l.'U)  .Mass.  410  (1881); 
Wright  V.  I'etric.  Smedes  &  M.  Ch.  (Miss.)  282  (1843.):  Catchings  v.  Manlove, 
30  Miss.  055  (18()1);  Tappan  v.  Evans,  11  N.  II.  311  (1840);  Abbott  v.  Ten- 
nev.  IS  N.  II.  100  (1840);  Chase  v.  Searles,  45  N.  II.  511  (1804);  Bayard  v. 
Hoffman,  4  Johns.  Ch.  (N.  Y.)  450  (1820) ;  Weed  v.  IMerce,  0  Cow.  (N.  Y.) 
722  (1827);  Proseus  v.  Mclntvre,  5  liarb.  (N.  Y.)  424  (1840);  McGill  v.  Ilar- 
man,  55  N.  C.  170  (1855);  Burton  v.  Farinholt,  SO  N.  C.  200  (1882).  See,  how- 
ever, Doak  V.  Bank,  28  N.  C.  300,  335-338  (1840). 


Ch.  4)  EXTINGUISHMENT   OF  A   TRUST.  329 

CHAPTER  IV. 

EXTINGUISHMENT  OF  A  TRUST. 


SELBY  V.  ALSTON. 

(Tn  Cliancory,  before  Sir  Richard  Tepper  Arden,  Master  of  the  Rolls,  1797. 

3  Ves.  Jr.  n.'JO.) 

James  Selby  havings  contracted  for  the  purchase  of  certain  estates 
in  the  counties  of  Alicldlesex  and  Hertford  and  the  isle  of  Ely,  and 
having  paid  the  purchase  money,  afierwards  by  his  will  gave  andl  de- 
vised "all  the  rest  of  my  real  and  personal  estate  whatsoever  and 
wheresoever  to  my  said  wife  in  trust,  that  she  do  thereout  educate 
and  maintain  my  said  son  until  he  shall  attain  the  age  of  twenty-one 
years,  and  until  he  shall  have  sufficiently  settled  and  secured  to  and 
upon  my  said  wife  what  is  to  be  settled  upon  and  given  to  her,  as 
aforesaid ;  and  afterwards  in  trust  to  convey  and  dispose  of  all  the 
then  rest  of  my  real  and  personal  estate  and  the  produce  thereof  to 
my  said  son,  his  heirs,  executors  and  assigns ;  but  in  case  my  said 
son  shall  die,  without  issue,  before  he  shall  attain  his  age  of  twenty- 
one  years,  then  in  trust,"  etc. 

The  testator  died  before  any  conveyance  was  made  of  the  estates 
agreed  to  be  purchased.  After  his  death  a  conveyance  by  lease  and 
release  was  made  to  his  widow ;  who  died  before  her  son  attained  the 
age  of  twenty-one.  He  afterwards  attained  the  age;  and  died  in  1772. 
having  been  always  in  possession  of  these  estates  from  the  death  of 
his  mother,  and  having  devised  them  to  charitable  uses ;  which  devise 
was  void  by  the  statute  of  mortmain  [9  Geo.  II,  c.  36]. 

The  bill  was  filed  by  the  heir  at  law  ex  parte  paterna,  claiming  these 
estates  against  the  heir  ex  parte  materna ;  who  was  in  possession.  The 
defendant  put  in  a  general  demurrer. 

Solicitor  General  [Sir  John  IMitford]  for  the  plaintifif.  The  ques- 
tion is,  as  to  the  equity  of  the  plaintiff.  The  ground  of  his  coming 
here  is,  that  the  legal  title  is  with  the  defendant.  The  son  being  en- 
titled in  both  capacities,  as  heir  ex  parte  paterna,  and  ex  parte  materna, 
that  made  it  a  question  of  election ;  and  it  might  not  have  been  the 
same  to  him  to  take  in  either  character ;  for  his  mother  might  have 
died  considerably  indebted.  If  the  equitable  estate  merges  in  the  le- 
gal, a  cestui  que  trust  happening  to  be  heir  of  his  trustee  must  be  lia- 
ble to  all  the  judgments  of  the  trustee. 

The  Master  of  the  Rolls  suggesting  that  this  point  had  been  before 
Lord  Thurlow,  and  Mr.  Mansfield  and  Mr.  Stratford,  who  supported 
the  demurrer,  saying  it  had  been  determined  by  Lord  Thurlow  in  fa- 
vor of  the  heir  ex  parte  materna  upon  this  very  will  in  Hone  v.  Med- 


330  EXTINGUISHMENT   OF   A    TRUST.  (Ch.  4 

craft  and  Franklin  v.  Alston,  23(1  April,  1779,  it  was  ordered  to  stand 
over,  that  it  might  be  inquired  into:  the  Master  of  the  Rolls  saying, 
if  that  was  so,  it  would  not  be  proper  for  hini,  sitting  for  the  Lord 
Chancellor,  to  give  any  opinion  upon  it. 

March  22d.  Master  of  the  Rolls.  Upon  looking  into  this  case,  I 
have  no  objection  to  give  my  opinion;  as,  if  it  was  decided  by  Lord 
Thurlow,  my  opinion  is  the  same  as  his. 

The  ground  of  this  bill  is,  that  the  plaintiff,  claiming  as  heir  ex 
parte  paterna  of  the  late  Mr.  Selby,  has  an  equity  to  call  for  a  con- 
veyance. The  case  and  the  premises,  or  at  least  some  of  them,  are 
exactly  the  same  as  in  Goodright  v.  Wells,  Doug.  771.  When  this 
was  mentioned,  it  occurred  to  me,  that  the  question  had  been  already 
decided  by  Lord  Thurlow  in  some  other  cause.  After  a  verdict  at 
law,  and  a  judgment  determining, that  at  law  it  descended  to  the  heir 
ex  parte  materna,  with  a  very  strong  opinion  of  three  of  the  judges, 
that  equitably  the  heir  ex  parte  paterna  could  have  no  claim,  though 
one  judge  gave  an  opinion  to  the  contrary,  it  does  ai)pear  that  the 
point,  whether  argued  or  not,  came  on  before  Lord  Thurlow.  The 
Register's  book  contains  farther  directions  in  two  causes.  Both  bills 
were  restrained  twelve  months  ;  and  it  was  ordered  that  Wells  and 
the  Franklyns,  claiming  as  heirs  upon  the  part  of  his  father's  mother, 
should  bring  an  ejectment;  that  Sir  Rowland  Alston,  claiming  on  the 
part  of  the  mother,  should  also  bring  an  ejectment ;  that  there  should 
be  a  trial  at  bar;  and  that  Sir  Rowland  Alston  might  also  attend  at 
the  trial  of  the  ejectment  brought  by  the  Wells's.  The  ejectment 
was  under  the  direction  of  this  court ;  that  is  certain.  Upon  farther 
directions  his  Lordship  declared,  that  the  devise  in  the  will  of  the  sev- 
eral freehold  and  leasehold  estates  thereby  given  to  the  charity  was 
void  ;  and  it  was  ordered,  that  the  title  deeds  of  the  estates  in  St. 
Clements's  church  yard  and  at  Hertingfordbury  should  be  delivered  to 
Sir  Rowland  Alston,  who  recovered  in  the  ejectment;  and  that  the 
receiver  should  be  discharged. 

If  any  equity  remained  between  these  heirs,  this  decree  could  not 
have  been  made.  The  equitable  point  was  raised  in  the  court  of  law  ; 
and  the  judges  gave  their  opinions  upon  it;  and  Lord  Thurlow  de- 
livered up  possession  to  the  person  claiming  as  heir  ex  parte  materna. 
Then  the  next  question  is,  whether  upon  the  case  made  by  the 
plaintiff  he  is  entitled  to  an  equity.  The  question  at  law  was  clear ; 
there  could  be  no  question  about  that;  but  the  judges  intimated  their 
opinion  upon  the  equitable  point.  The  argument  of  Mr.  Justice  Wil- 
son was  more  equitable  than  legal.  We  have  an  intimation  of  the 
opinion  of  Lord  Mansfield  and  a  strong  opinion  of  Judges  Ashurst 
and  Duller  against  the  equity.  Mr.  Justice  Willes's  opinion  was  in 
favor  of  the  equity.  The  question  now  is,  whether  upon  the  case 
now  coming  before  a  court  of  equity  the  opinion  of  the  three  judges 
is  such  as  this  court  will  follow.  I  do  not  say,  the  case  is  free  from 
all  difficulty;    and  there  may  be  good  reason  to  contend,  that  the  sit- 


Ch.  4)  EXTINGUISHMENT   OB^    A    TUUST.  331 

uation  of  the  trustee  shall  not  affect  in  any  degree  the  estate  coming 
from  him  to  the  cestui  que  trust;  but  I  must  not  lay  that  down  too 
broadly;  for  that  is  not  the  fact.     In  Philips  v.  Brydges  [3  Vesey,  Jr. 
126]   I  stated  as  a  universal  proposition  that  wherever  the  legal  and 
equitable  estates   uniting   in   the   same   person  are   co-extensive   and 
commensurate,  the   latter   is  absorbed   in  the  former.     I   stated,   and 
think    I  was  warranted  in  so  doing,  that  no  act  of  the  trustee  can  in 
any  degree  vary  the  right  of  the  cestui  que  trust ;  but  I  did  not  state, 
nor  upon  full  consideration  am  I  prepared  to  say,  that  it  was  ever 
held,  that  the  situation  of  the  trustee,  and  the  operation  of  lavt^  arising 
from  that  situation,  and  the  relation  to  the  cestui  que  trust,  does  not 
make  considerable  difference  in   the  estates  to  be  taken  ;  as   for   in- 
stance:   Supposing  the  trustee  was  an  ancestor  of  the  cestui  que  trust, 
and  dies ;  and  then  the  cestui  que  trust  dies :     Is  there  any  doubt  that 
his  widow  would  be  dowable ;  though  if  the  cestui  que  trust  died  first, 
she  unquestionably  would  not.     It  has  been  argued,  that  the  trustee 
is  a  mere  instrument,  and  his  situation  or  act  can  have  no  effect  at  all 
upon  the  estate.     I  have  put  a  case,  where  the  fact  being  that  the 
legal  estate  descends  upon  the  cestui  que  trust  and  is  united  with  the 
trust  estate,  he  becomes  solely  seized  at  law ;  and  both  his  widow  and 
heir  are  entitled.     Therefore  the  situation  of  the  trustee  (I  do  not 
say,  his  act)  may  make  a  considerable  difference.     If  the  widow  of 
Mr.  Selby  had  conveyed  to  the  son,  it  is  clear  he  would  have  taken 
an  estate  descendible  to  his  heirs  ex  parte  paterna.     Suppose  she  had 
made  a  feoffment  to  the  use  of  herself  for  life,  remainder  to  her  son  ; 
she  would  have  had  no  intention  of  giving  the  estate  in  any  new  line 
(it  is  to  be  supposed,  she  would  rather  it  should  continue  in  the  line 
that  would  carry  it  to  her  own  heirs) ;  but  that  act,  though  not  done 
with  that  view,  would  have  such  an  effect.     So,  where  an  heir  takes 
by  devise  instead  of  by  descent,  the  consequences  are  dift'erent;  but 
that  was  never  insisted  on  as  a  ground  of  equity.     If  an  heir  ex  parte 
materna  takes  by  devise,  that  would  let  in  his  heirs  ex  parte  paterna, 
and  if  they  fail,  his  heirs  ex  parte  materna  also;  if  he  takes  by  de- 
scent, he  would  only  take  an  estate  descendible  to  his  heirs  ex  parte 
materna ;  and  yet,  if  he  can  take  by  descent,  the  law  makes  him  take 
so.     The  case  of  an  escheat  does  seem  a  hardship  upon  the  line  of 
heirs  that  would  have  succeeded,  if  Mr.  Selby  had  taken  from  his 
father.     That    is   the   only   argument   that    pressed    upon    my    mind. 
Where  the  person  himself  has  an  equal,  coextensive,  estate  at  law  and 
in  equity,  the  legal  shall  prevail  notwithstanding  the  case  I  put  of  the 
escheat.     I  have  not  found  that  courts  of  equity  have  ever,  upon  that 
circumstance,  held  that  he  is  not  to  be  considered  as  having  a  coex- 
tensive estate  in  law  and  equity. 

The  case  relied  upon  in  Philips  v.  Brydges  was  Wade  v.  Paget,  1 
Bro.  C.  C.  363.  There  Lord  Thurlow  lays  down  a  universal  proposi- 
tion, to  which  I  am  inclined  to  accede;  that  where  the  estates  unite, 
the  equitable  must  merge  in  the  legal.     That  was  the  principle  of  the 


332  EXTINGUISHMENT   OF   A    TRUST.  (Ch.  4 

opinion  of  the  judges  in  Gooclright  v.  Wells;  and  upon  consideration 
I  am  inclined  not  to  lay  any  restriction  upon  or  to  narrow  it  in  any 
respect,  but  to  hold,  that  by  whatever  means,  whether  by  conveyance 
or  otherwise,  a  person  obtains  the  absolute  ownership  at  law  of  the 
estate,  though  he  acquired  that  by  an  equitable  title,  and  both  either 
come  together  or  are  afterwards  united  in  him,  the  legal  will  prevail, 
the  equitable  is  totally  gone  for  the  purpose  of  being  acted  upon  by 
any  person  in  this  court.  Therefore,  that  being  laid  down  universally, 
this  demurrer  must  be  allowed  against  the  plaintiff  claiming  as  heir  ex 
parte  paterna. 


AIATTHEWS,  Administrator,  v.  TIIOMPSOX  and  Others. 
THOMPSON  and  Others  v.  SA:\1E. 

(Supremo  Judicial  Court  of  Massachusetts,  3904.     18G  INIass.  14,  71  N.  E.  93, 
GG  L.  R.  A.  421,  104  Am.  St.  Rep.  550.) 

Two  bills  in  equity  filed  respectively  November  19,  1900,  and  Au- 
gust 6,  1900,  one  by  Nathan  Matthews,  Jr.,  administrator  with  the 
will  annexed  of  the  insolvent  estate  of  Edward  Thompson,  seeking  to 
set  aside,  as  fraudulent  and  void  as  against  the  creditors  of  that  es- 
tate, a  conveyance  of  certain  land  on  Huntington  Avenue,  made  by 
Edward  Thompson  through  a  third  person  to  the  defendant  V.  Mabel 
Thompson,  or,  in  the  alternative,  to  have  the  defendant  V.  Mabel 
Thompson  declared  a  trustee  for  the  benefit  of  the  plaintiff  as  ad- 
ministrator; the  other  by  Henry  Thompson,  Elizabeth  B.  Thompson 
and  Frances  M.  Thompson,  the  brother  and  sisters  of  Edward  Thomp- 
son, seeking  to  establish  a  trust  in  the  land  for  their  benefit. 

The  cases  were  heard  together  by  Barker,  J.,  who  reports  them  for 
determination  by  the  full  court,  such  decrees  to  be  entered  as  justice 
and  equity  might  require. 

Knowlton,  C.  J.^  Edward  Thompson,  the  testator  of  the  plaintiff 
in  the  first  suit,  became  indebted  from  time  to  time  in  a  considerable 
sum  to  his  unmarried  sisters,  Elizabeth  R.  Thompson  and  Frances  M. 
Thompson,  who  were  old  ladies  unfamiliar  with  business.  Of  his  own 
motion,  he  made  to  them,  as  security,  a  mortgage  of  the  real  estate 
in  question,  subject  to  other  mortgages,  which  together  amounted  to 
about  $37,000,  and  afterwards  he  caused  them  to  foreclose  this  mort- 
gage. A  conveyance  of  the  property,  subject  to  the  prior  mortgages, 
was  made  to  his  son,  who  held  it  as  agent  of  these  sisters  of  the  tes- 
tator. Subsequently  the  testator  caused  his  son  to  convey  the  prop- 
erty to  the  testator's  nephew,  one  Eldridge,  who  executed  a  declara- 
tion of  trust  for  the  benefit  of  the  old  ladies,  to  secure  them  for  their 
previous  mortgage  debts,  and  also  for  the  benefit  of  their  brother, 
Henry  Thompson,  to  secure  him  for  any  advancements  that  he  might 
make  to  Edward  Thompson,  and  any  other  claims  that  he  might  hold 

1  Part  of  the  opinion  is  omitted. 


Ch.  4)  EXTINGUISHMENT    OF   A    TRUST.  333 

against  Edward.  The  declaration  of  trust  also  provided  that  after  the 
payment  of  these  dehts  the  trustee  should  pay  the  balance,  if  any,  to 
Edward  Thompson.  This  declaration  was  not  acknowledged  nor  re- 
corded. It  was  understood  that  Edward  Thompson  was  to  have  the 
entire  management  of  the  property,  and  these  arrangements  for  se- 
curity wore  made  at  his  suggestion.  At  the  end  of  alx)ut  a  year  and 
a  half,  at  his  request,  a  paper  was  signed  by  the  beneficiaries  and  sent 
to  Eldridge,  as  follows  : 
"Mr.  William  T.  Eldridge,  "September  16th,  1896. 

"Dear  Sir:  We  hereby  request  and  authorize  you  to  convey  to 
Edward  Thompson  the  real  estate  in  Boston  conveyed  to  you  by  Fred- 
erick P.  Thompson.  Henry  Thompson. 

"Elizabeth    B.    Thompson. 
"Frances  Mary  Thompson." 

The  testator  enclosed  this  paper  to  Eldridge  and  asked  him  for  a 
conveyance  of  the  real  estate.  Thereupon,  on  October  6,  1896,  El- 
dridge conveyed  the  land  to  Edward  Thompson  by  a  deed  which  was 
duly  recorded,  and  which  contained  no  reference  to  a  trust.  The  deed 
was  in  the  form  of  an  ordinary  quitclaim  purporting  to  be  for  a  con- 
sideration of  $1  paid  by  Edward  Thompson,  not  describing  him  as 
trustee,  and  it  contained  a  warranty  that  the  premises  were  free  from 
all  incumbrances  made  or  suffered  by  Eldridge,  and  a  warranty  against 
the  lawful  claims  and  demands  of  all  persons  claiming  by,  through 
or  under  him.  This  deed  was  delivered  by  Eldridge  to  Edward 
Thompson  and  was  duly  recorded.  After  this  conveyance  Edward 
Thompson  held  the  land  as  if  it  were  his  own,  mortgaged  it  several 
times  for  his  own  debts,  had  repeated  negotiations  for  the  sale  of  it, 
and  treated  it  in  all  respects  as  if  he  were  the  absolute  owner  of  it. 
The  first  question  in  the  cases  is  whether  he  held  it  charged!  with  a 
trust  in  favor  of  his  brother  and  sisters,  so  that  it  still  remains  sub- 
ject to  this  trust  in  the  hands  of  his  widow,  to  whom  it  was  afterwards 
conveyed  in  his  lifetime. 

In  reference  to  the  transfer  from  Eldridge  to  the  intestate,  the  pre- 
siding justice  found  "as  a  fact  that  the  intention  of  all  parties  inter- 
ested, including  that  of  the  retiring  trustee,  Mr.  Eldridge,  was  not 
that  Mr.  Edward  Thompson  should  hold  as  trustee."  He  found,  "that 
the  intention  of  his  brother  andl  sisters  and  of  the  retiring  trustee 
was  that  the  title  should  go  back  to  him,  Edward  Thompson,  and  that 
the  brother  and  sisters  relied  upon  his  saying  what  he  would  do  in 
regard  to  their  debts,  not  because  he  was  a  trustee,  but  because  he  was 
their  brother  and  they  were  willing  to  trust  him." 

As  all  the  parties  were  of  full  age,  and  as  the  trust  was  created  by 
an  arrangement  to  which  the  trustee  and  the  cestuis  que  trust  were 
the  only  parties,  there  is  no  doubt  that  they  could  terminate  it  at  any 
time.  Smith  v.  Harrington,  4  Allen  (Mass.)  566;  South  Scituate  Sav- 
ings Bank  v.  Ross,  11  Allen  (Mass.)  442;  Sears  v.  Choate,  146  Mass. 
39^5,  15  N.  E.  786,  4  Am.  St.  Rep.  320;  Brown  v.  Cowell,  116  Mass. 


334  EXTINGUISHMENT    OF    A    TRUST,  (Ch.  4 

461.  Upon  the  findings  of  the  judge,  it  is  plain  that  they  undertook 
to  terminate  it  and  supposed  that  they  had  terminated  it.  The  plain- 
tiffs in  the  second  suit,  the  former  cestuis  que  trust,  rely  upon  the 
Pub.  St.  c.  120,  §  3  (Rev.  Laws,  c.  127,  §  3),  which  provides  that 
"No  estate  or  interest  in  land  shall  be  assigned,  granted,  or  surren- 
dered unless  by  such  writing  [an  instrument  in  writing  signed  by  the 
grantor  or  by  his  attorney]  or  by  operation  of  law."  The  kind  of  in- 
strument in  writing  required  under  this  section  depends  upon  the 
nature  of  the  interest  to  be  assigned  or  surrendered.  In  the  present 
case,  not  only  the  legal  estate,  but  by  the  record  title  an  absolute  es- 
tate in  fee,  including  equitable  interests,  as  well  as  legal,  was  in  El- 
dridge.  This  title  was  affected  only  by  an  unacknowledged  and  un- 
recorded paper.  By  his  deed  to  Edward  Thompson,  Eldridgc  as- 
signed and  conveyed,  according  to  the  record,  a  perfect  title  subject 
to  prior  mortgages.  This  deed  was  an  instrument  in  writing.  The 
only  additional  instrument  required  by  the  statute  was  a  writing  which 
wouldl  relieve  the  grantor  from  the  consequences  of  what  would  have 
been  a  breach  of  trust  if  he  had  acted  without  authority  from  the 
cestuis  que  trust.  Nothing  more  was  needed  to  pass  a  title  which  was 
free  from  equities.  As  applied  to  conditions  like  the  present,  we  are 
of  opinion  that  the  assignment  of  the  equitable  rights  of  the  plaintiffs 
in  the  second  suit,  made  by  a  deed  of  one  who  held  of  record  a  per- 
fect title  and  who  acted  under  their  authority  given  in  writing  was  a 
compliance  with  the  statute.  If  we  consider  it  as  a  surrender  of  equi- 
table rights,  we  are  of  opinion  that  the  paper  which  they  signed  was 
all  the  instrument  required  by  the  statute,  it  being  given  as  an  au- 
thority to  be  acted'  upon,  and  which  was  in  fact  acted  upon,  by  the 
trustee  who  held  of  record  an  absolute  title.  The  principle  is  anal- 
ogous to  that  which  has  been  applied  to  the  surrender  and  cancella- 
tion of  an  unrecorded  deed  of  defeasance,  given  in  connection  with  an 
absolute  deed  to  constitute  a  mortgage.  When  this  is  done  in  good 
faith,  and  is  subsequently  acted  upon  by  the  person  to  whom  the  sur- 
render is  made,  the  original  holder  is  estoppedl  from  setting  up  the 
surrendered  instrument  against  the  existing  title.  Trull  v.  Skinner, 
17  Pick,  (Mass,)  213;  Palis  v.  Conway  Ins"!  Co.,  7  Allen  (Mass.)  46, 
49,  See,  also,  as  to  parol  waiver  by  cestuis  que  trust,  under  the 
statute  of  frauds,  KHne's  Appeal,  39  Pa.  493 ;  Miller  v.  Pierce,  104 
N.  C.  389,  10  S,  E,  554;  Gorrell  v,  Alspaugh,  120  N.  C,  362,  368,  27 
S,  E.  85,  The  action  of  the  parties,  taken  in  good  faith,  makes  it 
impossible  in  equity  for  the  cestuis  que  trust  to  hold  the  trustee  for 
a  violation  of  his  duty  in  making  the  conveyance,  or  to  charge  the 
conscience  of  the  grantee  having  knowledge  of  the  previous  trust,  with 
a  duty  to  hold  subject  to  the  trust, ^     *     *     * 

2  Ormsby  v.  DiinieRnll,  91  Ky.  GOl,  16  S,  W,  459  (1S91):  by  the  exhaustion 
of  the  cestuis  quo  trust.  Burgess  v.  Wheate,  1  Wni.  BI.  ]2:^.  (17.j9);  by  tlie  es- 
cheat of  tlie  legal  title  to  laud  held  in  trust,  King  v.  Mildiuay,  5  D.  &  Ad. 
254  (1S;]3). 

See  note  to  this  case,  18  H.  L.  R.  53,  54. 


Ch.  5)  THE  DUTIES  OF  A  TRUSTEE.  33l 

CHAPTER  V. 
THE  DUTIES  OF  A  TRUSTEE. 


SECTION  1.— TO  CONVEY  THE  TRUST  RES  AS  THE 
CESTUI  OUE  TRUST  MAY  DIRECT. 


WATTS  V.  TURNER. 

(In  Chancery,  before  Sir  John  Leach,  Master  of  the  Rolls,  1830.     1  Russel 

&  Mjine,  G34.) 

A  trust  estate  descended  to  the  defendant;  and  the  plaintiff,  who 
was  cestui  que  trust,  being  entitled  to  the  legal  estate,  a  draft  of 
the  intended  conveyance  was  sent  to  the  solicitor  of  the  defendant,  and 
approved  of  by  him.  The  defendant  afterwards  refused  to  execute 
the  conveyance,  unless  the  plaintiff  paid  him  a  sum  of  money.  The 
bill  was  filed  to  compel  a  conveyance. 

The  Master  of  the  Rolls  made  the  decree  against  the  defendant, 
with  costs. ^ 

1  Cary,  13;  Jones  v.  Lewis,  1  Cox.  199  (1786);  Willis  v.  Hiscox.  4  Mvl.  & 
Cr.  197  (1838)  ;  Holford  v.  Phipps,  3  Beav.  434  (1841) ;  Thorbv  v.  Yeats, 'l  Y. 
&  C.  C.  C.  438  (1842);  Canipl>ell  v.  Home,  1  Y.  &  C.  C.  C  664  (1842):  Ten- 
fold V.  Boiich,  4  Hare,  271  (1844);  Firniin  v.  Pulham,  2  De  G.  &  Sni.  99 
(1848);  Devey  v.  Thornton,  9  Hare,  222  (18.51):  King  v.  Kin-  1  De  G.  &  J. 
663  (1857) :  Palairet  v.  Caresv,  32  Beav.  564  (1863) :  In  re  Kuox"s  Trusts,  L. 
H.  1  Ch.  538  (1895)  ;  Pearce  v.  Bryant  Coal  Co.,  25  111.  App.  51  (1887)  :  Warren 
V.  Ireland,  29  Me.  62,  68  (1848);  Paine  v.  Forsalth.  86  Me.  357,  30  Atl.  11 
(1894);  Tilton  v.  Davidson.  98  Me.  55,  56  Atl.  215  (1903):  Jasper  v.  Maxwell, 
16  N.  C.  357  (1830) ;  Reid  v.  Gordon,  35  Md.  174  (1871) ;  Hunuewell  v.  Lane, 
11  Mete.  (Mass.)  163  (1846);  Smith  v.  Harrington,  4  Allen  (Mass.)  566  fl862) ; 
Bowditch  v.  Andrew,  8  Allen  (Mass.)  339  (1864):  Stone,  Petitioner,  1.38  Mass. 
476  (1885);  Slater  v.  Hurlbut,  146  Mass.  308,  15  N.  E.  790  (1888);  Whall  v. 
Converse,  146  Mass.  345,  15  N.  E.  660  (1888) ;  Sears  v.  Choate,  146  Mass.  305. 
15  N.  E.  786,  4  Am.  St.  Rep.  320  (1888);  Felton  v.  Sawyer.  41  N.  H.  202 
(1860) ;  Archer  v.  American  Waterworks  Co..  50  N.  J.  Eq.  33.  24  Atl.  .508 
(1.S92);  Turnage  v.  Greene.  55  N.  C.  03,  62  Am.  Dec.  208  (1854):  Matthews  v. 
McPherson,  65  N.  C.  189  (1871);  Taylor  v.  Huber.  13  Ohio  St.  288  (1862): 
Megargee  v.  Naglee.  64  Pa.  216  (1870);  HopV>iinvs  Appeal.  65  Pa.  468  (1870): 
Culbertson's  Appeal,  76  Pa.  145  (1874) ;  Sharpless'  Estate,  151  Pa.  214,  25  Atl. 
44  (1892);  Fisher  v.  Wlster,  154  Pa.  65.  25  Atl.  1009  (1893);  Clarlc's  Estate, 
15  Phila.  (Pa.)  573  (1882);  Hubbs'  Estate,  16  I'hila.  (Pa.)  211  (1883);  Ives  v. 
Harris,  7  R.  I.  413  (1863);  Taylor  v.  Taylor,  9  R.  I.  119  (1868);  Rogers 
V.  Rogers,  10  R.  I.  5.56  (1873);  Nightingale  v.  Nightingale.  13  R.  I.  113  (ISSO); 
Whelan  v.  Reilly,  3  W.  Va.  597,  613  (LscO). 

Contra:  Ring  v.  McConn,  10  N.  Y.  26s  (1851);  Lent  v.  Howard.  89  N.  Y. 
169  (1882):  Asche  v.  Asche,  113  N.  Y.  232,  21  N.  E.  70  (1889);  Cuthbert  v. 
Chauvet,  136  N.  Y.  326,  32  N.  E.  lOSS.  18  L.  R.  A.  745  (1893);  Metcalfe  v. 
Union  Trust  Co.,  181  N.  Y.  39,  73  N.  E.  498  (1905);  Lewis'  Estate,  3  Misc. 
Rep.  164.  23  N.  Y.  Supp.  287  (1893). 

In  Turner  v.  Buck,  22  Yin.  Abr.  21,  pi.  5  (1715).  Lord  Chancellor  Cowper 
refused  to  direct  a  trustee  to  convey  the  legal  title  to  the  cestui  que  trust,  so 


336.  THE   DLTIi:S   OF   A  TRUSTEE.  (Cll.  5 

GOODSOX  V.  KTJJSSON. 
(In  Chancery,  before  Lord  Chancellor  Eldoii,  1S27.     3  Russell,  5S3.) 

Eldon,  Lord  Chancellor,-  In  1767  a  deed  was  executed,  and  I 
will  assume  that  a  fine  was  properly  levied  in  pursuance  of  it,  by 
which  an  estate  was  granted  and  conveyed  to  Richard  Ellisson  and 
his  heirs  on  certain  trusts.  The  bill  deduces  the  various  changes  of 
the  title  to  the  equitable  interest,  which  occurred  between  1767  and 
November,  1822,  bringing  it,  in  1819,  into  eight  different  persons, 
each  of  whom  is  represented  as  the  owner  of  an  undivided  eighth  part 
of  the  property. 

These  eight  persons  sell  the  property  in  different  lots  to  different 
persons ;  and,  the  present  plaintiff  having  bought  one  of  the  lots,  a 
deed  is  prepared,  conveying  certain  parcels  of  land  to  him ;  that  deed 
the  eight  persons,  who  are  represented  as  the  owners  of  the  beneficial 
interest,  have  executed ;  and  the  co-heiresses  of  Richard  Ellisson  are 
also  required  to  execute  it.    They  refuse,  and  the  bill  is  filed.     *     *     * 

The  Master  of  the  Rolls  has  ordered  the  defendants  to  execute  the 
conveyance,  and  to  pay  the  costs  of  the  suit. 

Now,  even  if  the  plaintiff  had  been  the  purchaser  of  the  whole  es- 
tate, and  the  conveyance  had  related  to  the  whole,  it  woidd  have  been 
a  matter  for  consideration,  whether  the  trustees  would  not  have  a 
right,  where  there  has  been  so  much  devolution  of  title,  to  have  the 
title  examined  in  this  Court,  instead  of  being  required  to  acquiesce 
in  an  opinion  which  was  not  clothed  with  the  sanction  of  judicial  au- 
thority. But  this  plaintiff  is  the  purchaser  of  only  sixteen  acres  of  the 
property,  and  the  rest  of  the  estate  has  been  sold  to  other  persons 
in  different  lots.  Now,  I  confess  it  is  quite  new  to  me,  to  be  in- 
formed that  you  can  call  on  a  trustee  from  time  to  time  to  divest  him- 
self of  dift'erent  parcels  of  the  trust  estate,  so  as  to  involve  himself 
as  a  party  to  conveyances  to  twenty  different  persons.  Has  not  a 
trustee  a  right  to  say,  "If  you  mean  to  divest  me  of  my  trust,  divest 
me  of  it  altogether,  and  then  make  your  conveyances  as  you  think 

that  the  latter  iiii;,'ht  iiiaintaiu  an  ejectment  against  the  purchaser  for  value 
without  notice  of  the  plaintiffs  rights. 

It  seems  that  the  trustee  will  he  compelled  to  convey  a  legal  title  only 
commensurate  with  the  equitable  interest  of  the  cestui  que  trust.  Saunders 
V.  Nevil.  2  Vern.  (liaithby's  Ed.)  428  (1706);  Talbot  v.  Whitfield,  Bunbury, 
204  (172.J). 

In  Dawkins  v.  Tenrhyn,  4  App.  Cas.  51  (1878)  at  page  (50,  Lord  Chancellor 
Cairns  said:  "I  can  conceive,  although  it  would  be  a  strange  and  unusual 
mode  of  conveyancing,  a  conveyance  or  devise  to  a  man  and  the  heirs  of  his 
body  in  trust  for  A.  B.  and  his  heirs ;  and  then  the  estate  tail  would  be  held 
in  trust  for  A.  B.,  and  A.  B.  could  call  upon  the  tenant  in  tail,  I  dare  say, 
to  l)ar  the  estate  tail,  and  to  enlarge  it  into  a  fee  for  his  benefit." 

If  the  trustee  has  a  legal  title  in  fee  sinqtle.  and  the  cestui  (lue  trust  an  in- 
terest in  tail,  it  seems  that  the  cestui  que  trust  can  bar  the  equitalile  interest 
in  tail,  and  enlarge  it  into  an  equitaltle  fee  simi)]e.  and  then  compel  the 
trustee  to  convey  to  him  a  fee.     See  Pearson  v.  Lane.  17  Ves.  Jr.  101  (1809). 

2  Only  a  part  of  Lord  l^ldon's  opinion  is  given. 


Sec.  1)        TO   CONVEY    RES   AS   CESTUI   QUE   TRUST   MAY   DIRECT.  337 

proper."  I  have  been  accustomed  to  think,  that  a  trustee  has  a  right 
to  be  deHvered  from  his  trusts,  if  the  cestuis  que  trust  call  for  a  con- 
veyance. 

Another  principle  which  has  been  lost  sight  of  in  this  decree,  is, 
that  a  trustee  can  be  called  on  to  convey  only  by  the  words  and  de- 
scriptions by  which  the  conveyance  was  made  to  him.  In  this  re- 
spect, he  is  like  a  mortgagee. 

I  see  nothing  in  the  record  which  would  have  hindered  me  from 
directing  these  ladies  to  convey,  if  I  had  such  parties  before  me  as 
would  have  enabled  me  to  direct  a  conveyance  of  the  whole  estate. 
If  the  cestuis  que  trust  had  all  been  here,  they  might  have  prayed  that 
the  sixteen  acres  in  question  might  be  conveyed  to  Goodson,  and  the 
residue  of  the  estate  to  a  trustee  on  trust  to  convey  to  other  purchas- 
ers.    As  the  suit  is  framed,  I  cannot  take  that  course. 

The  following  decree  was  made:  "His  Lordship  doth  order,  that 
the  decree  made  in  this  cause,  the  18th  of  August,  1824,  be  reversed; 
and  it  is  ordered,  that  it  be  referred  to  the  Master  to  inquire  and 
state  to  the  Court,  whether  the  plaintiff  is  entitled  to  that  beneficial  in- 
terest which  he  seeks  to  have  clothed  with  a  legal  estate  by  convey- 
ance;  and  in  making  the  said  inquiry,  it  is  ordered,  that  the  Master 
do  ascertain  and  state  to  the  Court  whether  all  prior  vested  and  con- 
tingent equitable  titles  have  failed  by  deaths  or  nonexistence  of  per- 
sons who  would  have  taken  before  the  plaintiff,  etc.  And  it  is  or- 
dered, that  the  said  Master  do  tax  the  costs  of  the  defendants  of  this 
suit  to  this  time,  including  their  costs  of  the  appeal,  as  between  party 
and  party,  that  the  same,  when  taxed,  be  paid  by  the  plaintiff  to  the 
defendants  ;  but  this  taxation  is  to  be  without  prejudice  as  to  whether 
the  defendants  shall  not  be  finally  entitled  to  any  further  costs,  charges 
and  expenses;  and  his  Lordship  doth  reserve  the  consideration  of  all 
further  directions,  and  whether  the  defendants  shall  be  allowed  any 
further  costs,  charges  and  expenses  up  to  this  time,  and  also  the  con- 
sideration of  all  subsequent  costs,  charges,  and  expenses,  until  after 
the  Master  shall  have  made  his  report."  ' 


SMITH  and  SNOW  v.  SXOW  and  Others. 

(In  Chancery,  before  Sir  John  Leach,  Vice  Chancellor,  ISIS.     3  Maddock,  10.) 

The  plaintiff  Smith  was  the  assignee  of  the  plaintiff"  Snow's  seventh 
part  or  share  in  certain  funds  standing  in  the  name  of  trustees,  two 
of  the  defendants.  The  plaintiffs  Smith  and  Snow  filed  their  bill 
against  the  trustees,  and  against  six  of  the  cestuis  que  trust,  brothers 

3  In  Rhoads  v.  Rhoads.  43  111.  2.39  (1S07).  Gunn  v.  Brown,  63  Md.  96  (1SS4), 

Seamans  v.  Gibbs,  132  Mass.  239  (1SS2).  Zabriskie's  Ex'rs  v.  Wetmore.  26  N.  J. 

Eq.  IS  (1875),  and  Hutchison's  Apix-al,  82  Pa.  509  (1876),  a  bill  tiled  by  one 

of  several  cestuis  que  trust  for  the  transfer  to  him  of  his  share  of  the  trust 

Ken.Tr.— 22 


338  THE   DUTIES  OF  A   TRL'STEE.  (Ch.  5 

and  sisters  of  the  plaintiff  Snow,  to  have  the  seventh  part  or  share  of 
the  plaintiff  Snow  transferred  to  the  plaintiff  Smith.  To  this  hill, 
four  of  the  defendants,  brothers  and  sisters  of  the  plaintiff  Snow_  (two 
of  the  defendants,  his  brothers,  being  out  the  jurisdiction)  put  in  the 
following  demurrer : 

"These  defendants,  etc.  for  cause  of  demurrer  show  that  no  relief 
is  prayed  by  the  bill  against  the  defendants,  and  that  the  said  com- 
plainants have  not  by  their  said  bill  made  such  a  case  as  entitles  them 
in  a  court  of  equity  to  any  discovery  from  or  against  these  defend- 
ants, touching  the  several  matters  in  the  bill  of  complaint  mentioned. 
or  any  of  them,  or  as  entitles  them  to  any  relief  or  assistance  against 
the  defendants.     Therefore,"  etc. 

The  Vice  Citancei.i.or.  The  question  is,  whether  a  party  who  is 
entitled  to  a  certain  aliquot  proportion  of  a  certain  ascertained  sum, 
can  file  a  bill  to  have  it  transferred  to  him,  without  making  the  persons 
entitled  to  other  aliquot  shares  of  the  fund,  parties.  Persons  not  in- 
terested in  the  suit  cannot  be  made  parties,  and  it  is  sufficient  to  say 
that  it  is  not  alleged  that  these  defendants  have  any  interest  in  this 
suit.  My  only  difficulty  is,  whether  trustees  can  be  called  upon  to  act 
in  execution  of  their  trust,  by  parts,  as  in  that  case  seven  different 
bills  might  be  filed  against  them  :  but  that  I  think  is  not  so  great  an 
inconvenience  as  the  allowing  of  such  a  bill  as  this  would  be.* 

Demurrer  allowed. 


TAYLOR  and  Wife  v.  Executors  of  HUBER  and  Others. 
(Supreme  Court  of  Ohio,  1SG2.     13  Ohio  St.  2SS.) 

On  the  11th  of  October,  1844,  Jacob  Huber  made  his  will,  in  which 
he  bequeathed  to  his  son,  Martin  Huber,  an  equal  share  of  his  estate. 
The  testator,  Jacob,  survived  his  son  Martin,  who  died  May  26,  1846, 
and  on  April  16,  1847,  made  this  codicil  to  his  will : 

"My  son  Martin,  having  departed  this  life  since  I  made  my  said 
will,  leaving  a  widow  and  children,  I  do  declare,  will  and  direct  that 
the  said  children  of  Martin  shall  succeed  to  the  distributive  share 
which  would  otherwise  have  accrued  to  said  Martin,  in  case  he  had 

property  was  dismissed;  not,  however,  on  the  ground  urged  by  Lord  Eldon, 
but  out' of  regard  to  the  intention  of  tlie  frentor  of  tlie  trust. 

In  Russell  v.  Grinnell.  10.")  Mass.  -lU.')  (INTO).  Cooper  v.  Cooper,  36  N.  J.  Eq. 
121  (1882),  and  Estate  of  Moss,  15  Phila.  (I'n.)  51G  (1SS2)  an  e(iuital)le  tenant 
for  life  was  refused  a  conveyance  of  a  legal  life  estate. 

4  In  Re  Iladcliffe,  L.  R.  1  Ch.  227  (1S{)2),  Inches  v.  Hill,  lOG  Mass.  575 
(1871)  Williams  v.  Thacher,  ISf,  Mass.  293,  71  N.  E.  5G7  (1904),  Welch  v. 
Episcopal  Theological  School,  189  Mass.  108,  75  N.  E.  139  (1905),  and  Estate 
of  Henderson.  15  I'hila.  (Vn.)  598  (1882).  one  of  several  cestuis  que  trust  ob- 
tained a  conveyance  of  his  share  of  the  trust  property. 

See  Wetmore  v.  Zabriskie,  29  N.  J.  Eq.  G2  (1878),  and  Terry  v.  Smith,  42  N. 
J.  Eq.  504,  8  All.  S8G  (1S87),  as  to  the  partibility  of  a  trust. 


Sec.  1)        TO   CONVEY   KES  AS  CESTUI   QUE  TRUST  MAY   DIRECT.  330 

survived  me.  Provided,  however,  that  the  interest  of  one  third  part 
of  said  share  shall  be  paid  annually  to  the  widow  of  said  Martin,  dur- 
ing her  natural  life,  the  jjrincipal  of  said  one  third  part  to  be  dis- 
tributed to  the  children,  or  their  heirs,  of  said  Martin,  after  the  death 
of  his  said  widow.  And  to  the  end,  that  the  interest  may  be  raised  on 
said  one  third  part,  for  said  widow,  and  the  principal  be  secured,  I 
do  direct  that  my  executors,  when  the  money  shall  come  into  their 
hands,  shall  loan  the  same  upon  bond  and  mortgage  on  real  estate, 
and  the  interest  to  be  paid  annually.  The  money  which  is  to  accrue 
to  said  children  of  Martin,  shall  be  paid  to  them  as  they  become  of 
age;  and,  until  that  time,  shall  be  loaned  on  bond  and  mortgage  as 
aforesaid,  except  such  part  as  may  be  necessary  for  their  support." 

The  children  of  Martin  Huber,  mentioned  in  this  codicil,  were 
David  and  Levi,  then  living ;  and  their  mother,  the  widow  of  said  Mar- 
tin, is  the  present  plaintiff,  Sarah  Taylor,  since  intermarried  with  her 
co-plaintiff,  Levi  Taylor. 

The  testator,  Jacob  Huber,  died  in  April,  1849.  His  will,  with  the 
codicil  thereto,  was  admitted  to  probate,  and  letters  testamentary 
were  granted  to  the  executors,  the  present  defendants,  in  May,  1849. 

After  the  death  of  the  testator,  David  and  Levi,  the  children  of 
Martin  Huber,  both  died  intestate,  minors,  free  of  debt,  unmarried, 
and  without  children,  leaving  no  brothers  or  sisters  of  the  whole  or 
half  blood.     David  died  first. 

The  plaintiffs,  Sarah  Taylor  and  Levi  Taylor,  her  present  husband, 
filed  their  petition  against  the  executors  of  said  testator,  in  the  court 
of  common  pleas  of  Fairfield  county,  stating  the  foregoing  facts; 
whereby  they  claim  that  the  said  Sarah,  the  mother  of  the  deceased 
children  of  Martin  Huber,  as  their  heir  at  law,  became  entitled  to  suc- 
ceed to  their  property  and  estate,  and  to  demand  and  receive  from 
said  executors,  by  virtue  of  said  codicil  to  the  will  of  said  Jacob  Hu- 
ber, the  principal  of  the  one  third  of  the  distributive  share  directed 
in  said  codicil  to  be  distributed  "to  the  children,  or  their  heirs,  of  said 
Martin,  after  the  death  of  his  said  widow,"  the  said  Sarah,  being  one 
third  of  $3,624.80,  or  $1,208.27,  the  executors  having  paid  to  her  the 
other  two  thirds. 

The  petition  further  states,  that  the  executors  have  invested  said 
sum  of  $1,208.27,  or  put  the  same  at  interest  for  a  long  period  of 
years;  and  the  plaintiffs  demand  judgment  against  the  executors  for 
said  sum,  with  interest  from  the  date  of  the  last  payment  of  interest ; 
but  if  the  executors  are  not  bound  personally  to  pay  said  sum,  that 
then  they  may  be  decreed  to  assign  to  said  Sarah  all  notes,  bonds, 
mortgages,  etc.,  they  may  hold  for  the  payment  of  said  sum,  to  her 
sole  and  separate  use,  etc. 

The  petition  further  states,  that  on  January  19,  1860,  James  A. 
Bope,  w^as  appointed  administrator  of  the  estate  of  said  children,  David 
and  Levi,  and  claims  as  such  an  interest  in  said  $1,208.27,  adverse  to 
the  plaintiffs.     He  is  made  a  defendant,  and  with  a  prayer  that  he 


340  THE   DUTIES   OF  A  TRUSTEE.  (Cll.  5 

be  required  to  answer,  and  be  restrained  from  collecting  or  interfering 
with  said  sum. 

As  a  second  cause  of  action,  the  petition  alleges  the  non-payment  of 
interest  on  the  $1,208.27  for  several  years,  of  which  an  account  is 
prayed  and  judgment  for  the  amount. 

To  so  much  of  the  petition  as  seeks  a  recovery  of  the  principal  of 
the  one  third  of  the  legacy  given  by  the  codicil  to  the  children  of  Mar- 
tin Huber,  deceased,  the  executors  of  the  will  demur,  on  the  ground 
that  the  facts  stated  do  not  constitute  a  cause  of  action. 

To  the  second  cause  of  action,  said  executors  answer,  adniittiiTj^  a 
balance  of  $46.35,  on  interest,  on  said  $1,208.27,  due  April  4,  1859, 
and  offer  to  pay  tlie  plaintiffs  that  sum. 

Bope,  as  the  administrator  of  Martin  Ruber's  deceased  children,  an- 
swers, claiming  title  and  right  to  the  fund,  and  prays  judgment  for 
the  same  against  his  co-defendants,  the  executors  of  Jacob  Huber,  or 
for  the  securities  evidencing  its  investment. 

The  executors  demur  to  Bope's  answer,  on  the  ground  that  it 
shows  no  cause  of  action  against  them. 

The  district  court  reserved  the  case  to  this  Court  for  decision. 

BrinkeriioFF,  J.  There  is  no  controversy  among  counsel  in  this 
case,  but  that  on  the  death  of  the  testator,  the  legacy  bequeathed  by 
his  will  became  vested  in  his  grandsons,  David  and  Levi,  though  sub- 
ject to  the  charge  upon  it  in  favor  of  their  mother  during  her  life; 
that  on  the  death  of  David,  his  share  of  it  passed  by  descent,  subject 
to  administration,  to  Levi,  and  on  his  death,  no  provision  having  been 
made  in  the  will  for  these  contingencies,  that  the  wdiole  passed  by  de- 
scent, subject  to  administration,  to  their  mother,  the  plaintiff,  as  their 
next  of  kin. 

And  it  is  claimed,  in  behalf  of  the  administrator  of  the  infants,  in 
effect,  that  inasmuch  as  a  regular  course  and  succession  of  adminis- 
trations. Settlements,  and  distributions,  with  their  attendant  costs, 
charges  and  consequent  depletions  of  the  original  legacy,  would  be 
a  regular  course  of  proceeding  at  law,  therefore  the  whole  formula 
of  such  a  course  must  be  followed ;  and  that  the  interest  of  the  mother 
can  reach  her  only  through  this  course  of  administrative  distributions. 
While,  on  the  part  of  the  executors  of  the  testator,  it  is  claimed,  that 
under  the  provisions  of  the  will,  they  have  the  right  to  retain  the  fund 
until  her  death ;  that  what  she  has  inherited  though  then  payable  to 
her  heirs,  shall  never  reach  her  at  all. 

We  cannot  accede  to  either  of  these  claims.  Although  a  course  of 
successive  administrations  and  distributions  would  be  regular  at  law, 
there  is  here  no  occasion  for  it,  the  children  having  left  no  debts  to 
be  paid  or  adjusted,  and  it  would  be  dilatory  and  exj^ensive.  The  ex- 
ecutors from  the  first  held  this  fund  in  trust  for  the  grandsons  of  the 
testator  by  the  provisions  of  the  will ;  and  now,  through  a  contin- 
gency not  foreseen  or  provided  for  by  the  will,  that  trust  having 
wholly  failed,  they,  by   operation  of  law,  hold  it  in  trust  for  their 


Sec.  1)        TO   CONVEY   RES  AS   CESTUI   QUE   TRUST   MAY   DIRECT.  341 

heir,  the  mother.  The  title  of  the  a(hiiinistrator  of  the  infants,  is  sub- 
ject to  the  Hke  trust.  These  trusts  equity  has  ample  jurisdiction  to 
enforce  and  in  proper  cases,  like  this,  will  do  so.  Cram  v.  Green,  G 
Ohio,  429;  Stiver  v.  Stiver,  8  Ohio,  217;  1  Story's  Eq.  §  593. 

A  decree  may  be  entered  in  favor  of  the  plaintiff,  Sarah  Taylor, 
ordering  the  executors  to  deliver  to  her  the  securities  in  their  hands, 
representing-  the  fund  in  controversy,  subject  to  any  just  and  proper 
charges  in  their  favor,  which  they  may  have  incurred  in  its  adminis- 
tration, and  remaining  unpaid;  and  subject  also  to  such  costs  and 
expenses  of  administration  on  the  estates  of  the  infant  grandsons, 
if  any,  as  the  court  of  common  pleas,  to  which  the  case  will  be  re- 
manded, shall  find,  under  all  the  circumstances  of  the  case,  to  be  strict- 
ly reasonable  and  just. 


HEAD  V.  LORD  TEYNHAM. 

(In  Chancery,  before  Lord  Loughborough,  Sir  W.  H.  Ashhurst,  .T.,  and  Sir 
Beaumont  Hotham,  B.,  Commissioners,  1783.     1  Cox,  57.) 

Bill  to  carry  the  trusts  of  a  will  into  execution,  whereby,  amongst 
other  things,  lands  were  limited  to  trustees  for  a  term  of  500  years 
to  raise  £4,000.  for  younger  children's  portions.  There  being  six 
younger  children  entitled  under  this  limitation  to  have  the  £4,000., 
two  of  them  assigned  their  shares  of  the  £4,000.  to  a  trustee  for  the 
benefit  of  two  other  of  the  children.  And  the  only  question  was, 
whether  it  was  necessary  that  this  trustee  should  be  a  party  to  this 
suit.  For  plaintiff  it  was  insisted  that  as  the  original  trustees  of  the 
term  who  had  the  legal  estate,  and  all  the  children  who  had  the 
beneficial  interest  were  before  the  court,  there  was  no  occasion  to 
make  the  other  trustee  a  party,  and  the  Court  would  direct  a  sale  of 
the  term  without  his  joining  in  the  sale;  and  of  that  opinion  was  the 
court — and  decreed  accordingly. 


JOSSELYN  V.  JOSSELYN. 

(In  Chancery,  before  Sir  Lancelot  Shadwell,  Vice  Chancellor,  1837.    9 

Simons,   63.) 

James  Josselyn,  the  testator  in  the  cause,  disposed  of  his  residuary 
personal  estate  in  the  following  words :  "All  the  rest,  residue  and  re- 
mainder of  my  goods,  chattels,  ready  money,  securities  for  monies  in 
the  public  stocks  or  funds,  debts  and  all  other  personal  estate  what- 
soever, I  give  unto  John  Josselyn,  the  son  of  my  late  cousin  John 
Josselyn,  deceased!;  and  I  order  and  direct  my  executors  or  the  sur- 
vivor of  them,  etc.,  to  place  the  same  out  on  government  or  good  real 
security,  and  the  interest  arising  therefrom,  as  the  same  shall  become 
due,  to  place  out  on  the  like  securities,  so  as  to  accumulate,  and  the 


342  THE   DUTIES   OF   A  TRUSTEE.  (Ch.  5 

principal  to  be  paid  to  the  said  John  Josselyn  at  his  attainment  of  the 
age  of  twenty  four  years." 

The  plaintiff  attained  21  in  Aii.q-ust,  1837,  and,  thereupon,  presented 
a  petition  stating  that  he  was  advised  that,  on  attaining  that  age,  he 
became  entitled,  under  the  will,  to  a  vested  interest  in  the  testator's 
residuary  estate,  and  the  accumulations  thereof,  and  praying  that  the 
funds  of  which  the  residue  and  accumulations  consisted,  might  be 
transferred  to  him. 

The  Vice  Chancellor.  The  residue  is  actually  given  to  the  plain- 
tiff;  and  the  words  which  follow  the  gift  are  merely  directory  as  to  the 
future  management  of  what  is  before  given.  I  shall,  therefore,  make 
an  order,  according  to  the  prayer  of  the  petition. 


GOSLING  V.  GOSLING. 

(In  Chancery,  before  Sir  W.  Page  Wood,  Vice  Cbaucellor,  1859.    .Johnson,  2G5.) 

Bennett  Gosling  devised  real  estate  to  trustees  to  hold  to  the  use  of 
plaintiff  for  life,  remainder  to  the  use  of  his  first  and  other  sons  re- 
spectively in  tail  male,  with  divers  remainders  over.  By  a  codicil  he 
provided :  "It  is  my  particular  desire,  that  no  one  shall  be  put  in 
possession  of  my  estate,  or  shall  enjoy  the  rent,  dividends,  and  profits 
of  any  part  thereof,  or  of  any  property  left  by  my  will  or  codicil,  un- 
til he  shall  attain  the  age  of  twenty-five  years ;  and  in  the  meantime, 
the  rent,  dividends,  and  profits  to  accumulate." 

The  questions  for  the  opinion  of  the  court  were:  Whether  the  tes- 
tator's desire  expressed  in  the  codicil  with  respect  to  the  accumula- 
tions of  the  rent,  dividends,  and  profits  of  his  estate  and  property,  was 
operative ;  and  whether  such  rent,  dividends,  and  profits,  or  any  of 
them,  ought  to  be  accumulated  in  accordance  therewith. 

The  Vice  Chancellor.-"'  The  principle  of  this  court  has  always 
been  to  recognize  the  right  of  all  persons  who  attain  the  age  of  twen- 
ty-one to  enter  upon  the  absolute  use  and  enjoyment  of  the  property 
given  to  them  by  a  will,  notwithstanding  any  direction  by  the  testator 
to  the  effect  that  they  are  not  to  enjoy  until  a  later  age ;  unless,  during 
the  interval,  the  property  is  given  for  the  benefit  of  another.  If  the 
property  is  once  theirs,  it  is  useless  for  the  testator  to  attempt  to  im- 
pose any  fetter  upon  their  enjoyment  of  it  in  full  so  soon  as  they  at- 
tain twenty-one.  And  upon  that  principle,  unless  there  is  in  the  will, 
or  in  some  codicil  to  it,  a  clear  indication  of  an  intention  on  the  part 
of  the  testator,  not  only  that  his  devisees  are  not  to  have  the  enjoyment 
of  the  property  he  has  devised  to  them  until  they  attain  twenty-five, 
but  that  some  other  person  is  to  have  that  enjoyment — or  unless  the 
property  is  so  clearly  taken  away  from  the  devisees  up  to  the  time 
of  their  attaining  twenty-five  as  to  induce  the  court  to  hold,  that, 

0  The  statement  is  abridfred  and  part  of  the  opinion  is  omitted. 


Sec.  1)        TO   CONVEY   RES  AS   CESTUI   QUE   TRUST   MAY   DIRECT.  343 

as  to  the  previous  rents  and  profits,  there  has  been  an  intestacy — the 
court  does  not  hesitate  to  strike  out  of  the  will  any  direction  that  the 
devisees  shall  not  enjoy  it  in  full  until  they  attain  the  age  of  twenty- 
five  years.     *     *     * 

The  true  construction  of  the  codicil  is  clearly  this:  There  is  to  be 
no  alteration  in  the  limitations  made  by  the  will  as  regards  the  per- 
sons who  are  to  take,  or  as  regards  the  time  at  which  their  interests 
are  to  be  vested.  But  having  said  by  his  will  that  they  should  enjoy 
the  property  at  twenty  one,  it  occurs  to  him  in  the  codicil,  that  a  young 
man  of  twenty  one  is  not  competent  to  manage  his  afifairs  and,  there- 
fore, he  desires  "that  no  one  shall  be  put  in  possession  of  his  estate, 
or  shall  enjoy  the  rents,"  until  he  shall  attain  twenty-five;  every 
word  in  the  codicil  pointing  to  the  enjoyment  and  user  of  a  gift 
which  is  taken  under  the  will,  and  nothing  pointing  to  a  revocation  of 
that  gift  for  any  purpose,  still  less  for  the  purpose  of  creating  an  in- 
testacy. 

It  seems  to  me  clear,  both  upon  principle  and  upon  the  authorities 
which  were  cited,  that  the  clause  in  the  codicil  was  simply  an  attempt 
to  put  a  fetter  upon  the  enjoyment  of  the  property  given  by  the  will 
after  the  period  when  the  law  says  the  owner  of  property  shall  enjoy 
it.     *     *     * 

The  answer  to  the  second  question  will  be,  that  the  desire  of  the 
testator,  expressed  in  the  codicil  with  respect  to  the  accumulations  of 
the  rent,  dividends,  and  profits  of  his  estate  and  property,  is  inop- 
erative.® 

Decree  accordingly. 

6  Saunders  v.  Vautier,  4  Beav.  115  (1S41);  Curtis  v.  Lukin,  5  Beav.  147 
(1842)  l.'jo,  156;  Jacksou  v.  Majoribanks,  12  Sim.  O.",  (1S41) ;  Jacob's  Will,  29 
Beav.  402  (ISGl) ;  Tathum  v.  Vernon,  29  Beav.  004  (1861) ;  Coventry  v.  Cov- 
entry, 2  Dr.  &  Sm.  470  (1865);  Ma^rath  v.  Morehead,  L.  R.  12  Eq.  491  (1871); 
Hilton  v.  Hilton,  L.  R.  14  Eq.  468  (1872):  In  re  Canimeron,  L.  R.  26  Ch.  Div. 
19  (1884);  In  re  Tweedie,  L.  R.  27  Ch.  Div.  315  (1884) ;  Harbin  v.  Masteriuan, 
L.  R.  2  Ch.  184  (1894);  In  re  Johnston,  L.  R.  3  Ch.  204  (1894);  Miller's 
Trustees  v.  Miller  (Court  of  Session)  18  R.  301  (1890) ;  Cuthbert  and  Another, 
31  Sc.  L.  R.  575  (1894);  Jasper  v.  Maxwell,  16  N.  C.  357  (1830);  Iluber  v. 
Donojihue,  49  N.  J.  Eq.  12.-.  23  Atl.  49.-)  (1891). 

Where  property  is  held  in  trust  for  the  children  of  a  woman,  and  in  default 
of  children  In  trust  for  another,  the  latter  may  compel  a  conveyance  by  the 
trustee,  as  soon  as  the  woman  in  the  opinion  of  the  court  has  become  in- 
capable of  bearing  children.  Miles  v.  Knight,  12  Jur.  666  (1848) ;  Forty  v. 
Reav,  Dart.  V.  &  P.  (5th  Ed.)  345  (1853);  Groves  v.  Groves.  12  W.  R.  45 
(1863);  Dodd  v.  Wake,  5  De  G.  &  Sm.  226  (1852);  Edwards  v.  Tuck,  23 
Beav.  268  (1856) ;  In  re  Widow's  Trusts.  L.  R.  11  Eq.  408  (1871)  ;  In  re  Mill- 
ner's  Estate.  L.  R.  14  Eq.  245  (1872) ;  Browne  v.  Taylor,  W.  N.  190  (1872) ; 
Maden  v.  Tavlor,  45  E.  J.  Ch.  569  (1876) :  Archer  v.  Dowsing,  W.  N.  43  (1879): 
Tavlor's  Trusts,  29  W.  R.  350  (1881) :  Cro.xton  v.  :\[ay.  L.  R.  9  Ch.  Div.  388 
(1878);  Davidson  v.  Kimpton.  L.  R.  IS  Ch.  Div.  213  (1881);  Browne  v.  War- 
nock,  L.  R.  7  Ir.  Ch.  3  (1880):  Washington  v.  Bank  for  Savings,  65  Ai»p. 
Div.  .338,  72  N.  Y.  Supp.  7.52  (19(^1):  C.owen's  Appeal,  106  Pa.  288  (1884): 
Estate  of  Mellon,  16  Phila.  (Pa.)  323  (1884). 

See.  however,  Towle  v.  Delano,  144  Mass.  95,  10  N.  E.  769  (1887);  List  v. 
Rodney,  S3  Pa.  483  (1877);  W^esthafer  v.  Koons,  144  Pa.  26,  22  Atl.  885 
(1891). 


344  THE   DUTIES   OF  A  TRUSTEE.  (Cll.  5 


CLAFLIN  V.  CLAFLIN  ct  al. 

(Supreme  Judicial  Court  of  Massachusetts,  1SS9.    149  Mass.  19,  20  N.  E.  454,  3 
L.  K.  A.  370,  14  Am.  St.  Kep.  393.) 

Appeal  from  supreme  judicial  court,  Suffolk  county;  William  Allen, 
Judg'e. 

Bill  by  Adelbert  E.  Claflin  against  William  Clatlin  and  others,  trus- 
tees under  the  will  of  Wilbur  F.  Clailin,  deceased,  to  require  them  to 
pay  the  complainant  a  legacy  given  by  said  will.  From  a  decree  dis- 
missing the  bill  complainant  appeals. 

Field.  J.  By  the  eleventh  article  of  his  will,  as  modified  by  a 
codicil,  Wilbur  F.  Claflin  gave  all  the  residue  of  his  personal  estate  to 
trustees,  "to  sell  and  dispose  of  the  same,  and  to  pay  to  my  wife, 
IMary  A.  Claflin,  one-third  part  of  the  proceeds  thereof,  and  to  pay 
to  my  son  Clarence  A.  Claflin,  one-third  part  of  the  proceeds  thereof, 
and  to  pay  the  remaining  one-third  part  thereof  to  my  son  Adelbert 
E.  Claflin,  in  the  manner  following,  viz :  Ten  thousand  dollars  when 
he  is  of  the  age  of  twenty-one  years,  ten  thousand  dollars  when  he 
is  of  the  age  of  twenty-five  years,  and  the  balance  when  he  is  of  the 
age  of  thirty  years." 

Apparently,  Adelbert  E.  Claflin  was  not  quite  21  years  old  when  his 
father  died,  but  he  some  time  ago  reached  that  age,  and  received 
$10,000  from  the  trust.  He  has  not  yet  reached  the  age  of  25  years, 
and  he  brings  this  bill  to  compel  the  trustees  to  pay  to  him  the  re- 
mainder of  the  trust  fund.  His  contention  is,  in  effect,  that  the  pro- 
visions of  the  will  postponing  the  payment  of  the  money  beyond  the 
time  when  he  is  21  years  old  are  void.  There  is  no  doubt  that  his 
interest  in  the  trust  fund  is  vested  and  absolute,  and  that  no  other 
person  has  any  interest  in  it ;  and  the  authority  is  undisputed  that  the 
provisions  postponing  payment  to  him  until  some  time  after  he  reaches 
the  age  of  21  years  would  be  treated  as  void  by  those  courts  which 
hold  that  restrictions  against  the  alienation  of  absolute  interests  in 
the  income  of  trust  property  are  void.  There  has  indeed,  been  no 
decision  of  this  question  in  England  by  the  House  of  Lords,  and  but 
one  by  a  Lord  Chancellor,  but  there  are  several  decisions  to  this  effect 
by  Masters  of  the  Rolls,  and  by  Vice-Chancellors.  The  cases  are 
collected  in  Gray,  Rest.  Alien.  §§  106-112,  and  appendix  H.  Se^e 
Josselyn  v.  Josselvn,  9  Sim.  62);  Saunders  v.  Vautier,  4  Beav.  11.^. 
on  appeal,  Craig.' &  P.  240;  Rocke  v.-  Rocke,  9  Beav.  66;  In  re 
Young's  Settlement,  18  Beav.  199 ;  In  re  Jacob's  Will,  29  Beav.  402 ; 
Gosling  V.  Gosling,  H.  V.  R.  Johns.  265 ;  Turnage  v.  Greene,  55  N.  C. 
63,  62  Am.  Dec.  208;  Battle  v.  Petway,  27  N.  C.  576,  44  Am.  Dec.  59. 
These  decisions  do  not  proceed  on  the  ground  that  it  was  the  in- 
tention of  the  testator  that  the  property  should  be  conveyed  to  the 
beneficiary  on  his  reaching  the  age  of  21  years,  because  in  each  case 
it  was  clear  that  such  was  not  his  intention,  but  on  the  ground  that 


Sec.  1)        TO   CONVEY   RES   AS   CESTUI   QUE   TRUST   MAY   DIRECT. 


345 


the  direction  to  withhold  the  possession  of  the  property  from  the  bene- 
ficiary after  he  reached  his  majority  was  inconsistent  with  the  ab- 
solute rights  of  property  given  him  by  the  will. 

This  court  has  ordered  trust  property  conveyed  by  the  trustee  to 
the  beneficiary  when  there  was  a  dry  trust,  or  when  the  purposes  of 
the  trust  had  been  accomplished,  or  when  no  good  reason  was  shown 
why  the  trust  should  continue,  and  all  the  persons  interested  in  it 
were  sui  juris,  and  desired  that  it  be  terminated;  but  we  have  found 
no  expression  of  any  opinion  in  our  reports  that  provisions  requiring 
a  trustee  to  hold  and  manage  the  trust  property  until  the  beneficiary 
reached  an  age  beyond  that  of  21  years  are  necessarily  void  if  the  in- 
terest of  the  beneficiary  is  vested  and  absolute.  See  Smith  v.  Harring- 
ton, 4  Allen  (Mass.)  566;  Bowditch  v.  Andrew,  8  Allen  (Mass.)  339; 
Russell  V.  Grinncll.  105  Mass.  425;  Inches  v.  Hill,  106  Mass.  575; 
Sears  v.  Choate,  146  Mass.  395,  15  N.  E.  786,  4  Am.  St.  Rep.  320. 
This  is  not  a  dry  trust,  and  the  purposes  of  the  trust  have  not  been 
accomplished,  if  the  intention  of  the  testator  is  to  be  carried  out. 

In  Sears  v.  Choate  it  is  said :  "Where  property  is  given  to  certain 
persons  for  their  benefit,  and  in  such  a  manner  that  no  other  person 
has  or  can  have  any  interest  in  it,  they  are  in  efiFect  the  absolute  owners 
of  it;  and  it  is  reasonable  and  just  that  they  should  have  the  control 
and  disposal  of  it,  unless  some  good  cause  appears  to  the  contrary." 
In  that  case  the  plaintiff  was  the  absolute  owner  of  the  whole  property, 
subject  to  an  annuity  of  $10,000,  payable  to  himself.  The  whole  of 
the  principal  of  the  trust  fund,  and  all  of  the  income  not  expressly 
made  payable  to  the  plaintiff,  had  become  vested  in  him  when  he 
reached  the  age  of  21  years  by  way  of  resulting  trust  as  property  un- 
disposed of  by  the  will.  Apparently  the  testator  had  not  contemplated 
such  a  result,  and  had  made  no  provision  for  it,  and  the  court  saw  no 
reason  why  the  trust  should  not  be  terminated,  and  the  property  con- 
veyed to  the  plaintiff. 

In  Inches  v.  Hill,  supra,  the  same  person  had  become  owner  of  the 
equitable  life-estate  and  of  the  equitable  remainder,  and,  "no  reason 
appearing  to  the  contrary,"  the  court  decreed  a  conveyance  by  the 
trustees  to  the  owner.  See  Whall  v.  Converse,  146  ]\Iass.  345,  15  N.  E. 
660. 

In  the  case  at  bar  nothing  has  happened  which  the  testator  did'  not 
anticipate,  and  for  which  he  has  not  made  provision.  It  is  plainly  his 
will  that  neither  the  income  nor  any  part  of  the  principal  should  now 
be  paid  to  the  plaintiff.  It  is  true  that  the  plaintiff's  interest  is  alien- 
able by  him,  and  can  be  taken  by  his  creditors  to  pay  his  debts,  but  it 
does  not  follow  because  the  testator  has  not  imposed  all  possible  re- 
strictions that  the  restrictions  which  he  has  imposed  should  not  be 
carried  into  effect. 

The  decision  in  Broadway  Nat.  Bank  v.  Adams,  133  Mass.  170,  43 
Am.  Rep.  504,  rests  upon  the  doctrine  that  a  testator  has  a  light  to 
diispose  of  his  own  property  with  such  restrictions  and  limitations,  not 


346  THE   DUTIES   OF  A  TRUSTEE.  (Ch.  5 

repugnant  to  law,  as  he  sees  fit,  and  that  his  intentions  ought  to  be 
carried  out,  unless  they  contravene  some  positive  rule  of  law,  or  are 
against  public  policy.  The  rule  contended  for  by  the  plaintiff  in  that 
case  was  fmnided  upon  the  same  considerations  as  that  contended  for 
by  the  plaintiff  in  this,  and  the  grounds  on  which  this  court  declined 
to  follow  the  English  rule  in  that  case  arc  applicable  to  this ;  and  for 
the  reasons  there  given  we  are  unable  to  see  that  the  directions  of  the 
testator  to  the  trustees  to  pay  the  money  to  the  plaintiff  when  he 
reached  the  ages  of  25  and  30  years  are  against  public  policy,  or  are 
so  far  inconsistent  with  the  rights  of  property  given  to  the  plaintiff, 
that  they  should  not  be  carried  into  effect.  It  cannot  be  said  that  these 
restrictions  upon  the  plaintiff's  possession  and  control  of  the  property 
are  altogether  useless,  for  there  is  not  the  same  danger  that  he  will 
spend  the  property  while  it  is  in  the  hands  of  the  trustees  as  there 
would  be  if  it  were  in  his  own. 

In  Sanford  v.  Lackland,  2  Dill.  6,  Fed.  Cas.  No.  12,312,  a  benefi- 
ciary who  would  have  been  entitled  to  a  conveyance  of  trust  property 
at  the  age  of  26  became  a  bankrui:)t  at  the  age  of  24,  and  it  was  held 
that  the  trustees  should  convey  his  interest  immediately  to  his  assignee, 
as  "the  strict  execution  of  the  trusts  of  the  will  had  been  thus  rendered 
impossible."  But  whether  a  creditor  or  a  grantee  of  the  plaintiff  in 
this  case  would  be  entitled  to  the  immediate  possession  of  the  property, 
or  would  only  take  the  plaintiff's  title  sub  modo,  need  not  be  decided. 
The  existing  situation  is  one  which  the  testator  manifestly  had  in 
mind,  and  made  provision  for.  The  strict  execution  of  the  trust  has 
not  become  impossible ;  the  restriction  upon  the  plaintiff's  possession 
and  control  is.  we  think,  one  that  the  testator  had  a  right  to  make ; 
other  provisions  for  the  plaintiff  are  contained  in  the  will,  apparently 
sufficient  for  his  support ;  and  we  see  no  good  reason  why  the  inten- 
tion of  the  testator  should)  not  be  carried  out.  Russell  v.  Grinnell,  ubi 
supra ;  Toner  v.  Collins,  67  Iowa,  369,  25  N.  W.  287,  56  Am.  Rep. 
346;  Rhoads  v.  Rhoads.  43  111.  239;  Lent  v.  Howard,  89  N.  Y.  169; 
Barkley  v.  Dosser,  15  Lea  (Tenn.)  529;  Carmichael  v.  Thompson 
(Pa.)  6  Atl.  717;    Lampert  v.  Haydel,  20  Mo.  App.  616. 

Decree  affirmed. 


FORD  V.  BATLEY. 

Hn  Chancery,  before  Sir  John  Romilly,  Master  of  the  Rolls,  1853. 
17  Beavan,  303.) 

The  testator  directed  his  executors,  immediately  after  his  decease, 
to  purchase,  in  their  names,  from  the  Connnissioners  for  the  Reduc- 
tion of  the  National  Debt,  by  the  Act  10  Geo.  IV,  c.  24,  empowered 
to  grant  annuities,  or  of  or  from  any  public  company,  duly  empowered 
by  act  of  Parliament,  charter,  or  otherwise,  to  grant  annuities,  an 
annuity  of  £30.  for  the  plaintiff. 


Sec.  1)        TO   CONVEY    ruOS   AS   CESrUI   QUE   TFaST   MAY   DIRECT.  347 

The  executors  handed  over  the  residue  to  the  residuary  legatee, 
without  making  the  investment,  there  being  some  doubt  as  to  the 
identity  of  the  annuitant. 

The  plaintiff,  however,  ultimately  established  his  right  to  the  an- 
nuity. 

Mr.  Craig  and  Mr.  Southgate,  for  the  plaintiff.  First,  the  annui- 
tant has  a  right  to  select  the  security  upon  which  the  annuity  shall 
be  purchased ;  and,  secondly,  he  has  a  right  to  elect  to  take  the  pur- 
chase-money instead  of  having  the  annuity  purchased.  He  elects  to 
have  a  government  annuity,  and  insists  on  having  the  money  necessary 
to  purchase  it. 

Mr.  Goodeve,  contra.  The  testator  has  given  his  executors  a  dis- 
cretion as  to  the  mode  of  purchasing  the  annuity.  This  should  be 
exercised  in  a  manner  the  least  prejudicial  to  the  estate,  and  the  an- 
nuity should  therefore  be  purchased  from  a  public  company,  whose 
terms  are  less  onerous  than  those  of  government.  Secondly,  the  tes- 
tator has  directed  the  annuity  to  be  purchased  in  the  names  of  the 
executors.  His  directions  they  are  bound  to  follow,  and  to  allow  the 
plaintiff  to  take  the  money  would  be  opposed  to  the  clear  intention 
of  the  testator,  who  intended  to  give  an  annuity  and  not  a  legacy. 
He  referred  to  Blewitt  v.  Roberts  [Craig  &  Ph.  274]. 

The  Master  of  the  Rolls.  The  annuitant  is  entitled  to  have  the 
best  security  for  his  annuity,  which  is  a  government  security.  I  am, 
therefore,  of  opinion,  that  he  is  entitled  to  a  government  annuity. 

I  also  think  he  is  entitled  to  have  such  a  sum  of  money  as  would 
be  required  to  purchase  an  annuity  from  the  Commissioners  for  the 
Reduction  of  the  National  Debt,  for  it  is  obvious,  that  if  an  annuity 
were  purchased,  he  might  sell  it  immediately  afterwards.'^ 

7  Re  Browne's  Will,  27  Beavan.  .324  (1859) ;  Stokes  v.  Cheek,  28  Beav.  620 
(18G0) ;  Gott  V.  Nairne,  L.  K.  ?,  Ch.  Dlv.  278  (1S7G)  ;  Bigiis  v.  Peacock,  L.  K. 
22  Ch.  Div.  284  (1882);  In  re  Mabbett,  L.  R.  (1891)  1  Ch.  707;  Fluke  v.  Ex- 
ecutors of  Fluke,  10  N.  J.  Eq.  478  (18(54) ;  Morse  v.  Iluckensack  Savings 
Bank,  47  N.  J.  Eq.  279,  20  Atl.  901.  12  E.  R.  A.  02  (1890)  ;  Huber  v.  IXniouhue, 
49  N.  J.  Eq.  125,  2:5  Atl.  495  (1^91);  rrontice  v.  Janssen,  79  N.  Y.  478  (1880); 
Armstrong  v.  McKelvey,  104  N.  Y.  179,  10  N.  E.  200  (1887) ;  Greenland  v. 
Waddell,  il6  N.  Y.  234,  22  N.  E.  :;e7,  15  Am.  St.  Rep.  400  (1889) ;  ilellen  v. 
Mellen,  1.39  N.  Y.  210,  34  N.  E.  925  (1893) ;  McDonald  v.  O'llara,  144  N.  Y. 
5G6,  39  N.  E.  042  (1895). 

See.  also,  Fearsou  v.  Lane,  17  Ves.  Jr.  101  (1809) ;  Hetzel  v.  Barber,  69  N. 
Y.  1  (1877). 

In  Stokes  v.  Cheek,  28  Beav.  620  (1S60).  the  testatrix,  after  bequeathing 
several  annuities  and  authorizing  hor  trustees  to  sell  her  freeholds,  etc.,  and 
directing  them  out  of  the  produce  to  iiurehase  government  annuities,  provided 
"that  no  one  of  the  animitants  hereinbefore  named,  shall  be,  nor  shall  the  ex- 
ecutors or  administrators  of  any  of  them  be,  allowed  to  accept  the  value  of 
the  annuity  to  which  he  or  she,  respectively,  shall  be  entitled,  in  lieu  thereof." 

The  estate  having  been  sold,  the  question  arose  whether  the  animitants 
were  entitled  to  receive  the  amount  necessary  to  purchase  the  annuities,  in- 
stead of  having  the  annuities  purchased  for  them.  The  Master  of  the  Itolls, 
Sir  John  ifomilly,  answered  tlie  (picstion  in  the  athrmative.  To  the  same  ef- 
fect, see  nation' V.  May,  L.  R.  3  Ch.  Div.  148  (1870);  Fioper  v.  Roper,  L.  R. 
3  Ch.  Div.  714  (1876) ;    In  re  Mabbetl^  L.  R.  (1891)  1  Ch.  707. 


343  THE   DUTIES  OF  A  TRUSTEE.  (Ch.  5 

IIATTON  V.  MAY. 

(In  Chfinrory,  before  Vice  Cbancellor  Malins,  187G.    Law  Reports,  3  Chancery 

Division,  14S.) 

Thomas  Macauley,  by  his  will,  dated  the  26th  of  July,  1872,  gave 
all  the  residue  and  remainder  of  his  property,  estate,  and  effects,  to 
George  Hatton  and  Sidney  Smith,  their  executors,  administrators, 
and  assigns,  upon  trust  to  convert  the  same  into  money,  and  to  pur- 
chase thereout  from  Government  an  annuity  of  £100.  sterling  for 
Mary  Ann  May  during  her  life,  and  which  he  gave  to  her  accordingly; 
and  after  directing  three  other  annuities  to  be  purchased  in  the  like 
manner  for  each  of  his  three  daughters,  he  declared  that  the  said 
Mary  Ann  May  and  his  three  daughters  should  not,  nor  should  either 
of  them,  nor  should  their  personal  representatives  respectively,  in 
case  of  the  death  of  either  of  them  before  such  purchase,  be  entitled 
to  elect  to  receive  the  price  or  value  of  the  said  annuity  in  lieu  of 
it;  and  he  declared  that  all  and  every  the  annuities  given  by  his  w^ill 
to  Mary  Ann  May  and  his  said  daughters  were  so  given  for  their 
sole  and  separate  benefit  and  disposal  as  the  same  should  be  from  time 
to  time  payable  independently  and  exclusively  of,  and  so  as  not  to 
be  subject  to  the  control,  debts,  or  engagements  of  any  husband,  and 
to  be  paid  to  the  respective  proper  hands  of  the  said  Mary  Ann  May 
and  his  said  daughters  respectively,  and  their  respective  receipts  given 
when  and  as  the  same  respectively  became  due  and  payable,  to  be 
alone  and  only  proper  discharges  for  the  same ;  and  he  expressly 
declared  that  if  any  of  the  said  annuitants  should  at  any  time  sell, 
alien,  assign,  transfer,  incumber,  or  in  any  wise  dispose  of  or  an- 
ticipate the  said  respective  annuities,  or  any  part  thereof,  then  and 
in  such  cases  respectively,  and  immediately  thereupon,  the  same  an- 
nuity to  such  annuitant  should  cease,  determine,  and  be  void,  and 
should  sink  into  and  become  part  of  the  residue  of  his  personal  estate 
and  effects.  And  upon  further  trust  that  his  said  trustees  should  pay 
all  the  residue  of  his  trust  moneys,  after  making  such  purchases  and 
deductions  as  aforesaid,  and  all  other  (if  any)  his  personal  estate, 
property,  and  effects,  unto  the  conductor  of  an  orphan  asylum  therein 
named,  to  be  applied  for  the  use  of  such  asylum. 

By  a  codicil  to  his  will,  dated  the  26th  of  July,  1872,  the  testator 
appointed  Mary  Ann  May  and  Sarah  Morgan  to  be  trustees  and  ex- 
ecutors of  his  will  jointly  with  G.  Hatton  and  S.  Smith.  He  died 
shortly  afterwards,  and  left  a  considerable  amount  of  property  be- 
yond what  was  specifically  becjueathed  by  his  will.  All  the  annui- 
tants were  alive.  The  bill  was  filed  by  G.  Hatton,  S.  Smith,  and 
Sarah  Morgan,  against  Mary  Ann  May  for  the  administration  of  his 
estate,  and  for  a  declaration  as  to  the  rights  of  Mary  Ann  ]\Iay  in 
respect  of  her  annuity. 

The  defendant,  Mary  Ann  May,  had  required  her  co-executors,  the 
plaintiffs,  to  pay  her  such  a  sum  as  would  be  recjuired  to  purchase  a 


Sec.  1)        TO   CONVEY   RES   AS   CESTUI   QUE   TRUST   MAY   DIRECT.  349 

Government  annuity  of  £100.  for  her  life,  but  the  plaintiffs  were  ad- 
vised that  it  was  doubtful  whether  she  was  entitled  to  this  i)a\ment. 

MAI.INS,  V.  C.  The  cardinal  rule  in  construing  wills  is  to  look  at 
the  whole  of  a  will,  in  order  to  ascertain  the  intention  of  the  testator. 
If  the  direction  to  the  trustees  to  purchase  an  annuity  for  Mary  Ann 
May  had  stood  alone,  it  would,  according  to  the  authorities,  have  en- 
titled her  to  be  paid  the  price  for  which  a  Government  annuity  could 
be  purchased ;  but  to  ascertain  whether  that  is  the  effect  of  the  be- 
quest, you  must  look  at  the  whole  of  the  will,  and  if  you  see  that 
such  is  not  the  intention  of  the  testator,  but  that  there  is  an  event 
specified  upon  the  happening  of  which  the  annuity  is  to  be  cut  short, 
then  you  must  pay  the  amount  to  the  annuitant  so  long  only  as  her 
title  to  it  endures.  By  the  first  clause  the  annuitant  gets  so  much 
money  as  will  buy  the  annuity,  but  the  testator  subsequently  shows 
his  anxiety  that  this  annual  sum  shall  be  a  personal  benefit  for  her. 
He  says  that  Mary  Ann  May,  and  each  of  his  three  daughters,  "shall 
not,  nor  shall  either  of  them,  be  entitled  to  elect  to  receive  the  price 
or  value  of  the  annuity  in  lieu  of  it;"  but  notwithstanding  that,  it 
has  been  argued  that  the  annuitant  is  entitled  to  have  a  sum  of  money 
in  lieu  of  the  annuity.  Then  he  goes  on  to  direct  that  all  the  annuities 
given  by  his  will  "are  so  given  for  their  sole  and  separate  benefit  and 
disposal,  as  the  same  shall  be  from  time  to  time  payable,  independ- 
ently and  exclusively  of  and  so  as  not  to  be  subject  to  the  control, 
debts,  or  engagements  of  any  husband  she  may  marry."  If  he  had 
stopped  there  it  would  have  been  like  the  case  of  Woodmeston  v. 
Walker  [2  Russ.  &  My.  197] .  It  would  have  been  a  gift  to  the  separate 
use  of  each  annuitant,  and  Mary  Ann  May  might  simply  have  elected 
to  take  the  money ;  but  then,  in  order  to  carry  his  intention  into 
effect  more  fully,  he  declares  "that  if  any  of  the  said  annuitants  shall 
at  any  time  sell,  alien,  assign,  transfer,  incumber,  or  in  any  wise 
dispose  of  or  anticipate  the  said  respective  aimuities,  or  any  part 
thereof,  then  and  in  such  cases  respectively,  and  immediately  there- 
upon, the  same  annuity  to  such  annuitant  shall  cease,  determine,  and 
be  void,  and  shall  sink  into  and  become  part  of  the  residue  of  my 
personal  estate  and  effects."  Now,  therefore,  he  has  commenced  by 
giving  an  absolute  annuity,  but  he  has  declared  she  shall  not  take  it 
if  she  aliens,  assigns,  transfers,  incumbers,  or  in  any  wise  disposes 
of  it,  and  if  she  does  then  it  is  to  be  void  and  to  sink  into  the  residue. 

This  is  clearly  settled,  that  if  you  give  an  annuity  till  the  happen- 
ing of  any  specified  event,  that  is  the  measure  of  its  limitation.  It 
may  be  cut  short  by  a  conditional  limitation  which  abridges  the 
estate.  That  is  distinctly  laid  down  in  Fearnc  [page  10,  note  "h"], 
where  the  difference  is  stated  between  a  contingent  remainder  and 
a  conditional  limitation  so  that  the  gift  is  to  her  for  life,  and  if  she 
does  certain  acts,  then  the  interest  is  to  be  cut  short.  That  is  a  con- 
ditional limitation,  that  in  case  she  alienates  the  annuity  it  is  to  be 
void  and  to  go  over.     What  sort  of  law  is  it,  then,  wdiich  says  that 


350  THE   DUTIES  OF  A  TRUSTEE.  (Ch.  5 

a  testator  has  no  power  to  prevent  an  annuitant  from  having  a  power 
of  alienation?  The  case  of  Shee  v.  Hale  [13  Ves.  404],  which  is 
not  by  any  means  the  llrst  case  laying  down  the  rule,  was  a  bequest 
of  an  annuity  with  a  condition  that  it  should  fall  into  the  residue 
upon  alienation  or  insolvency,  and  the  condition  was  held  to  be  broken 
in  taking  the  benefit  of  the  Insolvent  Act,  and  the  annuity  was  for- 
feited. 

That  rule  having  been  solemnly  settled,  I  have  always  relied  upon 
it  as  one  of  the  fixed  principles  of  the  law,  and  T  have  never  known  it 
questioned. 

Now,  this  case  is  not  a  new  one.  The  point  was  argued  in  Day  v. 
Day  [1  Drew.  569 1.  I  need  not  say  that  I  entertain  the  highest  re- 
spect for  the  decisions  of  my  learned  predecessor,  but  that  case  was 
produced  in  argument  in  the  case  of  Power  v.  Hayne  [Law  Rep.  8  Eq. 
262],  and  having  carefully  looked  into  the  case  and  fully  considered 
the  judgment,  and  delayed  giving  my  decision,  I  deliberately  came  to 
the  conclusion  that  I  could  not  follow  it,  because  I  thought  that  if 
the  trustees  had  paid  over  the  value  of  the  annuity  to  Charles  Day, 
and  he  had  afterwards  become  bankrupt,  they  could  have  no  answer 
whatever  to  the  persons  entitled  under  the  gift  over.  The  views  I 
then  expressed  are  to  my  mind  conclusive.  That  case  decides  that 
you  can  give  an  annuity  with  a  provision  for  its  going  over  in  case 
of  alienation. 

The  will  says  there  is  an  annuity  to  be  purchased,  which  is  to  be 
paid  to  Mary  Ann  j\Iay  for  her  separate  use,  and  if  she  commits  any 
act  of  alienation  it  is  to  fall  into  the  residue.  What  is  the  difficulty 
of  carrying  that  direction  into  effect?  My  attention  was  drawn  to 
the  case  of  Woodmeston  v.  Walk-er,  by  Mr.  Cutler,  in  wdiich  the  very 
same  question  arose.  It  is  a  case  I  well  remember,  for  I  heard  all 
the  arguments  in  it,  and  they  made  considerable  impression  upon  me 
at  the  time.  The  case  was  this:  a  testator  directed  that  one-thu'd 
of  his  residuary  estate,  should  be  invested  in  the  purchase  of  an  an- 
nuity for  the  life  of  his  sister,  who  was  unmarried,  and  this  annuity 
he  gave  to  her  separate  use  and  independently  of  any  husband  she 
might  marry,  and  without  power  to  sell  or  assign  the  same  by  an- 
ticipation. The  Master  of  the  Rolls,  Sir  J.  Leach,  refused  to  order 
payment  to  the  legatee  of  the  price  which  would  be  paid  for  the  an- 
nuity, on  the  ground  that  the  restraint  against  alienation  would  be 
valid  in  case  of  future  coverture.  That  decision  was  reversed  by 
Lord  Brougham,  who  said  [2  Russ.  &  My.  204]  :  "If  a  testator  be 
desirous  to  give  an  annuity  without  the  power  of  anticipation,  he  can 
only  do  so  by  declaring  that  the  act  of  alienation  shall  tletermine  the 
interest  of  the  legatee  and  create  a  new  interest  in  another.  There 
is  no  gift  over  in  the  present  case,  which  is  that  of  a  mere  naked 
prohibition,  not  guarded  by  any  clause  of  forfeiture."  He  also  pre- 
viously says:  "Where  the  subject  is  a  personal  chattel,  it  is  impossible 
so  to  tie  up  the  use  and  enjoyment  of  it  as  to  create  in  the  donee  a 


Sec.  1)        TO   CONVEY    UES   AS   CESTUI   QUE   TRUST   MAY    DIRECT.  351 

life  estate  which  he  may  not  alien.  Although  the  ohject  may  be  ob- 
tained indirectly,  in  a  manner  consistent  with  the  known  rules  of  law, 
by  annexing  to  the  gift  a  forfeiture  or  defeasance  on  the  happening 
of  a  particular  event,  or  on  a  particular  act  being  done,  *  *  * 
and  upon  the  happening  of  the  event  or  the  doing  of  the  act  a  new 
and  distinct  estate  accrues  to  a  different  individual."  That  is  exactly 
what  this  testator  has  done.  The  annuitant  is  not  to  have  the  right 
to  take  money  instead  of  the  annuity,  and  it  is  to  be  inalienable. 
Nothing  can  be  better  expressed  or  more  consonant  with  every  rule 
of  law.  The  cases  cited  by  Mr.  Pearson,  such  as  Barnes  v.  Rowley 
[3  Ves.  305],  and  Bayley  v.  Bishop  [9  Ves.  6],  where  property  was 
given  absolutely,  have  nothing  to  do  with  this  question.  Such  was 
the  case  of  Bradley  v.  Peixoto  [3  Ves.  324].  There  the  words  were: 
"I  give  to  my  son  the  dividends  arising  from  £1620.  bank  stock  for 
his  support  during  his  life,  but  at  his  decease  the  bank  stock  to  de- 
volve to  his  heirs,  executors,  administrators  and  assigns;"  and  he 
went  on  to  say  that  if  his  son  attempted  to  dispose  of  the  principal 
such  attempt  should  exclude  him  from  any  benefit  in  his  will,  and  he 
should  forfeit  the  wdiole  of  his  share,  principal  and  interest,  which 
should  be  divided  among  his  other  children.  The  son  filed  a  bill  that 
he  might  be  declared  entitled  to  the  bank  stock  absolutely.  ^  The 
Master  of  the  Rolls  said  it  was  laid  down  as  a  rule  long  established, 
that  where  there  is  a  gift,  with  a  condition  inconsistent  with  and  re- 
pugnant to  such  gift,  the  condition  was  wholly  void.  He  considered 
that  the  condition  in  that  case  was  inconsistent  with  the  interest  given 
to  the  legatee  in  the  stock,  and  was  therefore  void.  No  wonder  that 
was  held  to  be  void ;  if  this  were  a  gift  to  ^Mary  Ann  :May  absolutely 
I  should  say  the  same. 

I  think  the  whole  case  was  decided  by  me  in  Power  v.  Hayne  [Law 
Rep.  8  Eq.  262],  in  a  manner  I  am  still  satisfied  with.  I  decided  that 
case  after  much  consideration.  The  arguments  were  heard  on  the 
7th  of  ^lay,  and  I  took  till  the  28th  before  I  delivered  my  judgment, 
and  during  that  time,  as  my  habit  is,  I  looked  into  all  the  cases  cited. 
My  decision,  therefore,  was  the  result  of  careful  investigation  of  the 
authorities,  and  I  desire  to  be  understood  as  adhering  to  that  decision, 
and  repeating  the  rule  of  law  I  there  laid  down,  that  in  the  case  of 
a  gift  to  a  tenant  for  life,  either  to  A.  until  a  certain  event  should 
happen  or  for  a  wdiole  life,  with  a  proviso  th.at  it  shall  cease  on  the 
happening  of  a  particular  event,  the  restriction  is  clearly  effectual. 

If  there  could  have  been  any  doubt  in  this  case  it  is  removed  by 
Allen  v.  Jackson  [1  Ch.  Div.  3991.  That  is,  to  my  mind,  completely 
in  accordance  with  the  rules  I  have  laid  down.  There  a  testatrix 
gave  the  income  of  certain  property  to  her  niece  and  her  niece's 
husband  during  their  joint  lives,  and  to  the  survivor  during  his  or 
her  life,  with  a  proviso  that  if  the  husband  survived  his  wife  and  mar- 
ried again  the  property  should  go  over.  The  husband  survived  his 
wife  and  married  atrain.     It  was  there  held  that  this  was  a  limitation 


352  THE   DUTIES   OF   A   TRUSTEK.  (Ch.  5 

to  the  husband  while  remaining  a  widower,  that  the  proviso  was 
valid,  and  upon  the  husband  marrying  again  the  gift  over  took  effect. 

I  should  take  the  present  case  to  be  a  conditional  limitation  cutting 
short  the  first  gift.  Mary  Ann  May  is  not  to  take  the  annuity  in 
money  and  is  not  to  alienate.  Mr.  Pearson's  construction  would 
entitle  her  to  take  the  whole,  so  that  she  might  spend  the  money  the 
day  after  receiving  it,  leaving  nothing  for  her  support  during  the 
remainder  of  her  life. 

My  opinion  is  that  she  is  entitled  to  the  annuity  only  for  her  life, 
or  until  alienation. 

The  decree  will  be  that  an  annuity  is  to  be  purchased  for  Mary 
Ann  May  in  the  name  of  the  trustees,  and  to  be  paid  to  her  for  life 
or  until  she  shall  alien,  assign,  transfer,  incumber,  or  in  any  wise 
dispose  of  or  anticipate  the  annuity,  or  any  part  thereof.^ 


HAYES  V.  OATLEY. 

(In  Chanopry,  before  Sir  Jolm  Roniilly,  Master  of  the  Rolls,  1872.     Law 

Reports,  14  Eq.  1.) 

By  virtue  of  two  indentures,  dated  the  11th  of  December,  1838, 
a  mortgage  debt  of  i  12,000.  became  vested  in  William  Jones  and 
William  Henry  Oatley  upon  trust  as  to  £2,000.,  part  thereof,  for 
Walter  Stubbs  absolutely,  and  as  to  £10,000.,  the  residtie  thereof,  upon 
trust  to  pay  the  interest  thereof  to  Elizabeth  Stubbs,  the  wife  of  Walter 
Stubbs,  during  his  life,  and  after  her  death,  to  Walter  Stubbs  during 
his  life,  and,  subject  as  aforesaid,  upon  trust  for  such  persons  as 
Elizabeth  Stubbs  should  by  deed  or  will  appoint,  and  in  default  of 
appointment  for  Walter  Stubbs,  his  executors,  administrators,  and  as- 
signs. 

Elizabeth  Stubbs  by  her  will,  dated  the  23d  of  June,  1838,  expressed 
her  wish  that  her  husband  should  enjoy  her  income  during  his  life, 
after  paying  two  annuities  of  £150.  and  £50.  as  therein  mentioned; 
and  at  his  decease  she  gave  pecuniary  legacies,  amounting  in  the 
whole  to  more  than  £5,000.,  out  of  the  fund  of  £10,000.  She  made 
a  codicil  to  her  will,  dated  the  7th  of  October,  1844,  in  the  followmg 
terms :  "To  prevent  any  doubt  on  the  construction  of  my  will,  I 
hereby  declare  that  the  legacies  given  by  my  said  will  are  to  be  pay- 
able and  are  to  be  paid  only  out  of  the  sum  of  £5,000.  (so  far  as  the 
said  sum  of  £5,000.  may  extend),  one  moiety  or  half  part  of  the  sum 
of  £10,000.,  over  which  I  have  an  appointing  power  under  my  settle- 
ment (subject  to  the  interest  for  life  of  my  said  husband)  ;  and  as 
to  the  remaining  full  moiety  of  the  said  sum  of  £10,000.,  I  hereby 
appoint,  give,  and  bequeath  the  same  remaining  moiety,  being  £5,000., 

8  Rower  v.  Ilayne,  L.  R.  8  Eq.  262  (ISGO) ;  In  re  Draper,  57  L.  J.  Cb.  (N.  S.) 
942  (1S8S),    Contra,  Day  v.  Day,  1  Drew.  569  (1853). 


Sec.  1)        TO    CONVEY   RES   AS   CESTUI   QUE   TRUST   MAY   DIKECT.  353 

to  my  said  clear  husl)and,  Walter  Stubbs;  all  my  estate  whatsoever 
and  wlicresoever  and  all  the  residue  of  my  personal  estate,  I  ^dve, 
devise,  and  bequeath  to  my  said  husband,  Walter  Stubbs,  his  heirs, 
executors  and  administrators;  I  appoint  the  said  Walter  Stubbs  to 
be  executor  of  my  will  and  codicil;  and  I  confirm  my  said  will  in 
all  respects  save  as  it  may  be  repugnant  to  this  codicil ;  and  I  revoke 
the  will  so  far  as  it  is  repugnant  or  inconsistent  with  this  codicil." 

Elizabeth  Stubbs  died  on  the  12th  of  October,  1844,  and  Walter 
Stubbs  proved  her  will.  After  her  death  the  mortgage  debt  of 
f  12,000.  was  paid  off  by  the  persons  entitled  to  the  equity  of  redemp- 
tion in  the  property  subject  thereto.  A  receipt  for  the  debt  was  given 
by  William  Jones  and  William  Henry  Oatley,  but  the  money  was 
actually  received  by  Walter  Stubbs,  who  retained  thereout  the  sums 
of  i:2,dOO.  and  £5.000.  to  which  he  was  entitled,  and  invested  £3,000., 
part  of  the  remaining  £5.000.,  to  answer  the  legacies  given  by  the 
will  of  his  wife.  The  residue  of  the  last  mentioned  £5,000.,  amount- 
ing to  £2,000.,  was  not  invested  by  Walter  Stubbs,  and  by  reason  of 
his  insolvency  was  subsequently  lost. 

Walter  Stubbs  died  in  1865,  and  William  Jones  in  1869. 

In  1871  this  suit  was  instituted  by  William  Hayes  and  Mixvy,  his 
wife  (the  latter  of  whom  was  a  legatee  under  the  will  of  Elizabeth 
Stubbs),  against  William  Henry  Oatley  and  the  legal  personal  rep- 
resentative of  William  Jones,  to  compel  them  to  make  good  the  sum 
of  £2,000.  which  had  been  lost. 

Lx)RD  RoMiLivY,  M.  R.  I  entertain  no  doubt  that  the  trusts  of  the 
settlement  were  completely  discharged  when  the  trustees  paid  over 
the  £10,000.  to  the  executor  of  Mrs.  Stubbs.  If  it  were  not  so,  the 
trustees  would  have  to  carry  into  effect  all  the  limitations  of  her  will. 
I  think  that  it  is  a  mistake  to  say  that  her  will  did  not  come  into 
operation  till  the  death  of  her  husband. 

The  bill  must  be  dismissed  with  costs. * 


BUSK  V.  alda:\i. 

(In  Chnnoery,  before  Sir  Richard  JIalins,  Vice  Cliancollor,  1S74.    Law  Reports, 

19  E(i.  16.) 

Demurrer.  Thomas  Benson  Pease  by  will  dated  in  1839,  after  be- 
queathing to  defendants  £10,000.  upon  trust  to  invest  and  pay  the 
income  to  his  daughter,  Susannah  Pease,  afterwards  Susannah  Busk, 

9  Re  Philbrick's  Settlement,  34  L.  J.  Cli.  368  (1865) ;  Re  Hoskin's  Trusts, 
L.  R.  5  Cli.  Div.  229  (1877).  on  appeal  L.  R.  6  Ch.  Div.  281  (1877). 

In  6  Ch.  Div.  281.  at  pa.i,'e  283.  .James.  K  .J.,  said:  "I  may  add  that,  if  the 
merits  had  to  be  gone  into.  I  should  hold  it  to  be  established  beyond  all  (jues- 
tion  that  where  a  feme  covert,  or  .•my  other  i)erson  having  a  general  power  of 
appointment  over  a  fund  of  personalty,  makes  an  appointment  of  the  fund 
by  will  and  appoints  an  executor,  the  executor,  when  he  has  proved  the  will, 
is  entitled  to  nveive  the  appointed  fund." 

Kkn.Tu.— 23 


354  THE   DUTIES   OP   A   TRUSTEE.  (Ch.  5 

for  life,  with  power  to  her  to  appoint  the  fund  to  her  children  "in 
such  manner"  as  she  should  direct,  died  May  24,  1840.  Mrs.  Busk- 
died  in  1873.  By  will  dated  in  1868  she  appointed  that  the  fund  of 
£10,000.  should  be  held  upon  certain  trusts  in  favor  of  her  children 
and  directed  it  to  be  paid  to  trustees  named  in  her  will  and  that  they 
should  either  permit  the  same  to  remain  in  its  actual  state  of  invest- 
ment, or  should  sell  and  invest  in  the  manner  therein  mentioned, 
which  gave  a  greater  range  of  investments  than  allowed  by  the  wdl  of 
Thomas  I'enson  Pease. 

The  trustees  of  Mrs.  Busk's  will  filed  a  bill  against  the  trustees  of 
Thomas  Benson  Pease's  will  and  prayed  that  defendants  be  ordered 
to  pay  the  ilO,000.  to  them.     Defendants  demurred. 

Si/ Richard  Mauns,  V.  C,  after  .stating  the  facts,  continued: 
So  far  as  the  appointment  by  Mrs.  Busk  to  trustees  is  concerned, 
it  has  been  held  by  a  long  series  of  decisions  that  it  is  a  valid  execu- 
tion of  the  power  of  appointment,  and  that  the  appointment  is  just 
as  good  as  if  it  had  been  made  direct  to  the  objects  of  the  power. 
But  this  bill  is  filed  for  the  purpose  of  having  the  fund  transferred 
from  the  trustees  in  whose  cor.trol  it  is  now  placed  to  those  to  whom 
it  is  appointed.  For  what  object  this  is  desired  I  cannot  understand. 
It  is  said  that  it  would  be  very  convenient  to  have  the  fund  placed 
in  the  hands  of  the  new  trustees.  But  I  cannot  look  at  that.  I  must 
consider  what  was  intended  to  be  done  by  the  original  testator;  and 
I  can  see  that  such  a  transfer  as  is  asked  would  violate  his  intention. 
I  asked  Mr.  Cookson  whether  he  contended  that  a  mere  appointment 
of  new  trustees  by  the  donee  of  the  power  would  have  been  valid, 
and  he  pressed  upon  me  that,  on  the  authority  of  the  cases  cited,  the 
court  was  bound  to  hand  over  the  fund  to  the  new  trustees. 

Now  there  is,  first  of  all,  the  case  of  Thornton  v.  Bright  [2  My. 
&  Cr.  230],  which  simply  decides  that  an  appointment  to  persons  not 
an  object  of  a  power  as  trustee  for  a  person  who  is  an  object  is  a 
valid  exercise  of  the  power;  and  there  are  also  Kenworthy  v.  Bate 
[6  Ves.  793],  Trollope  v.  Linton  [1  S.  &  S.  477],  Cowx  v.  Foster 
|1  J.  &  H.  30],  and  Fowler  v.  Cohn  [21  Beav.  360 1.  r>ut  those  were 
all  cases  where  there  was  real  estate  to  be  converted  and  no  person 
appointed  to  effect  the  conversion,  and  it  was  decided  that  in  that 
case  an  appointment  to  trustees  to  sell  and  convert  and  distribute  the 
proceeds  amongst  the  objects  of  the  power  was  a  valid  execution  of 
the  power.  But  I  am  unable  to  see  how  that  can  be  an  authority  for 
taking  away  a  fund  from  trustees  who  are  fit  and  proper,  and 
handing  it  over  to  others  who  may  not  be  so  fit,  in  a  case  where  the 
duty  of  the  trustees  is  simply  to  hold  the  fund. 

I  am  asked  to  treat  these  cases  as  establishing  a  general  law,  that 
where,  in  all  cases,  a  fund  is  settled  upon  trust  for  a  mother  for  life, 
and  then  upon  trust  for  her  children  as  she  should  appoint,  and  she 
appoints  to  trustees  for  her  children,  the  first  trustees  are  bound  to 
hand  over  the  fund  to  the  trustees  appointed  by  the  daughter.     Here 


Sec.  1)        TO   CONVEY    RES   AS   CESTUI    QUE  TUUST   MAY    DIRECT,  355 

nothing  more  is  required  than  that  some  one  should  hold  the  fund, 
and  it  is  suggested  that  I  am  bound  to  hand  it  over  to  the  second 
trustees. 

I\Tr.  Cookson  says  that  I  decided  the  point  in  Ferricr  v.  Jay  [L. 
R.  10  Eq.  550].  But  what  I  there  decided  was,  that  where  there 
was  a  general  and  a  special  power,  and  an  appointment  was  made 
of  both  funds  together  to  trustees  in  trust  to  pay  debts  and  to  apply 
the  residue  to  the  objects  of  the  special  power,  the  appointment  must 
be  read  reddendo  singula  singulis,  and  the  fund  coming  under  the 
general  pow'er  applied  in  the  first  instance  to  the  purposes  to  which 
the  fund  subject  to  the  special  power  was  not  applicable.  I  agreed 
with  the  decision  in  Cowx  v.  Foster,  that  the  circumstance  of  direct- 
ing debts  to  be  paid  only  meant  that  they  were  to  be  paid  out  of  the 
particular  portion  of  the  mixed  fund  which  could  be  so  applied. 

I  did  also  in  that  case  undoubtedly  say  that  the  second  trustees 
were  the  most  fit  persons  to  have  charge  of  the  fund ;  but  I  did 
not  say  that  where  it  was  a  mere  question  which  of  two  sets  of  trus- 
tees should  hold  a  particular  fund,  the  court  would  necessarily  hand 
it  over  to  the  second  set  in  point  of  date. 

The  demurrer  will  be  allowed.^" 


ONSLOW  V,  WALLIS. 

(In  Chancery,  before  Lord  Chancellor  Cottenham,  1849.    1  Hall  &  Twell,  513.) 

By  indentures  of  lease  and  release,  dated  in  July,  1837,  A.  L.  Sarel 
conveyed  some  freehold  hereditaments  to  Wallis,  in  fee  simple,  upon 
trust  to  convey  them  to  such  persons  and  in  all  respects  as  Louisa 
Sarel,  the  wife  of  A.  L.  Sarel,  should  by  deed  appoint ;  and  in  default 
of  appointment,  upon  trust  to  apply  the  rents  to  her  separate  use 
during  her  coverture ;  and  after  the  decease  of  her  husband,  in  case 
he  died  in  her  lifetime  (an  event  which  happened),  then  upon  trust 
to  convey  the  hereditaments  to  the  use  of  Louisa  Sarel,  her  heirs  and 
assigns;  but  if  she  should  die  in  the  lifetime  of  her  husband,  then  the 
trustee  was  to  stand  seized  of  the  hereditaments  in  trust  for  the  ex- 
ecutors and  administrators  of  Mrs,  Sarel,  as  part  of  her  personal 
estate. 

\\'allis  died  in  April,  1842,  whereupon  the  hereditaments  in  ques- 
tion descended  to  his  eldest  son,  the  defendant  in  this  suit. 

Mrs.  Sarel  survived  her  husband,  and  died  in  September,  1847. 
The  answer  alleged,  that  she  died  without  an  heir.  She  made  a  will 
in  June,  1847,  by  which  she  devised  certain  hereditaments  to  one  of 
the  plaintiffs  in  this  suit,  in  fee,  and  then  continued  as  follows :    "I 

10  Von  Broekdorff  v.  Malcolm,  L.  R.  SO  Ch.  Div.  172  (1 88.^3)  :  In  re  Tyssen, 
L.  R.  (1891)  1  Oh.  56  (1893).  See  Scotney  v.  Lomer,  L.  R.  31  Ch,  Div.  380,  3S6 
(188G). 


356  THE    DUTIES   OF  A  TRUSTEE.  (Cll.  5 

give  certain  legacies,  which  I  have  mentioned  and  specified  in  a  cer- 
tain menioranckim  in  writing,  marked  with  the  letter  A,  and  signed 
by  me,  which  I  direct  my  trustees  and  executors,  hereinafter  named, 
to  pay  out  of  my  personal  estate.  I  give,  devise  and  bequeath  all 
other  the  messuages,  lands,  tenements,  hereditaments  and  real  estate, 
and  all  the  personal  estate  and  effects  of  or  to  which  I  shall  at  my 
death  be  seized,  possessed,  or  entitled  at  law  or  in  equity,  unto  [the 
plaintiffs]  their  heirs,  executors,  administrators  and  assigns  respec- 
tively, on  trust  that  they  and  the  survivor  of  them,  and  the  heirs,  ex- 
ecutors, administrators  or  assigns  of  such  survivor,  do  and  shall,  with 
all  convenient  speed,  make  sale  and  absolutely  dispose  of  and  convert 
into  money,  and  call  in  and  receive  all  the  same  real  and  personal 
estate  respectively,  and  do  and  shall  stand  possessed  of  and  interested 
in  the  moneys  to  arise  from  the  sale  thereof,  in  trust,  in  the  first  place, 
to  pay  thereout  all  costs,  charges,  and  expenses  of  and  attending  the 
execution  of  the  trusts  of  this  my  will,  and  my  debts,  funeral  and 
testamentary  expenses  and  legacies;  and  then  in  payment  of  the 
legacies  given  by  me  in  a  certain  memorandum,  signed  by  me,  and 
marked  with  the  letter  'A.'  " 

The  memorandum  marked  with  the  letter  "A"  had  not  been  dis- 
covered. 

It  was  alleged  by  the  bill,  and  admitted  by  the  answer,  that  there 
were  debts  of  the  testatrix,  which  her  personal  estate  was  not  suffi- 
cient to  pay.  The  trustees  under  the  will  applied  to  the  defendant  to 
convey  the  hereditaments  to  them  as  such  trustees,  but  he  insisted 
that  he  was  entitled  to  hold  them  for  his  own  benefit,  subject  to  the 
payment  of  such  portion  of  the  charges  created  by  the  will,  as  were 
properly  chargeable  thereon,  and  which  he  offered  to  pay. 

The  bill  prayed  that  the  defendant  might  be  decreed  to  convey  and 
assure  to  them  [the  trustees  under  Mrs.  Sard's  will],  as  such  dev- 
isees aforesaid,  the  hereditaments  comprised  in  the  deeds  of  July, 
1837. 

The  cause  was  heard  by  the  Vice  Chancellor  of  England,  on  the 
16th  of  January,  1849,  when  he  ordered  a  conveyance  to  be  executed 
by  the  defendant,  according  to  the  prayer  of  the  bill. 
The  defendant  now  appealed  from  that  decision. 
The:  Lord  Chancellor.  No  case  similar  to  this  has  been  cited, 
where  the  owner  of  property  which  was  on  trust,  has  given  it  to 
somebody  else ;  and  whether  it  was  so  given  beneficially,  or  not,  is  a 
question  which  the  defendant  has  no  right  to  inquire  into.  It  is  not 
like  the  case  of  Burgess  v.  Wheate  [1  Eden,  177,  1  W.  Bl.  123].  The 
only  reason  why  the  trustee,  under  such  circumstances  as  existed  in 
that  case,  is  allowed  to  hold  property,  is  because  there  is  nobody  to 
take  it  from  him;  it  does  not  belong  to  any  person  whom  the  law 
recognizes  as  having  a  right  to  ask  for  the  execution  of  the  trust. 
Now  here  the  original  owner  undoubtedly  had  a  right,  as  against  the 
trustee,  to  direct  what  he   should  do   with  the  property;    he  was   a 


Sec.  1)   TO  CONVEY  RES  AS  CESTL'I  QUE  TRUST  MAY  DIRECT.      357 

mere  naked  trustee.  The  testatrix  in  this  case  had  a  right  to  do  what 
she  pleased  with  the  beneficial  interest,  and  she  did  by  her  will  direct 
the  legal  estate  to  be  conveyed,  or  at  least  gave  the  property,  to  the 
trustees  of  her  will.  The  question  is,  whether  the  defendant,  who 
appears  to  be  the  trustee  of  the  legal  estate,  has  any  right  to  inquire 
for  what  purpose  these  parties  are  to  hold  the  trust  property.  It  is  a 
gift,  in  trust,  it  is  true ;  but  it  is  the  appointment  of  persons  who  are 
to  stand  in  the-  place  of  the  original  owner,  as  against  the  trustee. 
Then  why  is  the  beneficial  interest,  which  is  by  the  operation  of  the 
rule  of  law,  in  Burgess  v.  Wheate,  to  enure  to  the  benefit  of  trustees, 
to  enure  to  the  benefit  of  this  trustee?  There  is  no  w^ant  of  persons 
authorized,  as  against  him.  to  require  a  transfer  of  the  beneficial 
interest.  Suppose  the  testatrix  had  simply  directed  that  the  estate 
should  be  transferred,  and  had  appointed  new  trustees,  and  directed 
the  existing  trustee  to  convey  to  those  who  are  trustees  under  the 
will,  could  the  trustee  of  the  legal  estate  dispute  the  title  of  the  trus- 
tees under  the  will,  because  they  might  or  might  not  have  the  means 
of  carrying  into  efifect  the  trusts  of  the  will  ? 

The  real  question  is,  whether  it  is  regulated  by  the  doctrine  in 
Burgess  v.  Wheate.  I  think  that  it  is  not  regulated  by  the  doctrine 
in  Burgess  v.  Wheate  at  all,  because  that  case  proceeds  on  the  fact 
of  there  being  no  persons  having  a  right  to  control  the  legal  estate, 
and  here  there  are  persons  authorized  to  control  the  legal  estate. 

I  do  not  take  exactly  the  view  which  the  Vice  Chancellor  seems  to 
have  done,  because  he  seems  to  have  considered  that  the  matter  would 
depend  on  the  presumed  intention  of  the  testatrix.  For  that  purpose, 
you  are  to  assume  she  intended  that  the  paper  A  should  not  be  pro- 
duced, and  therefore  there  would  be  a  failure  of  her  declared  inten- 
tion. Therefore,  if  there  is  any  trustee  who  is  to  have  the  benefit  of 
the  doctrine  in  Burgess  v.  Wheate.  the  trustees  under  the  will  are  to 
have  it.  It  cannot  be  considered  that  the  testatrix  had  any  such  view 
at  all.  It  must  be  presumed,  she  intended  that  the  purposes  declared 
by  her  will  should  be  carried  into  eflfect.  Those  purposes  have  failed, 
in  consequence  of  that  paper  A  not  being  produced;  it  may  be  pro- 
duced hereafter,  or  it  may  not.  I  do  not  proceed  on  that  ground,  but 
I  proceed  on  this :  That  there  are  persons  appointed  by  the  owner  of 
the  property,  to  wdioni  the  property  is  to  be  conveyed.  They  are  the 
only  parties  having  a  right  to  it;  whether  or  not  they  have  power 
afterwards  to  dispose  of  all  the  beneficial  interest,  is  a  matter  to  which 
the  defendant  Wallis,  as  mere  owner  of  the  legal  estate,  has  nothing 
wdiatever  to  do. 

This  seems  to  me  to  be  a  case  which  does  not  fall  within  the  doc- 
trine of  Burgess  v.  Wheate,  so  far  as  the  defendant  Wallis  is  con- 
cerned ;  and  therefore  the  direction  of  the  Vice  Chancellor  for  a  con- 
veyance, under  the  terms  of  the  will,  is,  I  think,  a  proper  decree,  and 
it  must  be  affirmed,  with  costs. ^^ 

II  S.  C.  1  Mac.  &  G.  50G. 


358  THE   DUTIES  OF  A  TRUSTEE.  (Ch.  5 

In  re  LASHMAR. 
^lOODY  V.  PExXFOLD. 

(In  the  Supreme  Court  of  Judicature,  Chancery  Division,  ISOO.     Law  Reports 

[1891]  1  Ch.  258.) 

Appeal  from  Mr.  Justice  Kekewich. 

Peter  Lashmar,  by  his  will  dated  in  1858,  devised  a  freehold  house 
to  three  trustees  in  trust  for  Thomas  Lashmar  and  Jane,  his  wife, 
for  their  lives  and  then  for  his  nephew,  John  Lashmar,  for  life,  and 
on  his  death  unto  Charles  Lashmar,  nephew  of  John  Lashmar,  ab- 
solutely in  fee  simple.  Peter  Lashmar  died  in  November,  1859.  John 
Lashmar  died  in  March,  1875.  Thomas  Lashmar  died  in  April,  188L 
and  Jane  in  November,  1889.  Charles  Lashmar  died  in  Aut,nist,  1808, 
leaving  a  will  by  which  he  gave  to  John  Lashmar  and  John  Moody 
all  his  property  upon  trust  to  pay  to  his  wife  Ann  Lashmar,  the 
income  during  her  life,  and  after  her  death,  upon  trust  for  his  son 
George  Hartnup.  He  appointed  John  Lashmar  and  John  Moody  his 
executors. 

George  Hartnup  was  illegitimate  and  died  intestate  and  without 
issue  in  July,  1880.    Ann  Lashmar  died  in  October,  188(1. 

Shortly  after  the  death  of  Jane  Lashmar  in  1889,  Moody,  the  sur- 
viving trustee  of  Charles  Lashmar,  applied  to  defendant  William 
Penfold,  the  surviving  trustee  of  Peter  Lashmar,  for  a  conveyance, 
and  that  being  refused  the  plaintiff  took  out  an  originating  summons 
to  determine  his  right  to  such  a  conveyance. 

This  summons,  after  being  adjourned  into  court,  was  heard  March 
27,  1890,  by  Mr.  Justice  Kekewich,  who  made  a  decree  in  favor  of 
plaintiff.     The   defendant   appealed. 

LiNDLEY,  L.  J.^^  In  this  case  a  controversy  has  arisen  as  to  which 
of  two  trustees  is  to  keep  certain  property  which  was  not  intended  for 
either  of  them.  Mr.  Penfold  is  in  the  happy  position  of  having  got 
it,  and  the  question  is  whether  anybody  is  entitled  to  take  it  away 
from  him,  and,  in  particular,  whether  Mr.  Moody  is  entitled  to  take 
it  away  from  him.  The  learned  Judge  has  decided  this  question  in 
Mr.  Moody's  favor,  and  when  the  appeal  was  opened  and  for  a  con- 
siderable time  afterwards  I  was  disposed  to  think  that  that  decision 
was  right.  But  Mr.  Hadley  has  convinced  me,  and  further  reflection 
has  confirmed  the  conviction,  that  the  decision  is  wrong,  and  that  the 
person  who  is  in  possession  must  keep  what  he  has  got. 

The  question  arises  in  this  way.  Under  the  will  of  Peter  Lashmar, 
which  was  dated  in  1858,  Charles  Lashmar  was  entitled  to  an  equi- 
table reversion  in  fee  in  certain  property,  the  legal  estate  of  which 
was  vested  in  "William  Penfold,  who  was  the  surviving  trustee  of 
l^eter  Lashmar's  will.     Charles  Lashmar  made   a  will,   which  I  will 

-2  The  coufurrini  opinions  of  Bowen  and  Fry,  L.  JJ.,  are  omitted,  and  a 
portion  of  tlie  opinion  of  Lindley,  L.  J. 


Sec.  2)         DUTY    TO    PUT   CESTUI    QUE    TRUST    IW    POSSESSION.  359 

shortly  read.  [His  Lordship  then  stated  this  will,  and  continued:] 
Now  the  question  is,  upon  that  will,  what  interest  (if  any)  the  sur- 
viving trustee,  William  Moody,  takes  in  this  property;  and  I  cannot 
find,  after  spelling  over  the  will  with  all  the  care  I  can,  that  he  is,  or 
rather  was,  anything  more  than  a  bare  trustee  for  George  Hartnup. 
It  is  quite  obvious  that,  as  soon  as  Mrs.  Jane  Lashmar,  the  surviving 
tenant  for  life,  died  and  George  Hartnup  attained  twenty-one,  that 
Moody  had  no  duty  whatever  to  perform.  He  had  a  power  of  sale 
during  the  life  of  the  tenant  for  life,  and  also  during  the  minority 
of  George  Hartnup;  but  after  the  tenant  for  life  was  dead  and  Hart- 
nup had  attained  twenty-one,  he  w^as  simply  a  bare  trustee,  having 
no  duty  whatever  to  perform.     *     *     * 

Mr.  Iladley  has  convinced  me  that  upon  the  true  construction  of 
this  will,  Moody,  the  trustee  under  it,  having  no  duty  whatever  to 
discharge,  and  having  nothing  on  earth  to  do  with  the  property,  can- 
not take  the  house  in  question  from  Penfold,  who  has  got  it.  It 
appears  to  me  that  the  true  way  to  regard  this  w^ill  is  to  look  through 
Moody  as  nobody.  So  it  comes  to  this.  The  property  is  in  Penfold 
on  tru.st  for  nobody  at  all.  Therefore,  he  keeps  it;  and  accordingly 
the  appeal  must  be  allowed. 

LiNDLEY,  L.  J.  *  *  *  I  think,  perhaps,  I  ought  to  say  with 
respect  to  Onslow  v.  Wallis  [1  Mac.  &  G.  506],  on  which  I  think 
Mr.  Justice  Kekewich  decided  this  case,  that  there  the  trustee  had 
duties  to  perform,  and  if  this  gentleman  had  any  duties  to  perform 
our  decision  would  have  been  the  other  way.  It  is  because  he  has 
none  that  we  decide  as  we  have  done. 


SECTION    2.— TRUSTEE'S    DUTY   TO    PUT    CESTUI    QUE 
TRUST  IN  POSSESSION  OF  THE  TRUST  ESTATE. 


TIDD  V.  LISTER  and  Others. 

(In  Chaneory,  before  Sir  John  Loach,  Vice  Chancellor,  1820.     5  Jfaddock.  420.') 

Thi-;  Vice  Chancellor.^'  The  testator  in  this  case,  after  giving 
to  his  wife  and  daughter  the  personal  occupation  of  the  house  in 
which  he  resided,  and  the  use  of  his  furniture,  has  devised  and  be- 
queathed his  wdiole  real  and  personal  property  to  certain  trustees  upon 
trust,  in  the  first  place  to  pay  his  funeral  expenses  and  debts;  then 
to  keep  the  buildings  upon  his  estate,  consisting  of  freehold,  copyhold 
and  leasehold,  insured  against  loss  or  damage  by  fire ;   next  to  pay  the 

i«  Only  the  opinion  of  the  conrt  is  given. 


360  THE    DUTIES   OF  A   TRUSTEE.  (Ch.  5 

premiums  of  certain  policies  of  assurance  on  the  lives  of  his  two  sons, 
which  are  to  form  a  provision  for  their  widows  and  children ;  then 
to  pay  annuities  of  sixty  guineas  each  to  his  two  sons ;  and  lastly, 
he  has  given  the  surplus  income  between  his  wife  and  daughter  during 
their  joint  lives,  and  the  whole  surplus  income  to  the  survivor  for 
life;  and  in  case  his  two  sons  should  survive  his  wife  and  daughter, 
then  he  gives  to  them  his  whole  real  and  personal  estate.  Soon  after 
•the  death  of  the  testator,  a  bill  was  filed  in  this  court  for  the  execution 
of  the  trusts  of  his  will;  and  in  the  progress  of  that  suit,  the  debts 
and  funeral  expenses  were  paid  out  of  the  personal  estate,  and  the 
residue  of  the  personal  estate  was  secured  in  the  name  of  the  Ac- 
countant General,  and  is  of  an  amount  sufficient  to  satisfy  the  two 
annuities  of  sixty  guineas  each,  given  to  the  sons,  who  do  accordingly 
receive  the  same  from  the  Accountant  General.  The  premiums  of 
the  policies  of  assurance  continue  to  be  paid  out  of  the  rents  and 
profits  of  the  estates.  The  mother  died  in  the  year  1819,  and  the 
daughter,  who  is  become  entitled  to  the  whole  surplus  income  of  the 
real  and  personal  estate,  has  married.  The  mother,  the  two  sons,  and 
two  other  persons,  were  the  trustees  named  in  the  will ;  one  of  these 
persons  is  dead;  the  other  has  but  little  interfered  in  the  trusts  of 
the  will ;  one  of  the  sons  is  abroad,  and  the  management  of  the 
property  has  principally  devolved  upon  the  son,  William  Lister.  The 
present  bill  is  filed  by  the  daughter  and  her  husband,  praying,  a  con- 
veyance, surrender  and  assignment  of  th.e  legal  estate  from  the  trus- 
tees;  and  that  the  plaintiffs  may  be  let  into  possession,  or  that  a 
receiver  be  appointed.  The  prayer  for  the  conveyance,  surrender 
and  assignment  was  abandoned  at  the  bar,  but  it  was  insisted  that  it 
is  a  matter  of  course  in  a  court  of  equity,  to  divest  a  trustee  of  the 
management  of  the  trust  property,  and  to  deliver  the  possession  to  the 
cestui  que  trust  for  life.  And  that  the  only  difficulty  here  was,  that 
the  trustees  are  in  the  first  place  directed  to  pay  certain  premiums 
upon  policies  of  assurance,  which  remained  to  be  provided  for  out  of 
the  rents  and  profits  of  the  estates ;  and  that  to  remove  this  difficulty 
the  daughter's  husband  was  willing  to  invest  in  the  cause  a  sum  suffi- 
cient to  answer  the  amount  of  those  annual  payments ;  and  the  case 
of  Blake  V.  L5unbury  [1  A'es.  Jr.  IDJJ  was  cited  as  an  authority  for 
this  doctrine. 

My  first  impressions  were  strongly  against  the  existence  of  any 
such  rule.  It  is  perfectly  plain  from  the  continuing  nature  of  this 
trust  that  the  testator  intended  that  the  actual  possession  of  the  trust 
property  should  remain  with  the  trustees ;  and  it  did  appear  to  me  a 
singular  proposition,  that  if  a  testator  who  gives  in  the  first  instance 
a  beneficial  interest  for  life  only,  thinks  fit  to  place  the  direction  of 
the  property  in  other  hands,  which  is  an  obvious  means  of  securing 
the  provident  management  of  that  property  for  the  advantage  of 
those  who  are  to  take  in  succession,  that  it  should  be  a  principle  in 
a  court  of  equity  to  disappoint  that  intention,  and  to  deliver  over  the 


Sec.  2)         DUTY    TO    PDT   CESTUI   QUK    TRUST   IN    POSSESSION. 


;gi 


estate  to  the  cestui  que  trust  for  life,  unprotected  against  that  bias 
whicli  he  must  naturally  have  to  prefer  his  own  immediate  interest 
to  the  fair  rights  of  those  who  are  to  take  in  remainder.  Inde- 
pendently of  the  purpose  of  management  of  the  property,  a  testator 
may  be  considered  in  the  case  of  a  female  cestui  que  trust  for  life,  as 
having  a  further  view  to  her  personal  protection  in  the  case  of  her 
marriage. 

The  husband  can  only  compel  the  trustee  to  account  to  him  for 
the  wife's  income  by  the  aid  of  a  court  of  equity;  and  this  court,  in 
certain  cases  of  misconduct  by  the  husband,  will  not  compel  the  trus- 
tee to  account  to  the  husband,  but  will  secure  the  income  for  the  bene- 
fit of  the  wife.  It  is  manifest  that  this  protection  would,  to  some 
extent,  be  prejudiced,  if  the  husband  were  put  into  the  possession  of 
the  trust  estate. 

The  case  of  Blake  v.  Bunbury  is  no  authority  for  the  proposition 
for  which  it  was  cited.  It  was  not  the  case  of  a  cestui  que  trust  for 
life,  but  the  case  of  a  legal  tenant  for  life,  subject  to  a  term  for 
raising  a  charge.  There  was  there  no  purpose  but  to  raise  the  charge, 
and  the  legal  tenant  for  life,  securing  the  charge,  had  upon  every 
principle  a  right  to  the  possession.  There  may  be  cases  in  which  it 
may  be  plain  from  the  expressions  in  the  will,  that  the  testator  did 
not  intend  that  the  property  should  remain  under  the  personal  man- 
agement of  the  trustee.  There  may  be  cases  in  wdiich  it  may  be  plain 
from  the  nature  of  the  property,  that  the  testator  could  not  mean  to 
exclude  the  cestui  que  trust  for  life,  from  the  personal  possession  of 
the  property,  as  in  the  case  of  a  family  residence.^*  There  may  be 
very  special  cases  in  which  this  Court  would  deliver  the  possession  of 
the  property  to  the  cestui  que  trust  for  life,  although  the  testator's 
intention  appeared  to  be  that  it  should  remain  with  the  trustee,  as 
where  the  personal  occupation  of  the  trust  property  was  beneficial 
to  the  cestui  que  trust,  there  the  court  taking  means  to  secure  the  due 
protection  of  the  property  for  the  benefit  of  those  in  remainder, 
would,  in  substance,  be  performing  the  trust  according  to  the  inten- 
tion of  the  testator.  The  present  case  is  not  one  of  special  circum- 
stances. It  is  not  the  personal  occupation,  but  the  management  of 
the  property,  that  is  sought  by  this  bill. 

The  cestui  que  trust  for  life  is  a  feme  covert.  Two  of  the  trustees 
are  the  persons,  who,  if  they  survive  the  wife,  will  be  entitled  to  this 
property.     The  testator  has  thought  fit  to  place  his  property  in  their 

i-t  Baylies  v.  Baylies,  1  Coll.  537  (1S4-1) ;  Powys  v.  Blagrave,  Kay,  495  (1854), 
affirnioti  4  De  G.,  M.  &  G.  448  (1854) ;  Roper  v.  Roper,  2t)  Ala.  247  (1850) ; 
Wiilianison  v.  Wilkins.  14  Ga.  410,  422  (1854)  ;  Wade  v.  Towell.  20  Ga.  045 
(1850) :  Mouutjoy  v.  Lashbrook,  8  Duna  (Ky.)  33  (1839) ;  Campbell  v.  Pres- 
tous,  22  Grat.  (Va.)  390  (1872). 

See,  also.  Kaye  v.  Powel,  1  Yes.  Jr.  408  (1791);  Jenkins  v.  Milford.  1  J. 
&  W.  029  (1820);  Clarke  v.  Earl  of  Onnonao.  Jacob,  lOS  (1821):  Denton  v. 
Denton.  7  Beav.  388  (1844);  IJornor  v.  'Wlu'olwri.ulit,  2  Jnr.  (N.  S.)  307  (1850); 
Hoskins  v.  Campbell.  W.  N.  59  (1809);  Etcbells  v.  Williamson,  W.  N.  61 
(1809) ;    Young  v.  Miles'  Ex'rs,  10  B.  Mon.  (Ky.)  287  (1850). 


3G2  THE   DUTIES   OF   A  TRUSTEE.  (Cll.  5 

hands,   and  out  of  the  management  of  the  cestui  que  trust  for  life, 
and  I  have  no  authority  to  revoke  his  will. 

There  is,  however,  in  this  bill,  a  prayer  for  a  receiver,  and  allega- 
tions of  misconduct  to  support  that  prayer.  These  allegations  are 
denied  by  the  answer,  and  not  proved.  lUit  I  find  in  the  answer,  that 
the  accounting  trustee,  William  Lister,  expresses  himself  to  be  willing 
that  a  receiver  should  be  appointed.  If  the  plaintiffs  desire  a  re- 
ceiver, they  are  entitled  to  it,  upon  this  consent  of  the  trustee.^^ 


TAYLOR  V.  TAYLOR. 

(Tn  Chancery,  before  Sir  George  Jessei.  Master  of  the  Rolls,  1875.    L,aw  Re- 
ports, 20  Eq.  2D7.) 

James  M.  Taylor  died  in  April,  1870.  By  his  will  he  made  certain 
devises  and  bequests  to  two  trustees  for  the  benefit  of  his  wife  during 
her  life.  She  had  entered  into  contracts  for  granting  leases  of  por- 
tions of  the  real  estate  comprised  in  the  trust.  [An  application  was 
now  made  in  the  suit  of  Taylor  v.  Taylor  that  the  contracts  might 
be  approved  by  the  Court,  and  leases  granted  in  pursuance  thereof.] 

Mr.  Ince,  for  the  trustees: 

Secondly,  the  application  is  wrong  in  point  of  substance.  Mrs. 
Taylor  has  no  power  to  grant  leases  under  the  will,  nor  is  she  a  per- 
son "entitled  to  the  possession  or  to  the  receipt  of  the  rents  and 
profits"  within  the  meaning  of  the  Leases  and  Sales  of  Settled  Estates 
Act,  §  32. 

Mr.  Bagshawe,  O.  C,  in  reply: 

The  words  "entitled  to  the  possession  or  to  the  receipt  of  the  rents 
and  profits"  are  a  conventional  expression  used  throughout  the  Act 
to  indicate  the  beneficial  owner  of  the  property.  Grey  v.  Jenkins  [26 
Beav.  351].  I\Irs.  Taylor  is  the  beneficial  owner,  and  upon  making 
application  to  the  Court,  would,  according  to  the  ordinary  practice, 
be  let  into  possession  of  the  property. 

[He  also  referred  to  Tidd  v.  Lister.] 

Sir  G.  JRSSEL,  M.  R.^''  The  question  which  I  have  to  consider  is, 
the  proper  construction  to  be  put  on  the  32d  section  of  the  Leases  and 
Sales  of  Settled  Estates  Act  [19  &  20  Vict.  c.  120  (1856)]  under  the 
circumstances  I  am  about  to  mention.     *     *     * 

Now,  the  material  part  of  the  ;)2d  section  of  the  Act  is  this:  "It 
shall  be  lawful  for  any  person  entitled  to  the  possession  or  to  the 
receipt  of  the  rents  and  profits  of  any  settled  estates  for  an  estate  for 
life,"  to  lease  for  any  term  not  exceeding  twenty-one  years,  "provided 
that  every  such  demise  be  made  by  deed,  and  the  best  rent  that  can 

iMMgU  V.  Yauiiban,  12  Beav.  517  ( 18.50) :  Davis  v.  Hunter.  2.3  Ga.  172 
(18.57)  ;    Dick  t.  ritchford,  21  N.  C.  480  (18:J7) ;    Wiclcham  v.  Berry,  55  Pa.  70 

(1867). 

16  Only  a  part  of  tl.e  (pinion  is  given. 


Sec.  2)  DUTY    TO    PUT   CESTUI    QUE    TRUST    IN    POSSESSION. 


363 


reasonably  be  obtained  be  thereby  reserved,  without  any  fine,  or  other 
benefit  in  the  nature  of  a  fine,  which  rent  shall  be  incident  to  the 
immediate  reversion,"  the  demise  not  to  be  made  without  imjjeach- 
ment  of  waste,  and  to  contain  covenants  for  the  payment  and  receipt 
of  the  rent,  and  such  other  usual  and  proper  covenants  as  the  lessor 
shall  think  fit,  and  a  condition  for  re-entry.  That  is,  therefore  giving 
to  the  person  making  the  demise  a  very  great  power  of  management, 
because  in  the  case  of  the  trustees  being  appointed  managers  by  the 
will,  it  is  enabling  the  person  said  to  be  the  beneficial  tenant  for  life 
not  only  to  lease  without  their  consent,  but  to  impose  such  terms  on 
the  lessee  as  the  tenant  for  life,  or  so-called  tenant  for  life,  shall  think 
fit.  It  is  a  very  strong  interference,  therefore,  with  the  management 
of  the  estate,  and  the  question  is,  whether  the  Legislature  intended 
that  to  apply  when  the  tenant  for  life  was  not  the  manager  of  the 
estate.  I  do  not  think  the  Legislature  did  so  intend.  In  the  case  I 
have  before  me  the  management  is  in  the  trustees.  They  are  clearly 
by  the  express  terms  of  the  will,  the  persons  to  receive  the  rents. 
They  are  the  persons  to  pay  the  charges  of  insurance,  repairs,  collec- 
tions, and  other  necessary  outlay,  besides  the  annuities,  and  so  on. 
Clearly,  therefore,  as  far  as  the  words  and  meaning  of  the  will  are 
concerned,  they  are  to  have  the  management,  and  are  to  dispose  of 
and  apply  the  net  annual  income  and  rents  that  may  be  left  to  the 
lady,  and  for  her  separate  use  if  she  should  be  married.  As  far  as 
the  will  is  concerned,  and  as  far  as  the  express  intention  of  the  tes- 
tator can  be  gathered  from  his  words,  the  trustees  are  managers  of 
the  estate. 

Then  it  is  said,  and  truly  said,  that  there  are  certain  cases  in  which, 
although  similar  words  have  occurred  in  wills,  the  Court  of  Chancery 
has  thought  fit  to  put  the  tenant  for  life  in  possession.  I  agree,  but 
T  say  it  is  subject  to  the  judicial  discretion  of  the  Court.  It  is  not  the 
right  of  the  tenant  for  life  to  be  in  possession.  The  tenant  for  life 
is  not  entitled  to  the  possession,  but  the  court  has  a  power,  notwith- 
standing similar  expressions  in  a  will,  to  say  that,  looking  to  the 
whole  will,  the  intent  can  be  fully  accomplished  by  putting  the  tenant 
for  life  in  possession,  taking  security  from  the  tenant  for  life  either 
in  the  shape  of  an  undertaking  (if  that  shall  be  thought  sufficient) 
or,  in  some  instances,  other  substantial  security,  that  what  remains  to 
be  done  under  the  will  for  the  benefit  of  persons  other  than  the  tenant 
for  life,  shall  be  duly  performed.  The  tenant  for  life  in  such  a  case 
is  not  a  person  entitled  to  possession,  but  a  person  who  may  obtain 
possession  by  judicial  process,  and  to  whom  the  trustees  ought  not 
to  hand  over  the  possession  unless  either  by  the  leave  of  the  court, 
or,  if  they  choose  to  act  without  the  leave  of  the  court,  then  by  taking 
such  security  as  would  indemnify  thom  hereafter  from  any  breach 
by  the  tenant  for  life  of  those  duties  which  the  trustees  ought  them- 
selves to  perform.  Therefore,  in  such  a  case  as  I  have  before  me, 
I  am  of  opinion  that  this  lady  is  not  entitled  to  the  possession. 


364  THE   DUTIES   OF  A  TRUSTEE.  (Ch.  5 

Then  the  next  point  is  as  to  the  receipt  of  the  rents  and  profits. 
That  is  the  same  thing.  The  trustees  are  the  persons  who,  by  the 
will,  are  directed  to  receive  the  rents  and  profits.  I  agree  that  I 
might  upon  terms  take  the  receipt  from  them.  I  might  possibly  do 
so  even  in  this  case,  but  then  the  tenant  for  life  is  not  entitled  to  the 
receipt.  She  may  obtain  it  through  the  intervention  of  the  court,  but 
she  is  not  a  person  entitled,  in  my  opinion,  to  the  receipt.  The  very 
notion  that  this  Act  of  Parliament  was  to  allow  a  person  entitled  to 
the  residue  of  the  rents  and  profits  to  take  away  the  management  and 
letting  of  the  estate  from  the  trustees  while  they  remained  in  actual 
management  and  in  receipt  of  the  rents,  is,  according  to  my  judg- 
ment, wholly  repugnant  to  the  ordinary  proceedings  of  the  Legisla- 
ture in  not  interfering  with  the  testamentary  dispositions  of  men 
more  than  is  absolutely  necessary.  I  think  that  the  Act  has  no  ap- 
plication, and  that  there  is  no  power  of  this  sort,  and  the  application 
must  be  refused.-^'^ 


E.  A.  COX  and  Wife,   BARBARA,   v.  ARETUS   WILLIAMS 

and  Others. 

(Supreme  Court  of  North  Carolina,  1859.    58  N.  C.  150.) 

Cause  removed  from  the  Court  of  Equity  of  Jones  County. 

Lewis  Williams,  by  his  will  devised  and  bequeathed,  among  other 
things,  as  follows,  viz:  "Having  no  confidence  whatever  in  E.  A. 
Cox,  the  husband  of  my  daughter,  Barbara,  I  give  and  bequeath  and 
devise  unto  my  son,  Aretus  Williams,  his  heirs,  executors,  admin- 
istrators and  assigns,  forever,  the  following  property,  that  is:  The 
tract  of  land  whereon  I  now  reside,  subject  to  the  life  estate  of  my  wife 
therein,  and  a  negro  woman,  named  Sarah,  in  special  trust  and  con- 
fidence, nevertheless,  that  he  and  they  will  hold  the  same  for  the  sole 
and  separate  use  and  benefit  of  my  daughter,  Barbara  Cox,  and  during 
her  natural  life,  in  such  manner  that  the  same  shall  in  no  event  be 
subject  to  the  control  or  liable  for  the  debts,  or  contracts,  of  her 
husband,  E.  A.  Cox,  and  I  wish  Aretus,  or  his  executors,  etc.,  to  allow 
his  sister,  Barbara,  either  on  the  said  place  to  live,  or  rent  it  out," 
with  ulterior  limitations  of  the  trust  to  the  children  of  the  said  Bar- 
bara. In  a  subsequent  clause,  he  gives  to  his  wife  a  number  of  slaves 
for  her  life,  with  remainder  to  Aretus  Williams,  in  trust,  for  the  sole 
and  separate  use  of  Barbara  Cox,  as  in  the  preceding  clause.  Mrs. 
Irena  Williams,  by  deed,  properly  authenticated,  surrendered  to  Are- 
tus Williams  her  life  estate  in  the  land  and  slaves,  given  her  by  the 
will  of  her  husband,  to  hold  the  same  as  trustee  for  Mrs.  Cox,  ac- 
cording to  the  trusts  declared  in  the  foregoing  will. 

Cox,  the  husband,  and  his  wife,  filed  this  bill  against  the  trustee, 

17  Affirmed  L.  11.  3  Ch.  Div.  14r.  (1876), 


Sec.  2)       DUTY  TO  ruT  cestui  que  trust  in  possession.  3G.J 

setting  out  that  it  would  greatly  promote  the  comfort  of  the  family 
of  Mrs.  Cox,  and  preserve  and  increase  the  value  of  the  land  and 
slaves  intended  for  her  benefit,  for  her  and  her  husband,  to  have  the 
possession  of  the  property  for  the  purpose  of  carrying  on  farming 
operations,  and  pray  that  a  decree  may  pass  the  court  to  that  effect. 
The  defendant  demurred  to  the  bill,  generally,  for  the  want  of 
equity. 

The  cause  was  set  down  for  argument  on  the  demurrer,  and  sent 
to  this  court  by  consent. 

PilARSON,  C.  J.  The  object  of  the  bill  is  to  have  the  land  and 
negroes  put  into  the  possession  of  the  feme  plaintiff,  so  as  to  let  her 
have  the  use  of  the  property  for  the  purpose  of  carrying  on  a  farm, 
without  the  control  and  superintendence  of  the  trustee,  and  the  equity 
is  put  on  the  ground,  that  she  would  thus  be  furnished  with  a  com- 
fortable home,  and  her  support  and  maintenance  be  better  provided 
for  than  by  allowing  the  property  to  continue  under  his  management. 
The  defendant  has  filed  a  demurrer,  and,  in  support  of  it,  urges: 
that  if  the  property  is  put  into  the  possession  of  the  feme  plaintiff, 
it  would,  as  matter  of  course,  be  subject  to  the  control  and  manage- 
ment of  her  husband,  the  other  plaintiff,  and  thereby  defeat  the  pur- 
pose of  the  trust,  and  be  in  direct  violation  of  the  expressed  directions 
of  the  testator. 

It  is  clear,  from  a  perusal  of  the  will,  that  the  testator  did  not 
intend  that  the  property,  the  use  of  which  is  given  to  his  daughter, 
should,  in  any  event,  be  subject  to  the  control  of  Cox;  for  this  rea- 
s  son,  he  gives  the  property  to  his  son,  so  that  it  may  be  under  his 
management;  and,  to  remove  all  room  for  doubt,  he  sets  out,  in  so 
many  words,  that  he  does  so,  because  "he  has  no  confidence  whatever 
in  E.  A.  Cox,  the  husband  of  his  daughter." 

In  respect  to  the  land,  he  relaxes,  in  some  degree,  and  gives  to  his 
son  a  discretion  "either  to  let  his  sister  live  on  the  place,  or  rent  it 
out,"  but  this  restricted  discretion  tends  to  show,  the  more  plainly, 
that  in  regard  to  the  negroes,  there  was  to  be  no  discretion,  and  his 
son  was  to  keep  them  under  his  exclusive  management.  So,  it  is 
manifest,  that  the  object  of  the  bill  is  in  direct  contravention  of  the 
trusts  declared  by  the  testator.  See  how  it  would  operate.  Suppose, 
instead  of  merely  permitting  his  sister  "to  live  on  the  place."  which 
is  within  his  discretion,  the  trustee  should  be  required,  by  a  decree  of 
this  Court,  to  let  his  sister  have  possession  of  the  plantation  and  the 
negroes  also;  it  would  become  necessary,  in  order  to  carry  on  the 
farm,  that  horses,  cattle,  farming  utensils,  etc.,  should  be  provided, 
and  as  she  is  under  the  control  of  her  husband,  it  would  follow  that 
the  entire  management  and  control  of  the  concern  would  fall  into  his 
hands. 

A  testator  has  a  right  to  give  his  property  with  such  restrictions, 
and  upon  such  terms,  as  he  sees  proper,  and  the  courts  are  bound  to 
carry  his  intention  into  effect,  unless  there  be  something  in  the  trusts 


366  THE   DUTIES   OF   A   TRUSTEE.  (Ch.  5 

unlawful  and  against  public  policy.  So  that,  so  far  from  showing 
an  equity,  the  plaintififs,  on  their  own  showing,  have  none. 

We  deem  it  unnecessary  to  refer  to  any  authority,  and  put  our  deci- 
sion upon  the  peculiar  circumstances  growing  out  of  the  special  pro- 
visions of  this  will. 

Pkr  Curiam.     Bill  dismissed. 


In  re  WYTHES. 
WEST  V.  WYTHES. 

(In  Chancory,  before  Kekewich,  J.,  1S93.     Law  Reports  [1^03]  2  Ch.  3C9.) 

Adjourned  summons. 

George  Wythes,  of  Bickley  Park,  Kent,  and  Copt  Hall,  Essex,  by 
his  will,  dated  the  r)th  of  September,  1882,  appointed  executors  and 
trustees,  and  devised  to  them  all  his  real  estate,  upon  trust,  as  to  his 
Bickley  Park  estate,  during  the  life  of  George  E.  Wythes,  the  eldest 
of  his  two  grandsons,  out  of  the  rents  and  profits  to  provide  for  the 
education  of  the  said  George  E.  Wythes  until  he  should  attain  twenty- 
one,  and  to  accumulate  any  rents  and  profits  not  so  applied,  and  upon 
his  attaining  that  age  to  pay  the  rents  and  profits  of  the  Bickley  Park 
estate  to  him  during  his  life,  or  until  he  should  become  a  bankrupt, 
or  should  assign,  charge,  or  incumber,  or  attempt  or  afifect  to  as- 
sign, charge  or  incumber,  the  same  rents  and  profits,  or  some 
part  thereof,  or  should  do  or  sufifer  something  whereby  the  same 
or  some  part  thereof  would,  through  his  act  or  default,  or  by 
the  action  or  process  of  law  or  otherwise,  if  belonging  absolutely  to 
him,  become  vested  in -or  payable  to  some  other  person  or  persons; 
and  after  the  determination  of  the  trust  in  favor  of  such  grandson 
in  his  lifetime  the  trustees  were  to  apply  the  rents  and  profits  in  their 
discretion  for  the  maintenance  and  support  of  such  grandson  and  his 
wife  (if  any),  and  child  or  children  and  other  issue,  and  accumulate 
the  unapplied  residue ;  and  after  the  death  of  such  grandson  the 
trustees  were  to  stand  possessed  of  the  Bickley  Park  estate  in  trust 
for  his  child  or  children  as  he  should  by  deed  or  will  appoint,  and  if 
there  were  no  such  children,  upon  the  trust  declared  concerning  the 
testator's  Copt  Hall  estate  in  favor  of  his  grandson  Ernest  J.  Wythes 
and  his  issue.  The  testator  then  devised  his  Copt  Hall  estate  upon 
trusts  in  favor  of  his  grandson  Ernest  J.  Wythes,  corresponding  with 
the  trusts  of  the  Bickley  Park  estate  in  favor  of  his  grandson  George 
E.  Wythes.  The  testator  empowered  the  trustees  and  trustee  of  his 
will,  "at  their  and  his  own  uncontrolled  discretion,"  during  the  con- 
tinuance of  the  trusts  of  his  will  relating  thereto,  "to  maintain,  man- 
age, and  improve  all  or  any  part  or  parts  of  his  real  estates,  and  lay 
out  all  or  any  of  the  surplus  rents  and  profits  directed  to  be  accumu- 


Sec.  2)         DUTY    TO    I'UT   CESTDI    QUE    TRUST   IN    POSSESSION. 


3(J 


lated  as  aforesaid  in  the  maintenance,  management,  and  improvement, 
by  buildings,  drainage,  roads,  or  otherwise  howsoever,  of  the  herechta- 
ments  which  had  produced  such  rents  and  profits,  or  any  other  her- 
editaments held  upon  the  same  trusts,  and  also  to  demise  all  or  any 
part  of  the  real  estates  at  such  rents  and  subject  to  such  covenants, 
and  generally  in  all  respects  upon  such  terms  and  conditions  as  they 
or  he  should  in  their  or  his  uncontrolled  discretion  think  fit."  The 
testator  also  provided  that  the  trustees  or  trustee  of  his  will  should 
have  a  power  of  sale  and  exchange  over  all  or  any  of  the  heredita- 
ments thereinbefore  devised  on  trusts  exercisable  during  the  life  of 
any  tenant  for  life  in  possession  of  the  premises  proposed  to  be  sold 
or  exchanged  with  his  consent  in  writing,  and  as  to  such  premises 
during  the  minority  of  any  child  or  children  of  such  tenant  for  life 
at  the  discretion  of  the  trustees  or  trustee.  And  after  conferring 
large  powers  of  management  on  the  trustees  in  connection  with  his 
business  and  otherwise,  the  testator  authorized  them  to  transact  all 
matters  and  concerns  respecting  his  business  and  estate,  and  to  do 
or  cause  to  be  done  all  acts  relative  thereto  in  such  and  in  the  same 
manner  to  all  intents  and  purposes  as  if  such  trustees  or  trustee  were 
absolutely  interested  therein,  and  as  he  (the  testator)  could  have  done 
if  Hving,  it  being  his  intention  to  give  such  trustees  and  trustee  the 
rmplest  possible  discretionary  power  with  reference  to  the  disposi- 
tion and  management  of  his  business  and  concerns  in  any  contingency, 
howsoever  unforeseen,  which  might  arise,  and  without  such  trustees 
or  trustee  being  answerable  to  any  persons  interested  under  his  will 
for  the  exercise  of  such  discretion  as  was  thereby  given  to  them  or 
him,  or  the  mode  in  which  they  or  he  might  carry  into  effect  any  such 
powers. 

The  testator  died  in  1883.  His  grandson,  George  E.  Wythes,  died 
a  bachelor  in  1887. 

The  Bickley  Park  estate  was  subject  to  a  mortgage  of  £80,000. 
Ernest  J.  Wythes  had  attained  the  age  of  twenty-one  years.  It 
did  not  appear  that  he  had  become  bankrupt,  or  had  in  any  way  as- 
signed, charged,  or  incumbered,  or  afiFected  to  assign,  charge  or 
incumber  the  rents  and  profits  of  the  Bickley  Park  or  Copt  Hall 
estates. 

The  Bickley  Park  estate  was  a  building  estate.  The  Copt  Hall 
estate  was  agricultural  and  was  let  on  lease. 

This  was  a  summons  by  Ernest  James  Wythes  asking  that  he  might 
be  let  into  possession  and  into  the  receipt  of  the  rents  and  profits  of 
the  Bickley  Park  and  Copt  Hall  estates,  on  his  undertaking  to  pay 
and  keep  down,  out  of  the  rents  and  profits  of  the  Bickley  Park  estate, 
the  interest  upon  the  mortgage  for  £80,000;  and  that  the  trustees 
might  deliver  to  him  the  deeds  and  documents  of  title  relating  to  the 
two  estates  respectively,  including  the  counterparts  of  current  leases 
and  agreements  for  leases  (but  not  including  the  probate  of  tb.e  tes- 


368  THE   DUTIES   OF  A   TRUSTEE.  (Cll.  5 

tator's  will  and  a  deed  of  disclaimer  by  one  of  the  persons  named 
as  trustees),  the  applicant  undertaking-  not  to  part  with  such  deeds 
and  documents  without  the  consent  of  the  trustees,  and  to  produce 
them  to  the  trustees  upon  all  reasonable  occasions. 

Kkkkwich,  J.  It  would  not  have  been  satisfactory  to  make  such 
an  order  as  is  asked  in  Chambers.  The  matter  deserved  the  full 
attention  which  it  has  received  in  open  court.  Inasmuch  as  there  was 
no  hostile  'arg-unuMit.  there  is  no  occasion  for  me  to  go  through  the 
authorities,  or  to  reca]iitulate  the  rules  deduciljle  from  them,  or  to 
explain  in  detail  how  far  recent  legislation  has  qualified  them  or  ren- 
dered them  inapplicable.  On  the  other  hand,  it  must  be  borne  in 
mind  that  the  applicant's  case  was  placed  before  the  court  by  the 
Solicitor  General  as  fully  and  with  as  much  precision  as  if  he  was 
encountering  opponents,  as  counsel  for  the  trustees  were  prepared  to 
insist  upon  any  point,  requiring  consideration,  not  thus  brought  out. 
.\nd  not  only  during  the  argument,  but  since,  I  have  thought  it  my 
duty  to  reflect  on  the  case  made  by  the  applicant,  and  to  consider 
all  the  authorities  cited  with  special  reference  to  the  provisions  of 
the  Settled  Land  Acts,  on  which  the  applicant's  case  was  rested. 
My  conclusion  is  that  the  Solicitor  General's  argument  is  sound,  and 
that  the  old  authorities,  of  which  Tidd  v.  Lister  [5  Mad.  429]  may 
be  taken  to  be  the  type,  and  which  were  summarized  by  the  late 
Master  of  the  Rolls  in  Taylor  v.  Taylor  [L.  R.  20  Eq.  297],  may 
be  treated  as  largely,  if  not  altogether,  abrogated  by  the  Acts  just 
mentioned.  I  must  not  be  understood  as  saying  that  even  now  an 
equitable  tenant  for  life,  where  the  trustees  in  whom  the  legal  estate 
is  vested  have  duties  of  management  and  the  like  to  perform,  is 
entitled,  as  a  matter  of  course,  to  be  let  into  possession ;  but  I  intend 
to  hold  that  the  powers  granted  to  and  the  duties  imposed  on  a 
tenant  for  life,  as  defined  by  the  Settled  Land  Acts  (which  definition 
clearly  includes  an  equitable  tenant  for  life  such  as  the  applicant), 
have  raised  a  presumption  in  favor  of  the  title  to  possession  which 
did  not  before  exist,  and  have  made  it  incumbent  on  the  court  to 
provide  that,  if  the  estate  and  the  trustees  can  be  adequately  protected 
by  reasonable  safeguards,  an  ecjuitable  tenant  for  life  shall  be  let 
into  possession  and  be  enabled  personally  to  exercise  these  powers  and 
discharge  these  duties  unless  there  be  found  some  reason  to  the 
contrary  far  more  urgent  than  is  disclosed  by  the  terms  of  this  will. 
The  point  is  in  a  great  measure  new.  It  was  before  Mr.  Justice 
Pearson  in  In  re  Bentley  [54  L.  J.  Ch.  782],  and  I  have  no  doubt, 
from  a  perusal  of  his  judgment,  that  he  would  have  decided  this 
case  as  I  am  now  deciding  it.  The  title  to  possession  once  established, 
the  custody  of  the  title  deeds  appears  to  follow,  unless,  of  course, 
there  is  in  any  particular  case  reason  for  distinction.  As  regards 
the  deeds,  the  case  of  In  re  Ihu-naby's  Settled  Estates,  before  Mr. 
Justice  Stirling   [42  Ch.  Div.  621],  is  distinctly  in  point.     There  was 


Sec.  3)  DUTY   TO    GIVE    INFORMATION    AS   TO    TRUST    ESTATE.  300 

no  opposition  there ;  but  the  arguments  for  the  applicant  were  based 
on  the  provisions  of  the  Settled  Tvand  Acts,  and  the  learned  Judge 
must  be  taken  to  have  assented  to  them  as  I  do.^* 


SECTION  3.— THE  TRUSTEE'S  DUTY  TO  GIVE  INFOR- 
MATION AS   TO   THE  TRUST   ESTATE. 


LOW  V.  BOUVERIE. 

(In  llie  Court  of  Appoiil.  ISOl.     r^w  Reports  [IROll  3  Ch.  R2.) 

The  plaintifY  being  about  to  deal  with  an  equitable  tenant  for  life 
under  a  settlement  by  lending  him  money  upon  the  security  of  his 
life  interest,  caused  inquiries  to  be  made  of  the  defendant,  one  of 
the  trustees  of  the  settlement,  whether  the  life  interest  was  incum- 
bered. Defendant  replied  that  the  life  interest  was  subject  to  cer- 
tain incumbrances,  mentioning  them,  but  did  not  say  there  were  no 
others.  The  plaintiff  then  made  a  loan  to  the  life  tenant  on  the 
security  of  a  mortgage  of  his  equitable  life  interest.  Subsequently  the 
plaintiff  found  that  the  life  interest  was  subject  to  several  incum- 
brances prior  to  his  own,  besides  those  mentioned  by  defendant,  the 
existence  of  which,  it  was  admitted,  the  defendant  had  forgotten 
when  replying  to  the  plaintiff's  inquiries,  though  he  had  had  notice 
of  them.  The  plaintiff's  security  being  insufficient,  he  sued  the  de- 
fendant to  have  him  declared  liable  for  the  amount  due  on  the  se- 
curity, alleging  that  the  loan  was  made  upon  the  faith  of  the  defend- 
ant's representation. 

Mr.  Justice  North  decided  in  favor  of  the  plaintiff  and  the  de- 
fendant appealed. 

LiNDivEY,  L.  J.^*  This  appeal  raises  several  extremely  important 
questions.  First,  it  is  necessary  to  consider  what  are  the  duties  of 
trustees  towards  persons  about  to  deal  with  their  cestuis  que  trust, 
and  who,  before  dealing  with  them,  make  inquiries  of  their  trustees 
as  to  any  assignments  or  incumbrances  known  to  them. 

In  Browne  v.  Savage  [4  Drew.  635,  639],  A^ice  Chancellor  Kin- 
dersley  said  that  trustees  "must,  for  their  own  security,  give  correct 
information,  when  inquiry  is  made  of  them,  whether  they  have  had 
notice  of  any  prior  assignments  affecting  their  trust  property."     Mr. 

18  In  re  Beiitley,  54  L.  J.  Ch.  782  (1SS5) ;  In  re  Batcofs  Settlemeut,  L.  II. 
(1894)  1  Ch.  177  (1893) ;    In  re  Nowon,  I..  R.  (1894)  2  Ch.  297. 

19  The  statement  of  facts  is  conilonsed.  and  the  opinions  of  Bowen  and 
Kay,  L.  .T.T.,  and  a  part  of  tlie  opinion  of  Liudley,  L.  J.,  aye  omitted. 

Kex.Tr.— 24 


370  THE   DUTIES   OF  A   TRUSTEE.  (Ch.  5 

Lewin,  in  his  well  known  work  (Lewin  on  Trusts  [8th  ed.]  p.  704), 
refers  to  that  case  as  an  authority  for  the  proposition  that  trustees 
are  bound  to  answer  such  inquiries.  I  hit  when  this  opinion  is  ex- 
amined it  can  scarcely  be  sui^ported,  and  if  such  a  doctrine  were 
logically  carried  out  it  would  impose  very  serious  duties  upon  trus- 
tees. The  duty  of  a  trustee  is  properly  to  preserve  the  trust  fund, 
to  pay  the  income  and  the  corpus  to  those  who  are  entitled  to  them 
respectively,  and  to  give  all  his  cestuis  (luc  trust,  on  demand,  infor- 
mation with  respect  to  the  mode  in  which  the  trust  fund  has  been  dealt 
with,  and  where  it  is.^o  But  it  is  no  part  of  the  duty  of  a  trustee 
to  tell  his  cestui  que  trust  what  incumbrances  the  latter  has  created, 
nor  which  of  his  incumbrancers  have  given  notice  of  their  respective 
charges.  It  is  no  part  of  the  duty  of  a  trustee  to  assist  his  cestui 
que  trust  in  selling  or  mortgaging  his  beneficial  interest  and  in  squan- 
dering or  anticipating  his  fortune;  and  it  is  clear  that  a  person  who 
proposes  to  buy  or  lend  money  on  it  has  no  greater  rights  than  the 
cestui  que  trust  himself.  There  is  no  trust  or  other  relation  between 
a  trustee  and  a  stranger  about  to  deal  with  a  cestui  que  trust,  and 
although  i)robably  such  a  jierson  in  making  inquiries  may  be  regarded 
as  authorized  by  the  cestui  que  trust  to  make  them,  this  view  of  the 
stranger's  position  will  not  give  him  a  right  to  information  which 
the  cestui  que  trust  himself  is  not  entitled  to  demanrl.  The  trustee, 
therefore,  is,  in  my  opinion,  under  no  obligation  to  answer  such  an 
inquiry.  He  can  refer  the  person  making  it  to  the  cestui  que  trust 
himself. 

I  will  next  take  the  case  of  a  trustee  who  answers  the  inquiry. 
What  in  this  case  is  the  extent  of  his  obligation?  Is  he  bound  to  find 
out  the  facts — bound  to  make  inquiries  of  his  co-trustees  or  of  the  solic- 
itor of  the  trust  ?  Or  is  his  obligation  limited  to  giving  such  information 
as  he  himself  can  give  without  inquiry  or  research?  I  am  not  aware 
of  any  principle  or  authority  which  imposes  upon  him  any  obligation 
to  do  more  than  give  an  honest  answer  to  the  inquiry — that  is  to  say, 
to  do  more  than  answer  to  the  best  of  his  actual  knowledge  and  belief. 
He  may,  no  doubt,  undertake  a  greater  responsibility.  He  may  bind 
himself  by  a  warranty,  or  he  may  so  express  himself  as  to  be  estopped 
from  afterwards  denying  the  truth  of  what  he  said;  but  unless  he 
does  one  or  the  other,  I  do  not  know  on  what  principle  consistent  with 
Derry  v.  Peek  [14  A])p.  Cas.  337]  he  can,  if  he  answer  honestly,  ex- 
pose himself  to  liability.     +     *     * 

20  In  Loud  V.  NVincbcster,  52  Mich.  174.  at  page  IS.'},  17  N.  W.  7S4,  at  page 
787  (l.S,s:{),  Caiupliell,  J.,  sjiys:  "The  bonefii-iaries  under  a  trust  have  the 
right  to  he  kept  infonned  at  all  times  concerning  tlie  management  of  the  trust, 
and  it  is  the  duty  of  the  trustees  to  .so  inform  them."" 

See,  also.  Walker  v.  Symonds.  'A  S\v.  1,  5S  (181.S) ;  Newtou  v.  Askew,  11 
Beav.  145  (1848) ;    In  re  Diutuall,  L.  11.  (1895)  1  Gh.  474. 


Sec.  3)  DUTY    TO    GIVE   INFORMATION    AS   TO    TRUST   ESTATE.  371 

In  re  TILLOTT. 
LEE  V.  WILSON. 

(In  Chancery,  before  Chitty,  .Tustice,  1891.    Law  Reports  [1^^921  1  Ch.  SO.) 

Motion. 

James  Tillott,  by  his  will  dated  the  11th  of  July,  1868,  after  ap- 
pointing trustees  and  executors,  bequeathed  his  leasehold  messuages, 
12  and  13  Amsherst  Road,  Hackney,  to  his  trustees  upon  trust  to 
pay  the  net  proceeds  arising  therefrom  to  his  daughter  Mary  Ann 
Lee,  for  her  life,  and  after  her  decease  upon  trust  for  such  of  her 
children  living  at  her  death,  and  such  issue  then  living  of  her  children 
then  dead  as  either  before  or  after  her  decease  should,  being  males, 
attain  twenty-one,  or,  being  females,  should  attain  that  age  or  marry, 
and  if  more  than  one,  as  tenants  in  common  according  to  the  stocks ; 
and  he  devised  and  bequeathed  the  residue  of  his  estate  to  his  trustees 
upon  trust,  as  to  one  e(|ual  third  part,  to  pay  the  net  annual  income  to 
each  of  his  three  daughters,  the  said  Mary  Ann  Lee  being  one,  during 
their  lives,  and  on  the  death  of  each  daughter,  as  to  the  share  in  which 
she  had  a  life  interest,  upon  similar  trusts  for  their  children  as  those 
above  mentioned  with  regard  to  the  leaseholds  bequeathed  upon  trust 
for  Mary  Ann  Lee. 

The  plaintiff,  being  one  of  the  children  of  Mary  Ann  Lee,  who  was 
still  alive,  commenced  this  action  by  originating  summons,  and  asked 
by  this  summons  that  the  defendant,  as  trustee  of  the  testator's  will, 
might  be  directed  to  sign  and  deliver  to  the  plaintiff  an  authority 
enabling  the  plaintiff,  his  sohcitor  and  agents,  to  ascertain  the  amount 
of  consols  standing  in  the  name  of  the  defendant,  and  what  stop  orders 
and  distringases  (if  any)  had  been  placed  thereon,  and  to  produce 
all  deeds,  papers,  and  documents  in  his  possession  relating  to  the 
property  held  by  the  defendant  as  trustee  of  the  will,  and  to  furnish 
the  plaintiff  with  a  general  account  of  the  residuary  estate. 

By  an  order  made  in  Chambers  dated  the  3d  of  August,  1891, 
it  was  ordered  that  the  defendant  should  forthwith  write  a  letter  to 
the  Bank  of  England  authorizing  the  bank  to  inform  the  plaintiff  as 
to  the  amount  of  consols  standing  in  the  name  of  the  defendant,  or 
to  verify  the  same  by  affidavit,  and  to  produce  for  the  inspection  of 
the  plaintiff  all  deeds  and  documents  relating  to  property  in  which  the 
plaintiff  was  interested  under  the  will  of  the  testator.  The  defend- 
ant accordingly  wrote  the  letter  to  the  bank  as  directed  by  the  order. 

This  was  a  motion  by  the  plaintiff  that  the  above  order  might  be 
discharged  or  varied,  and  that  the  defendant  might  be  directed  to  sign 
and  deliver  to  the  plaintiff,  an  authority  to  the  bank,  enabling  the 
plaintiff'  to  ascertain  what  stops,  notices  or  distringases  had  been 
placed  on  the  consols  standing  in  the  name  of  the  defendant. 

Chittv,  J.  In  pursuance  of  an  order  made  in  Chambers  the  de- 
fendant has  written  a  letter  to  the  bank,  on  the  authority  of  which  the 


372  TUE   DUTIES   OF   A   TRUSTEE.  (Ch.  5 

bank  has  given  to  the  plaintiff  information  which  shows  that  a  sum 
of  stock  is  actually  standing  in  the  name  of  the  trustee.  The  ]:)lain- 
tiff,  however,  requires  something  more;  he  asks  for  an  authority 
which  will  enable  him  to  obtain  information  from  the  bank  as  to 
whether  there  are  any  stop  orders  on  the  fund;  his  object  in  asking 
for  this  information  is  to  deal  with  his  own  share  in  the  trust  estate, 
his  share  being  one-twelfth,  to  which  he  is  entitled  contingently  on 
the  death  of  his  mother.  It  is  no  part  of  the  duty  of  a  trustee  to 
assist  a  cestui  que  trust  in  mortgaging  or,  as  Mr.  Justice  Lindley 
added,  "in  squandering  or  anticipating  his  fortune,"  Low  v.  Bouverie 
[L.  R.  (1891)  3  Ch.  89,  99],  but  a  testator  is  bound  to  give  a  cestui 
que  trust  proper  information  as  to  the  investment  of  the  trust  estate, 
and  where  the  trust  estate  is  invested  on  mortgage,  it  is  not  sufificient 
for  the  trustee  merely  to  say,  "I  have  invested  the  trust  mopey  on  a 
mortgage,"  but  he  must  produce  the  mortgage  deeds,  so  that  the  cestui 
que  trust  may  thereby  ascertain  that  the  trustee's  statement  is  cor- 
rect, and  that  the  trust  estate  is  so  invested.  The  general  rule,  then, 
is  what  I  have  stated,  that  the  trustee  must  give  information  to  his 
cestui  que  trust  as  to  the  investment  of  the  trust  estate.  Where  a 
portion  of  the  trust  estate  is  invested  in  consols,  it  is  not  sufficient 
for  the  trustee  merely  to  say  that  it  is  so  invested,  but  his  cestui  que 
trust  is  entitled  to  an  authority  from  the  trustee  to  enable  him  to  make 
proper  application  to  the  bank,  as  has  been  done  in  this  case,  in  order 
that  he  may  verify  the  trustee's  own  statement;  there  may  be  stock 
standing  in  the  name  of  a  person  who  admits  he  is  a  trustee  of  it, 
which  at  the  same  time  is  incumbered ;  some  other  person  having  a 
paramount  title  may  have  obtained  a  charging  order  on  the  stock  or 
placed  a  distringas  upon  it. 

The  question  here  is  whether  the  cestui  que  trust  is  not  entitled, 
in  addition  to  the  information  that  he  has  obtained,  to  the  further 
authority  to  the  bank  for  information  which  will,  besides  verifying 
the  trustee's  statement,  that  the  trust  money  is  invested  in  the  stock, 
also  enable  him  to  ascertain  that  the  stock  is  free  from  incumbrance 
or  free  from  any  paramount  claim.  In  the  case  before  me  there  is 
no  suggestion  that  the  trustee  is  wrong,  there  is  no  charge  of  any  sort 
made  against  him,  though  Mr.  Wheeler  tried  to  suggest  a  possible 
case  and  did  suggest  that  there  might  be  some  kind  of  paramount 
claim  affecting  the  stock  in  question,  yet  there  is  no  suggestion  to  be 
found  on  the  evidence  in  the  case,  but  still,  I  think,  now  that  the 
matter  has  been  brought  before  me  and  discussed,  that  the  cestui  que 
trust  is  entitled  to  the  further  information  that  he  now  asks  for, 
which  will  enable  him  to  go  back  with  an  authority  from  the  trustee, 
on  which  the  bank  will  show  that  the  fund  is  either  clear  of  all  dis- 
tringases and  the  like  or  that  it  is  not.  I  quite  agree  with  what  fell 
from  counsel  for  the  defendant  that  this  may  give  the  plaintiff  more 
information  than  lie  is  entitled  to  ask,  because  as  there  are  twelve 
shares  in  this  fund,  it  may  be  that  there  are  several  distringases  on 


Sec.  3)       DUTr  to  give  infoumation  as  to  trust  estate.        .><•» 

the  fund  obtained  by  persons  who  have  charges  on  the  contingent 
interest  of  the  other  persons,  and  it  is  clear  that  the  trustee  is  not 
bound  to  give  the  cestui  que  trust  of  one  share  any  information  as  to 
the  deahngs  of  the  other  cestui  que  trust  in  whose  share  he  has  no 
interest,  showing  whether  those  shares  are  or  are  not  incumbranced. 
I  think,  then,  for  these  reasons,  that  there  ought  to  be  a  further  order 
in  the  terms  the  plaintiff  asks  for,  but  the  plaintiff  must  pay  the  costs 
of  the  motion. ^^ 


In  re  POSTLETHWAITE. 

In  re  RICKMAN. 

POSTLETHWAITE  v.  RICKMAN. 

(In  Chancery  before  North,  Justice,  1887.     Law   Reports,  35  Ch.  Div.  722.) 

Joseph  Legg  Postlethwaite,  William  Charles  Rickman,  and  John 
Joseph  Tourle,  were  the  trustees  of  the  will  of  William  Postlethwaite, 
deceased.  Joseph  Legg  Postlethwaite  w^as  beneficially  interested  in 
the  proceeds  of  sale  of  the  testator's  residuary  real  and  personal  es- 
tate. Joseph  Legg  Postlethwaite  was  now  dead.  The  plaintiffs  were 
his  three  children,  and  were  entitled  to  his  interest  under  the  will 
of  William  Postlethwaite.     William  Charles  Rickman  was  also  dead; 

21  It  is  tlie  trustee's  duty  to  keep  clear  and  correct  accounts  of  the  trust 
properly  and  to  be  ever  ready  to  produce  them  for  inspection  by  the  cestui 
que  trust  or  the  cestui  que  trust's  agent.  White  v.  Lady  Lincoln,  8  Ves.  36;j 
(1803) ;  Freeman  v.  Fairlie,  3  Mer.  24,  43  (1817)  ;  Anonymous.  4  Mad.  273 
(1819) ;  Pearse  v.  Green,  1  J.  &  W.  135  (1819)  ;  Clarke  v.  Earl  of  Ormonde, 
Jacob,  108,  120  (1821) ;  Turner  v.  Corney,  5  Beav.  515  (1841) ;  Ottley  v.  Gilby, 
8  Beav.  002  (1845)  ;  Gray  v.  Haig,  20  Beav.  219  (1854) ;  Springett  v.  Dash- 
wood,  2  (Jifl'.  521  (1800) ;  Kemp  v.  Burn,  4  Giff.  348  (18G3)  ;  Wroe  v.  Seed,  4 
Giff.  425  (18(5.3) ;  Green  v.  Brooks,  81  Cal.  328.  22  Pac.  849  (1889) ;  Waterman 
V.  Alden.  144  111.  90,  32  N.  E.  972  (1893)  ;  Blauvelt  v.  Ackerman,  23  N.  J.  Eq. 
495  (1873) ;  Elmer  v.  Loper,  25  N.  J.  Eq.  475,  482  (1875) ;  In  re  Gaston  Trust, 
.35  N.  J.  Eq.  00  (18S2),  affirmed  in  Veghte  v.  Steele,  35  N.  J.  Eq.  348  (1882) ; 
Martin  v.  Williourne.  GO  N.  C.  321  (1872) ;  Walker  v.  Sharpe,  71  N.  C.  257 
(1874);    Libbett  v.  Maultsby,  71  N.  C.  .345  (1874). 

It  is  the  trustee's  duty  to  produce  all  deeds  and  documents  relating  to  the 
trust  estate  for  inspection  by  the  cestui  (pie  trust  or  the  cestui  que  trust's 
agent.  Clarke  v.  Earl  of  Ormonde,  Jacob,  108,  120  (1S21)  ;  Gough  v.  Offley,  5 
DeG.  &  Sm.  653  (1852);  P.ugden  v.  Tylee.  21  Beav.  545  (1850);  Smith  v. 
Barnes,  L.  R.  1  Eq.  05  (1S().">) ;  Simpson  v.  Bathurst,  5  Ch.  App.  Cas.  193 
(1809) ;    In  re  Cowin,  L.  R.  33  Ch.  Div.  179  (INSOi. 

It  is  the  trustee's  duty  to  produce  for  Inspection  by  the  cestui  que  trust 
or  by  the  cestui  que  trust's  agent  cases  submitted  to  counsel  and  opinions 
thereon  furnished  by  counsel  to  guide  him  in  the  due  administration  of  his 
trust.  Devaynes  v.  Robinson,  20  Beav.  42  (18,55) ;  Wynne  v.  Ilumberston, 
27  Beav.  421  (1859) ;  Talbot  v.  Marslifield,  2  Drew.  &  Sm.  549  (1805) ;  Re 
Mason,  L.  R.  22  Ch.  Div.  009  (1883). 

The  trustee,  however,  is  not  Iiound  to  produce  for  such  inspection  cases 
submitted  and  opinions  of  counsel  therein  taken  to  defend  himself  against 
legal  proceedings  by  tlie  cestui  (lue  trust.  Brown  v.  Oaksliott,  12  Beav.  252 
(1849):  Devavncs  v.  Robinson,  L'O  IU>:iv.  12  (IS.".."));  Wynne  v.  Ilumberston, 
27  Beav.  421  il8."39);   Talbot  v.  Marslitleld,  2  Drew.  &  Sm.  549  (1865). 


374  THE   DUTIES   OF    A   TUUSTEE.  (Ch.  5 

the  defendants  were  his  executors  and  John  Joseph  Tourle,  the  sur- 
viving trustee  of  the  will  of  William  Postlethwaite. 

The  statement  of  claim  alleged  that  a  portion  of  the  testator's 
estate  had  been  sold  to  one  James  Walker,  who  was  acting  as  trustee 
for  William  Charles  Rickman,  and  was  put  forward  by  the  latter  for 
the  purpose  of  concealing  from  Joseph  Legg  Postlethwaite  and  others 
interested  in  the  estate  that  William  Charles  Rickman  was  the  real 
purchaser;  that  the  defendant  Tourle  had  acted  as  the  solicitor  for 
himself  ami  his  co-trustee  in  winding  up  the  estate,  and  that  William 
Charles  Rickman  had  made  large  profits  in  reselling  the  trust  prop- 
erty bought  for  him.  The  plaintififs  sought  to  make  the  estate  of 
William  Charles  Rickman  and  the  defendant  Tourle  liable  for  such 
profits. 

The  defendants,  the  executors  of  William  Charles  Rickman,  alleged 
in  their  statement  of  defence  that  the  sale  to  Walker  was  made  bona 
fide,  and  that  their  testator  had  subsequently  bought  from  Walker. 
They  had  made  an  affidavit  of  documents,  including  a  number  of 
letters  written  by  the  defendant  Tourle  to  their  testator,  and  the  bills 
of  costs  of  the  defendant  Tourle.  They  claimed  privilege  from  pro- 
ducing these  on  the  ground  that  they  were  professional  communica- 
tions of  a  confidential  character  between  their  testator  and  the  de- 
/endant  Tourle,  who  in  such  communications  acted  professionally 
for  their  testator,  and  as  his  private  solicitor,  and  not  as  solicitor  for 
the  trust,  and  were  charged  to  and  paid  for  by  him  out  of  his  own 
money. 

This  was  a  summons  on  the  part  of  the  plaintiffs  to  compel  the 
production  of  those  documents. 

North,  J.^^  The  defendants  object  to  produce  certain  letters  and 
copies  of  letters  and  correspondence  between  Tourle  and  Rickman  in 
the  years  1853  and  1854,  and  two  bills  of  costs,  on  the  ground  that 
they  were  privileged.  It  is  said  that  in  that  correspondence  Tourle 
was  acting  as  the  private  solicitor  of  Rickman  and  not  as  the  solicitor 
of  the  trustees,  and  that  those  communications  were  paid  for  by  Rick- 
man personally  out  of  his  own  moneys,  and  were  made  with  the  object 
of  enabling  him  to  procure  legal  advice  and  assistance  as  a  private 
individual,  and  not  as  a  trustee  of  the  testator's  will.  And  it  is  said 
that  the  bills  of  costs  were  prepared  by  Tourle  in  his  private  capacity, 
acting  professionally  for  Rickman  as  a  private  individual  and  at  his 
expense,  and  that  they  contained  professional  communications  of  a 
confidential  character  between  Rickman  and  Tourle. 

It  seems  to  me  that  these  documents  ought  to  be  produced,  and 
on  three  grounds.  In  the  first  place,  looking  at  the  case  made  by  the 
statement  of  claim  (whether  it  will  be  proved  or  not  I  do  not  know 
and  I  assume  that  it  is  true  only  for  the  purpose  of  deciding  the 
present  question),  I  think  that  when  a  scheme  is  devised  by  two  out 

22  Ouly  a  part  of  the  opinion  is  given. 


Sec.  3)         DUTY    TO    GIVE    INFOKMATION    AS   TO    TRUST    ESTATE.  'dl'i 

of  three  trustees  that  one  of  the  two  shall  purchase  part  of  the  trust 
estate  in  the  name  of  a  third  party,  and  that  this  shall  be  concealed 
from  the  third  trustee,  so  that  the  cestui  que  trust  may  know  nothing; 
about  it,  no  professional  privilege  can  avail  to  protect  from  pro- 
duction any  correspondence  relating  to  such  a  transaction  as 
that.     *     *     * 

But,  in  the  second  place,  Rickman  and  Tourle  were  acting  together 
in  relation  to  the  trust  estate.  Tourle  was  himself  one  of  the  trus- 
tees, and  he  was  the  solicitor  of  all  the  trustees,  and  he  also,  in  some 
totally  independent  matters  acted  as  Rickman's  solicitor.  In  my 
opinion  it  is  not  open  to  trustees  to  act  together  in  such  a  way — the 
one  acting  as  the  professional  adviser  of  the  other — as  to  close  the 
mouth  of  either  of  them  in  regard  to  matters  relating  to  the  trust. 
If  they  do  so  act.  they  must  take  the  consequence  of  that  which  they 
had  done  not  being  treated  as  privileged.  The  difficulty  of  holding 
that  privilege  existed  in  such  a  case  would  be  very  great.  Suppose 
that  one  of  the  cestuis  que  trust  had  made  an  assignment  of  his 
interest  in  the  trust  property  of  which  notice  had  been  given  only  to 
one  of  the  trustees — Rickman.  Suppose  that  no  notice  had  been  given 
by  the  assignee  to  Tourle,  but  that  he  had  been  informed  of  the  as- 
signment by  Rickman  when  he  was  acting  as  Rickman's  solicitor; 
could  he  decline  to  answer  whether  he  had  received  notice  on  the 
ground  that  he  was  acting  as  Rickman's  solicitor?  In  my  opinion  he 
could  not,  but  the  notice  which  he  had  received  would  have  been  re- 
ceived by  him  in  his  character  of  trustee,  and  he  would  be  bound  to 
disclose  it.  If  two  trustees  acted  together,  not  fraudulently,  but  un- 
fairly to  their  cestui  que  trust,  I  think  it  would  be  a  novel  doctrine 
to  say  that  they  had  a  right  to  keep  within  their  own  bosoms  that 
which  they  had  done  because  one  of  them  was  acting  as  solicitor  for 
the  other. 

The  third  ground  is  one  which  is  peculiar  to  the  present  case.  The 
executors,  by  their  defence,  deny  that  Walker  was  acting  as  trustee 
for  Rickman  for  the  purpose  of  concealing  the  fact  that  he  was  pur- 
chaser from  the  cestuis  que  trust.  Adopting  this  as  a  true  statement, 
it  amounts  to  this,  that  what  was  done  by  Rickman  and  Tourle,  before 
the  sale  to  Walker,  was  done  by  them  as  co-vendors  of  the  property 
to  him,  and  not  because  Rickman  had  any  independent  interest  by 
reason  of  the  purchase  from  Walker.  If  this  be  so,  what  ground  is 
there  for  saying  that  any  relation  of  solicitor  and  client  existed  be- 
tween Rickman  and  Tourle  which  can  confer  any  professional  privi- 
lege upon  the  communications  between  them?  I  think  the  statements 
in  the  executors'  defence  put  them  out  of  court.  I  therefore  must 
order  the  production  of  these  documents.  With  the  consent  of  the 
counsel  on  both  sides  I  have  looked  at  the  documents,  and  from  wdiat 
I  have  seen  of  them  I  think  it  is  clear  that  they  ought  to  be  produced. 
But  the  defendants  will  have  liberty  to  seal  up  such  parts  as  are  not 
relevant  to  the  matters  in  question  in  this  action. 


376  THE   DUTIES   OF  A  TRUSTEE.  (Cll.  5 


SECTION  4.— THE  TRUSTEE'S  DUTIES  OF  MANAGEMENT 
OF  THE  TRUST  ESTATE. 

I.  The:  Trustf.f/s  Duty  to  Take  the  Steps  Xfckssary  to  Secure 
THE   Trust   Estate. 


MARY  JACOB  and  ROBERT  ROTl  IWELL  LUCAS  and  Others, 
Infants,  by  the  Said  MARY  JACOB,  Their  Next  Friend,  Plain- 
tiffs, V.  ROBERT  TRISTRAM  LUCAS  and  Others,  Defendants. 

(In  Chancery  before  T^rd  Langdale,  Master  of  the  Rolls,  1839.     1  Beavan, 

436.) 

Stnckley  Lucas,  by  his  will,  directed  his  children  to  assign  to  the 
trustees  of  his  will  certain  stocks,  funds  and  securities,  to  which  they 
would  become  entitled  under  the  testator's  marriage  settlement;  and 
in  default,  that  they  should  forfeit  the  benefits  given  them  by  his 
will.  The  testator  gave  part  of  his  property,  including  the  property 
in  the  settlement,  to  his  trustees,  Thomas  Todd,  John  Henry  Jacob, 
Richard  Bere  and  John  Beague,  in  trust  as  to  part,  for  his  son 
Robert  Tristram  Lucas,  for  life,  with  remainder  to  his  children,  and 
as  to  other  part,  for  the  benefit  of  persons  defendants  to  the  suit ; 
and  he  appointed  the  four  trustees  his  executors.  The  will  contained 
a  direction,  that  when  any  trustee  should  die  or  refuse  to  act,  the 
surviving  or  acting  trustees  should  appoint  new  trustees,  "so  that 
there  might  not  be  less  than  two  acting  trustees  at  any  one  time." 

The  testator  died  in  1811,  and  Thomas  Todd  and  John  Henry  Jacob 
alone  proved  his  will.  Part  of  the  testator's  property  consisted  of 
£825.  bank  stock  and  £17.  10s.  long  annuities,  standing  in  his  name 
at  the  time  of  his  death.  The  acting  executors  and  trustees  did  not 
transfer  these  sums  into  their  own  names,  but  suffered  them  to  remain 
in  the  name  of  the  testator. 

The  settlement  funds  were  assigned  by  the  testator's  children  to 
the  trustees  of  the  will,  but  were  permitted  by  them  to  remain  stand- 
ing in  the  names  of  the  trustees  of  the  settlement. 

Thomas  Todd  died  in  1819;  and  John  Plenry  Jacob,  who  survived 
him,  appointed  no  new  trustee  in  his  place.  He  died  in  1828,  having 
appointed  the  plaintiff,  Mary  Jacob,  his  sole  executrix,  who  after- 
wards proved  his  will.  After  the  death  of  John  Henry  Jacob,  Robert 
Tristram  Lucas,  upon  the  renunciation  of  Bere  and  Beague,  the  two 
other  executors  who  had  not  acted,  obtained  letters  of  administra- 
tion de  bonis  non  of  the  estate  and  effects  of  Stuckley  Lucas ;  and, 
as  administrator,  he  sold  out  the  two  sums  of  £825.  bank  stock  and 
£17.  10s.  long  annuities,  and  he  applied  the  same  to  his  own  use. 
This  he  was  enabled  to  do,  in  consequence  of  the  acting  executors, 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF   TRUST   ESTATE.  377 

Thomas  Todd  and  John   Henry  Jacob,  having  allowed  these   sums 
to  remain  in  the  name  of  the  testator,  Stuckley  Lucas. 

Robert  Tristram  Lucas  assigned  his  interest  under  the  will  to 
secure  £LSO.  to  John  Wood;  and,  in  1822,  he  likewise  charged  it 
with  an  annuity  of  £32.  to  George  Haynes,  and,  in  1834,  he  further 
charged  it  with  an  annuity  of  £106.  12s.  to  Mr.  Rudall. 

A  suit  of  O'Neil  v.  Lucas  had  been  instituted,  to  compel  the  specific 
legatees  of  Stuckley  Lucas  to  contribute  towards  payment  of  his 
debts,  there  being  a  deficiency  of  assets  to  provide  for  the  debts  and 
legacies.  In  that  suit,  funds,  in  which  Robert  Tristram  Lucas  was 
interested  under  the  will,  had  been  paid  into  court.  The  effect  of 
that  suit  was  relied  on  in  argument,  but  did  not  form  the  ground  of 
the  decision. 

The  bill  was  filed  by  j\Iary  Jacob,  the  executrix  of  John  Henry 
Jacob,  who  was  the  surviving  acting  executor  and  trustee  under  the 
will  of  Stuckley  Lucas,  and  by  the  infant  children  of  Robert  Tristram 
Lucas  (who  were  entitled  in  remainder  to  part  of  the  property),  by 
Mary  Jacob,  their  next  friend,  against  Robert  Tristram  Lucas,  his 
incumbrancers,  and  against  the  personal  representatives  of  Thomas 
Todd  the  other  executor  and  trustee,  and  against  the  other  parties 
interested,  praying  "that  Robert  Tristram  Lucas  might  be  decreed 
responsible  for  the  said  several  sums  of  £825.  Bank  of  England  stock 
and_il7.  10s.  long  annuities,  which  he  had  sold  out  and  applied  to 
hiT_own_use ;"  and  that  he  might  be  decreed  to  replace  those  sums ; 
and  "in  default  thereof,  that  the  several  stocks,  funds  and  securities, 
to  which  he  might  be  held  to  be  beneficially  entitled  under  the  said 
will,  and  in  the  said  suit  of  O'Neil  against  Lucas,  might  be  appro- 
P^riated  and  applied  in  the  liquidation  and  satisfaction  of  such  several 
sums  of  stock  and  annuities." 

The  bill  charged :  "That  Robert  Tristram  Lucas  pretended  that 
he  was  not  liable  to  reinvest  the  said  stock,  or  to  supply  any  deficiency 
that  might  arise  in  respect  thereof,  but  that  the  estates  of  Thomas 
Todd  and  John  Henry  Jacob,  or  one  of  them,  were  liable  in  respect 
of  any  loss  incurred  thereby ;  for  that  such  several  sums  of  stock 
ought,  upon  the  death  of  the  said  testator,  Stuckley  Lucas,  to  have 
been  invested  in  their  names,  and  that  they  wilfully  neglected  to  do 
so,  and  that  in  consequence  thereof,  they  were  guilty  of  a  breach  of 
trust,  and  ought  to  make  good  any  loss  occasioned  thereby ;  whereas 
the  plaintifif,  Mary  Jacob,  expressly  charged,  that  the  said  trustees  and 
executors  were  never  directed  by  the  will  to  invest  any  such  stock 
in  their  own  names  by  said  testator,  and  that  independently  of  that 
circumstance,  the  same  remaining  outstanding  was  a  protection  to 
the  interest  of  the  cestui  que  trust,  by  remaining  distinct  and  unmixed 
with  other  funds,  over  which  they  had  control,  and  to  which  other 
parties  were  entitled." 

The  Master  of  the  Rolls.  The  bill  prays:  [His  Lordship  stated 
the  prayer.]     It  appears  that  Robert  Tristram  Lucas,  as  legal  personal 


378  THE   DUTIES   OF   A   TRUSTEE.  (Ch.  5 

representative  of  the  testator  Stuckley  Lucas,  procured  these  funds, 
in  which  he  was  entitled  to  a  hfe  interest,  with  remainder  to  the  plain- 
tiffs, his  infant  children,  to  he  transferred  into  his  own  name,  and 
that  he  has  applied  them  to  his  own  use.  Nothing  can  he  more  clear 
than  the  equity  of  the  plaintiffs  to  relief  in  respect  to  this  gross 
hreach  of  trust;  and  if  this  were  all,  it  would  be  equally  clear  that 
the  infant  plaintiff's  and  thiise  wdio  have  suffered  from  this  breach 
of  trust,  are  entitled  to  be  recouped  to  the  extent  of  the  interest  of 
Robert  Tristram  Lucas  ;  he  has  not  only  committed  these  breaches 
of  trust,  but  he  has  assigned  his  beneficial  interest  to  other  persons ; 
and  when  the  plaintiffs  ask  that  his  interest  may  be  appropriated  and 
applied  in  satisfaction  of  the  breaches  of  trust,  they  come  in  instant 
competition  with  the  other  persons  who  have  claims  on  the  fund, 
either  in  the  character  of  assignees  or  in  the  character  of  persons 
who,  having  suft'ered  from  these  breaches  of  trust,  are,  as  such,  en- 
titled to  equal  relief  with  the  plaintiffs.  It  is  necessary,  therefore,  to 
look  beyond  the  simple  circumstances  to  which  I  have  adverted. 

The  testator  died  in  ISll;  by  his  will -he  appointed  four  persons 
to  be  his  trustees  and  executors ;  two  only  proved ;  and  it  ap])ears  that 
his  assets  consisted  of  stocks,  funds  and  securities  standing  in  his 
name;  he  made  gifts  to  his  children  on  condition  that  they  assigned 
to  the  trustees  of  his  will  certain  settlement  funds  to  which  they  w^ere 
er.titled;  the  children,  it  is  said,  assigned  their  interests  and  accepted 
the  benefit  under  the  will.  Todd,  one  of  the  executors,  died  in  De- 
cember, 1S19;  and  the  other  acting  executor  was  Jacob,  wdio  died 
on  the  13th  of  January,  1828.  At  that  time  a  portion  of  the  funds 
remained  in  the  name  of  the  testator ;  while  that  portion  of  the  set- 
tlement fund,  which  he  had  purchased  by  gifts  to  his  children,  re- 
mained in  the  names  of  the  trustees  of  the  settlement.  The  acting 
executors  and  trustees  did  not  declare  the  trusts  specifically  or  convert 
themselves  from  executors  to  trustees,  of  the  funds  which  were  stand- 
ing in  the  name  of  the  testator,  and  did  not  procure  the  transfer  of 
the  settlement  funds.  Jacob,  the  survivor,  having  died  in  January, 
1828,  the  two  other  persons  who  had  been  appointed  executors  and 
trustees  renounced  ;  and  letters  of  administration,  with  the  will  an- 
nexed, were  granted  to  Robert  Tristram  Lucas,  who  thereby  took  on 
himself  the  execution  of  the  trusts  of  the  will.  At  the  time  he  pro- 
cured the  letters  of  administration  to  be  granted  to  him,  the  funds 
were  in  this  situation ;  partly  in  the  name  of  the  testator  and  j^iartly 
in  the  name  of  the  trustees  of  the  settlement;  and  in  this  state  of 
things  the  case  of  O'Xeil  v.  Lucas  was  instituted.  [His  Lordship 
stated  the  nature  of  the  suit  of  O'Neil  v.  Lucas.]  There  seems  great 
difficulty  in  this  suit  not  being  connected  with  O'Neil  v.  Lucas,  so 
as  to  enable  the  plaintiffs  to  avail  themselves  of  the  proceedings  in 
that  case.  A  bill,  being  necessary,  is  filed,  not  on  behalf  of  the  infants 
alone,  but  in  conjunction  with  Mary  Jacob,  who  is  the  legal  personal 
representative    of    John     Henry    Jacob    the    surviving    executor    and 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF   TRUST   ESTATE.  379 

trustee,  who,  it  appears,  has  been  sought  to  be  charged  with  a  breach 
of  trust.  Mary  Jacob,  it  is  to  be  observed,  is  not  at  all  personally 
responsible  (except  out  of  the  assets  of  John  Henry  Jacob)  for 
this  breach  of  trust,  which  was  of  this  nature;  a  certain  numl)er  of 
trustees  ought  to  have  been  kept  up,  which  has  not  been  done,  and 
the  funds  were  left  in  the  name  of  the  testator,  and  were  never  trans- 
ferred into  the  names  of  the  trustees;  by  these  means  Robert  Tris- 
tram Lucas  got  possession  of  these  funds,  and  was  thereby  ena1)lcd 
to  commit  this  breach  of  trust.  Another  breach  of  trust  complained 
of  was  this,  that  after  Todd  and  Jacob  had  (the  time  of  the  assign- 
ment is  not  stated)  obtained  an  assignment  and  transfer  of  the  settle- 
ment funds,  by  which  they  became  a  portion  of  the  testator's  estate, 
they  w^ere  permitted  to  remain  in  the  names  of  the  trustees  of  the 
settlement;  the  income  was  paid  to  the  persons  entitled,  without  any 
notice  having  been  given  to  the  trustees  that  the  trust  fund  had  become 
the  property  of  the  testator;  and  subject  to  the  trusts  of  his  will; 
Robert  T.  Lucas  was  permitted  to  receive  the  interest  of  the  trust 
funds  thus  remaining  in  the  hands  of  the  trustees,  and  he  pro- 
ceeded to  deal  with  it  for  the  purpose  of  making  incumbrances  and 
granting  annuities  payable  out  of  his  interest.  In  this  state  of  things, 
it  is  not  to  be  wondered  that  those  persons  who  are  interested  in  the 
estate  of  the  testator,  and  have  suffered  by  the  breaches  of  trust  of 
Robert  Tristram  Lucas,  should  say  that  there  is  a  remedy  against  the 
trustees  in  respect  of  those  breaches  of  trust;  and  it  is  clear  that  if 
John  Henry  Jacob  was  answerable  for  them,  his  estate  in  the  hands 
oOlary  Jacob  is  also  answerable.  Now  what  is  sought  in  this  suit 
is,  that  the  infant  children  of  Mr.  Lucas  desire  to  be  repaid  out  of 
his  life  estate ;  but  in  seeking  payment  out  of  that  life  estate,  they 
come  in  competition  with  a  great  variety  of  other  persons — with 
persons  standing  precisely  in  the  same  situation— having  precisely 
the  same  rights  and  equities  as  they  have,  and  with  other  per- 
sons, who  under  the  circumstances  I  have  mentioned,  have  become 
assignees  of  the  interest  of  Robert  Tristram  Lucas.  Suppose  (which 
may  possibly  happen)  that  the  life  estate  of  Robert  Tristram  Lucas 
should  turn  out  to  be  insufficient  to  pay  all  the  several  losses  which 
the  parties  have  sustained  by  the  breaches  of  trust,  who  would  then 
be  the  person  next  resorted  to  but  those  who  have  improperly  per-  -.  c-^  , 
mitted  those  breaches  of  trust  to  be  committed?  And  these  are  the  ''Wsh^^ 
representatives  of  Todd  and  Jacob.  I  do  not  mean  to  decide  any  J,  q^ 
points  of  equity  arising  between  the  parties ;  but  here  I  find  the  infant  •  't-  • 
plaintiffs  connected  in  the  suit  with  a  person  with  whom  they  may 
probably  come  into  competition  in  the  future  stages  of  this  caus^. 
The  answer  which  was  made  during  the  argument  of  this  case  was, 
that  the  joinder  of  Mrs.  Jacob  did  not  prejudice  the  infants  at  all, 
because  any  other  person  might  file  a  bill  and  make  Mary  Jacob  a 
defendant,  and  that  she  would  not  in  any  way  be  released  by  this  suit. 
But  is  that  a  state  in  which  things  ought  to  be  left?     I  confess  I  feel 


380  THE   DUTIKS   OF   A   TRUSTEE.  (Cll.  5 

it  impossible  to  get  over  the  difficulty;  thinking,  at  the  same  time, 
there  is  a  right  on  the  part  of  the  plaintiffs  to  equitable  relief,  if  it 
were  correctly  brought  forward,  I  should  be  disposed,  if  I  could  set 
everybody  right  as  to  costs,  and  if  I  could  leave  the  question  open  as 
to  the  responsibility  of  Mary  Jacob,  to  put  the  suit  right,  rather  than 
dismiss  the  bill.  I  have  no  ol)jection  to  let  the  cause  stand  over  for 
a  few  days,  to  see  if  the  parties  can  arrange  it. 

It  being  intimated  to  the  court,  that  there  was  no  prospect  of  the 
parties  consenting  to  any  arrangement, 

The  Master  of  The  Roles  said :  Then  I  must  dismiss  the  bill 
with  costs,  without  prejudice  to  the  plaintiffs  filing  another  bill,  or 
adopting  such  proceedings  as  they  may  be  advised,  and  without  prej- 
udice to  any  question  as  to  the  rights  of  the  parties.'^ 


HEXT  v.  PORCHKR. 

(Court  of  Appeals  of  South  Carolina,   1S4G,     1  Strob.   Eq.  170.) 

Before  Johnston,  Ch.,  at  Gillisonville,  February,  1846. 

The  facts  of  the  case  are  stated  in  the  following  circuit  decree. 

Johnston,  Ch.  This  is  a  bill  claiming  redress  for  the  alleged  neg- 
ligence of  a  trustee,  by  which  the  trust  property  has  been  lost  to  the 
cestuis  que  trust. 

On  the  15th  of  December,  1806,  Sarah  C.  Porcher,  the  mother,  and 
Lawrence  Hext,  the  father  of  the  plaintiffs,  on  the  eve  of  their  inter- 
marriage, which  shortly  afterwards  took  place,  entered  into  a  deed  of 
indenture  with  James  Porcher,  the  intestate  of  the  defendant,  wdiereby 
the  said  Sarah  C.  conveyed  all  her  individual  interest  in  the  estate  of 
her  deceased  father,  Peter  Porcher,  and  of  her  deceased  uncle,  Wil- 
liam Young,  to  the  said  James  Porcher,  in  trust,  after  the  marriage, 
for  the  joint  use  of  herself  and  her  intended  husband,  during  their 
joint  lives,  and  to  the  survivor  of  them,  with  remainders  in  fee,  to 
the  issue  of  the  said  Sarah  C.  by  that  or  any  subsequent  marriage. 

The  trustee,  James  Porcher,  caused  the  deed  to  be  registered  in  the 
Registry  of  Mesne  Conveyance  for  Beaufort  District,  thirteen  or 
fourteen  days  after  its  execution,  but  it  was  never  registered  in  the 
Secretary  of  State's  office,  and  the  original  is  now  in  the  defendant's 
possession,  as  administratrix  of  the  said  trustee. 

After  the  intermarriage  of  Lawrence  Hext  and  wife,  her  shares 
in  said  estate  were  partitioned  off  to  her,  and  there  came  into  the 
possession  of  the  husband  a  number  of  slaves,  who,  with  their 
increase,  now  number  some  seventeen  or  eighteen. 

All  these  slaves  were  sold  to  bona  fide  purchasers  (without  notice 
either  by  Lawrence  Hext  himself   or  by  the   sheriff)   for  his  debts, 

23  See  Fenwick  v.  Greenwell,  10  Beav.  412  (1847). 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF  TRUST   ESTATE.  381 

with  the  exception  of  two,  as  to  which  no  relief  is  sought  against  the 
defendant.  Lawrence  Hext  and  his  wife  arc  now  both  dead,  and  the 
plaintiffs,  who  are  the  issue  of  the  marriage,  claim  an  account  of  the 
value  of  the  slaves  lost  to  them  by  the  negligence  of  their  trustee  to 
register  the  deed  in  the  proper  office,  so  as  to  charge  the  purchasers 
of  the  trust  property  with  notice,  and  enable  the  plaintiffs  to  recover 
it  from  them._^  It  appears,  from  an  examination  of  the  Registry  of 
Mesne  Conveyance  for  Beaufort  District,  from  1787  to  1812,  inclu- 
sive, that  forty-six  marriage  settlements  were  recorded  in  that  office, 
of  which  twenty-three  were  settlements  of  real  and  personal  property, 
eighteen  of  personal  property,  and  the  remaining  five  of  property  the 
character  of  which  is  undefined. 

This  is  the  case  stated  by  the  counsel,  for  the  consideration  of  the 
court;  and  the  question  is,  whether,  under  these  circumstances,  the 
trustee  was  liable  for  the  losses  sustained  by  his  omission  to  record 
the  deed  in  the  Secretary  of  State's  office. 

My  impressions  of  this  case  have  materially  changed,  since  the 
hearing;  and  I  cannot  now  say,  as  I  would  have  said  then,  that  the 
conduct  of  the  trustee  was  or  is  to  charge  him.  I  do  not  doubt  that 
it  was  his  duty,  after  accepting  the  trust,  to  perform  any  act  necessary 
for  the  preservation  of  the  property,  and  for  securing  the  interests 
of  his  cestuis  que  trusts,  and  to  record  the  deed,  as  one  means  of  at- 
taining these  ends. 

Nor  is  it  any  longer  a  question,  that  the  proper  office  for  the 
registration  of  marriage  settlements,  under  the  Act  of  1785,  was  that 
of  the  Secretary  of  State;  although  that  seems  to  have  been  doubted, 
up  to  the  decision  of  Boatright  v.  Wingate,  2  Tread.  Const.  522,  which 
was  long  after  this  deed  was  recorded,  and  it  will  appear,  by  the 
opinion  of  the  Judges  in  that  case,  that  one  of  them,  who  at  the  regis- 
tration of  this  deed,  was  the  leading  counsel  in  Beaufort,  and  had 
the  principal  direction  and  control  of  the  business  there,  was  strenu- 
ously of  opinion  that  such  a  registration  as  was  made,  in  this  case, 
was  effectual  and  valid.  My  own  opinion,  while  at  the  bar,  was,  and 
is  still,  that  under  the  Act  of  1785,  settlements  of  personalty  were  to 
be  recorded  in  the  Secretary's  office,  and  that  as  to  settlements  of 
realty,  they  were  subject  to  a  double  registration ;  one  in  the  Secre- 
tary's office,  as  settlements  under  the  Act  in  question,  and  the  other 
in  the  Registry  of  Mesne  Conveyance,  as  deeds  for  conveying  lands, 
under  the  Act  upon  that  subject.  The  trustee,  therefore,  did  not 
comply  with  the  law,  by  the  registration  which  he  caused  to  be  made 
in  this  case,  and  his  cestuis  que  trusts,  the  preservation  of  whose 
interest  _was  the  very  end  of  his  appointment,  have  suffered  loss  by 
his  omission. 

But  the  liability  of  trustees  is  not  measured  by  the  abstract  rule  of 
their  duty.  The  universal  test  of  their  liability,  or  exemption  from 
liability,  is  this;  is  there,  or  is  there  not,  in  this  case,  evidence  of 
faithful  endeavors  to  fulfill  it?    The  office  of  trustee  is  one  essential 


382  THE  DUTIES   OF  A  TRUSTEE.  (Ch.  5 

to  every  important  interest  in  society,  and  so  far  from  those  interests 
being  promoted,  they  would  be  deeply  prejudiced,  if  any  rule  more 
rigorous  than  this — any  rule  calculated  to  deter  prudent  and  honest 
men,    of   ordinary    capacity,    from    accepting    the   appointment— were 
laid  down,  or  insisted  on.     The  partial  effect  of  that  rule  would  be 
to  confine  the  office  to  the  crafty  and  dishonest,  who  might  accept 
with  the  hope  of  eluding  liability,  and  securing  profit  by   fraud  and 
dexterity.     The  test  of  liability,  as  I  have  laid  it  down,  is  to  be  gath- 
ered from  all  the  cases  upon  the  subject,  and  I  shall  not  trouble  my- 
self with  an  analysis  of  them.     There  may  be  strong  expressions  to 
the  contrary  effect,  but  the  broad  leading  principle  of  all  the  cases  is 
as  I  have  stated  it.     It  has  sometimes  been  said,  as   I  have  laid  it 
down  in  Cooper  v.  Day,  1  Rich.  Eq.  26,  that  if  the  act  done  by  a 
trustee,  be  such  as  a  i)rudent  man  would  not  have  done  in  his  own 
affairs,  or  if  that  which  the  trustee  has  omitted,  be  what  a  prudent 
man  would  not  have  omitted  in  matters  of  personal  interest,  the  trus- 
tee shall  be  liable.     But  this  rule  is  manifestly  subsidiary.     It  is  used_ 
as  a  test  of  unfaithfulness,  which,  after  all,  is  the  fundamental  ground^ 
of  liability.     If  a  trustee  does,  or  omits,  what  a  prudent  man  would 
not  do  or  omit,  in  his  own  concerns,  and  there  is  no  more  in  the  case 
than  that,  it  may  be  set  down  as  presumptive  evidence  of  indifference 
to  his  duty.     And  in  the  case  I  have  mentioned  there  were  circum- 
stances (if  their  aid  had  been  required)  to  give  a  tinge  to  the  conduct 
of  the  trustee,  and   to  strengthen   the  presumption  arising   from  his 
unexplained  omission  to  record  the  deed.     But  here  the  omission  does 
not  stand  alone.     There  are  circumstances  which  refute  the  presumj)- 
tion   which  might  arise   from   it,   and   to   show  that   the  trustee  was 
honest  and  diligent,  but  mistaken.     The  fault  is  not  an  omission  to 
record,  but  a  mistake  in  the  office  where  it  was  done.     The  registra- 
tion, though   erroneous,  is  proof  of  a   faithful   intention  to  perform 
the  duty  required  by  law,  which  intention  is  none  the  less  meritorious 
on  account  of  the  mistake.     The  mistake  appears  also  to  have  arisen 
naturally  from  the  general  custom  of  the  time,  in  which  prudent  men, 
trustees   and  others   deeply   interested,   indulged ;    and    it   appears   to 
have  been  grounded  upon  very  high  authorities. 

I  do  not  conceive,  that  to  take  advantage  of  a  mistake,  committed 
with  an  evidently  honest  endeavor  by  the  trustee  to  perform  his  duty, 
and  to  make  him  liable  for  the  consequences,  would  either  square  with 
the  dictates  of  justice,  or  promote  the  true  policy  of  the  court  or  the 
interests  of  its  sanctions,  and  it  is  ordered  that  the  bill  be  dismissed. 
The  complainants  moved  to  reverse  the  decision  of  his  Honor, 
Chancellor  Johnston,  in  the  case  above  stated,  on  the  following 
grounds : 

1.  Because  it  was  made  clearly  to  appear,  by  the  bill,  answer,  ex- 
hibits and  evidence,  that  the  property  to  which  complainants  were 
entitled,  had  been  lost  in  consequence  of  the  negligence  or  omission 
of  the  trustee,  James  Porcher,  to  cause  the  trust  deed  to  be  registered 


Sec.  4)  DUTIES  OP  MANAGEMENT   OF  TRUST   KSTATE.  383 

in  the  projier  office,  and  therefore  the  estate  of  the  said  James  Por- 
cher  should  have  been  held  liable  for  the  loss  so  sustained. 

2.  Because  it  is  conceded,  by  the  very  terms  of  the  decree,  that 
the  trustee,  James  Porcher,  was  bound  to  cause  the  trust  deed  to  be 
recorded ;  and  it  is  respectfully  submitted,  that  the  fact  that  the  trust 
deed  was  recorded  in  the  wrong  office,  is  not  any  proof  of  diligence, 
prudence  or  skill,  nor  is  it  any  excuse. 

3.  Because    the   decree    is    contrary    to    law,    e(|uity    and    evidence. 
Johnston,  Ch.,  delivered  the  ojiinion  of  the  court. 

This  court  concurs  in  the  decree  of  the  Chancellor,  and  it  is  ordered 
that  the  decree  be  affirmed,  and  the  appeal  dismissed. 
DuNKiN,  Ch.,  and  Caldwell,  Ch.,  concurred. 
Harper,  Ch.,  absent  at  the  hearing. 
Appeal  dismissed.^* 


CANEY  V.  BOND. 
(In  Chancery,  before  Lord  Langdale,  Master  of  the  Rolls,  1843.    6  Eeav.  4SG.) 

The  object  of  the  suit  was  to  make  an  executor  liable  for  a  sum  of 
money  which  had  been  lost  by  the  insolvency  of  the  debtor,  on  whose 
personal  security  the  debt  had  been  allowed  by  the  executor  to  re- 
main. 

In  1825,  the  testator  advanced  to  a  Mr.  Phillips  a  sum  of  £500.. 
to  be  invested  by  the  latter  on  some  mortgage  security.  For  securing 
it  in  the  meantime,  Mr.  Phillips  gave  to  the  testator  his  promissory 
note,  payable  with  interest. 

In  January,  1826,  the  testator  died,  and  his  will  was  proved  by 
Jones  and  Bond,  his  executors.  Shortly  afterwards,  Jones  and  one 
of  the  persons  interested  in  the  testator's  estate  pressed  Bond  to  call 
in  this  debt,  and  to  invest  it  in  the  funds ;  but  Bond  replied,  "that  he 
should  not  think  of  removing  the  money  from  Mr.  Phillips's  hands, 
as  it  was  as  safe  there  as  if  it  were  in  the  Bank  of  England."  Other 
similar  applications  were  afterwards  made  to  Bond,  but  with  no 
better  success.  In  1827  Bond  received  £100.  from  Mr.  Phillips,  in 
part  payment,  and  the  remainder  was  lost  by  the  death  and  insolvency 
of  Mr.  Phillips  in  March,  1828.  There  was  evidence  to  show  that 
Mr.  Phillips,  if  pressed  earlier,  would  have  paid  the  amount. 

Under  these  circumstances,  it  was  insisted,  by  the  bill,  that  Bond 
was  personally  liable  for  the  £400.  and  interest. 

The  Master  of  the  Rolls.  At  the  death  of  the  testator,  part  of 
his  estate  was  outstanding  on  personal  security.  It  was  the  duty  of 
the  executors,  quite  independently  of  any  application  made  to  them 
by  the  persons  interested  in  the  estate,  to  take  steps  to  get  in  this 


24    I 

resultin 
laud 


n  Cooper  v.  Day,  1  Rich.  Eq.  2G  (1844),  a  trustee  was  held  liaMe  for  loss 
inp:  to  his  cestui  quo  trust  from  his  uegleet  to  record  a  trust  deed  of 


384  THE   DUTIES   OF  A  TRUSTEE.  (Cll.  5 

money.  In  the  exercise  of  a  fair  discretion,  they  were  not  to  com- 
mence legal  proceedings  unnecessarily,  but  they  ought  to  have  exerted 
themselves  to  get  in  tlie  debt,  and,  if  necessary,  to  have  commenced 
compulsory  proceedings  to  obtain  it. 

The  persons  beneficially  interested,  not  considering  the  money  safe 
where  it  was,  requested  the  defendant  llond  to  get  it  in.  Instead  of 
complying  with  this  request,  he  refused  to  do  so,  saying  that  the 
money  was  as  safe  as  in  the  Bank  of  England ;  two  years  afterwards 
the  money  was  lost  by  the  insolvency  of  the  debtor. 

If,  in  any  case,  an  executor  is  to  be  charged  for  wilful  default,  it 
is  in  a  case  of  this  sort,  where  the  money  not  only  is  found  on  a 
security  not  sanctioned  by  the  court,  and  which  ought  therefore  to 
be  got  in,  but  where  also  the  executor  has  been  requested  to  call  it 
in,  and  has  refused  on  the  ground  that  it  is  perfectly  safe. 
'  The  defendant,  by  his  conduct,  has  taken  upon  himself  the  risk 
of  the  security,  and  he  must  therefore  be  charged  with  it,  and  with 
the  costs  down  to  the  hearing.-^ 

25  Lowson  V.  Copeland,  2  Bro.  C.  C.  1.56  (17S7) ;  Powell  v.  Evans,  5  Yes. 
Jr.  8.39  (ISOl);  Tebbs  v.  Cari)onter,  1  Mad.  290  (181(5);  Mucklow  v.  Fuller, 
.Jacob,  19S  (1S21) ;  Platel  v.  Craddock,  Cooper's  Chy.  Kep.  481  (1838) ;  Bul- 
lock V.  Wheatlev,  1  Coll.  130  (1844)  ;  Maitlaiid  v.  Bateman,  IG  Sim.  233,  note 
(1S44);  Styles  v.  Guv,  16  Sim.  230  (1848),  affirmed  1  Mac.  &  G.  422  (1849); 
livrne  v.  Norcott,  13  Beav.  .3.36  (18.51) :  Wiles  v.  Gresham,  2  Drew.  258  (18.54) ; 
r.rittlebank  v.  Goodwin,  L.  R.  5  E(i.  545  (lS(;,s) ;  In  re  Brogden,  L.  R.  ,38  Ch. 
Div.  546  (1S8S)  ;  In  re  Tucker,  L.  R.  (1S91)  1  Ch.  724;  Daiffee  v.  Buchanan, 
8  Ala.  27  (184.5)  ;  Hughes  v.  INIitehell,  19  Ala.  2(58  (1851)  ;  Royall's  Adm'r  v. 
MoKenzie,  25  Ala.  363  (1854) ;  Munden  v.  Bailey,  70  Ala.  (53  (issi)  ;  Sliephard's 
Heirs  v.  Shephard's  Adm'r,  19  Fla.  .300,  .326  (1882);  Sanderson's  Adm'rs  v. 
Sanderson,  20  Fla.  292.  .•«5  (1883);  Whitney  v.  Peddieord,  (>3  111.  249  (1872); 
Waterman  v.  Alden,  144  111.  90,  32  N.  E.  972  (1893) ;  Simpson  v.  Gowdy,  19 
Ind.  292  (1862);  State  v.  Gregory,  88  Ind.  110  (1882);  Cross  v.  Petree.  10 
B.  Mon.  (Kv.)  413  (1850)  ;  Hunt  v.  Gontrum,  80  Md.  64.  .30  Atl.  620  (1894) ; 
Banks  v.  Machen,  40  Miss.  2.56  (1866);  Moffatt  v.  Txmghridge,  51  Miss.  211 
(187.5);  McWilliams  v.  Xorfleet,  63  Miss.  183  (188,5);  Booker  v.  Armstrong, 
93  Mo.  49,  4  S.  W.  727  (18871  ;  Ilolcomb  v.  Coryell.  11  N.  ,T.  I>1.  476  (1S.5S); 
Coolev  V.  Yansvckle,  14  N.  J.  Eq.  496  (1S60) ;  Poulson  v.  .Tohnson.  29  X.  .1. 
Eq.  ,529  (1878);  Speakman  v.  Tatem.  48  N.  .T.  Eq.  1.36,  21  Atl.  4(^)(;  (1N91), 
affirmed  50  N.  J.  Eq.  484,  27  Atl.  636  (1892)  ;  Shultz.  Adm'r,  v.  I'ulver,  3 
Paige  (N.  Y.)  182  (18:52),  affirmed  11  Wend.  (N.  Y.)  361  (18:«) ;  Ilollister  v. 
P.urritt,  14  Hun  (N.  Y.)  291  (1878) ;  Harrington  v.  Keteltas,  92  N.  Y.  40  (188.'i) ; 
Matter  of  Cornell,  110  N.  Y.  .351,  .365,  18  N.  E.  142  (1888);  O'Connor  v.  Gif- 
lord,  6  Dem.  Sur.  (N.  Y.)  71  (1888) ;  Wilson  v.  Lineberger,  88  N.  C.  416,  422 
(188.3)  :  Long's  Estate,  6  Watts  (Pa.)  46  (1837) ;  .Johnston's  Estate,  9  Watts 
&  S.  (Pa.)  107  (1815);  Beckley's  Appeal,  3  Pa.,  4-25  (1846);  Wills'  Appeal, 
22  Pa.  :325  (1853);  Cliarlton's  Appeal,  :U  Pa.  473,  75  Am.  Dec.  673  (ls.59)  ; 
Shaffer's  Appeal.  46  Pa.  131  (1S6.3)  ;  Stong's  Estate,  160  Pa.  13.  28  Atl.  4S0 
(1N90;  Carr's  Estate.  24  Pa.  Super.  Ct.  369.  .375  (1904);  O'Dell  v.  Young, 
McMul.  Eq.  (S.  C.)  1.55  (1829)  ;  (Jates  v.  Whetstone,  S  S.  C.  244,  28  Am.  Rep. 
284  (1876) ;  I^wrv  v.  ]McGee,  3  Head  (Tenn.)  269  (1859)  ;  Holmes  v.  Bridg- 
man,  37  Vt.  28  (1864)  ;  McClosky  v.  Gleason,  56  Yt.  264,  48  Am.  Rep.  770 
(188.3) ;  Rowe  v.  Bentlev,  29  Grat.  756  (1878)  ;  Anderson  v.  Piercy,  20  W.  Ya. 
282,  330  (1882). 

In  In  re  Brogden,  L.  R.  38  Ch.  Div.  ,546  (1888),  Fry,  L.  J.,  said  at  page  572: 
"AYhen  the  cestui  que  trust  has  shown  that  the  trustee  has  made  default 
in  the  ])erformance  of  his  duty,  and  when  the  money  which  was  the  subject 
of  the  trust  is  not  forthcoming,  the  cestui  (pie  trust  1ms  made  out,  in  my 
judgment,  a  prima  facie  case  of  liability  uix)n  the  trustee,  aud  if  the  trustee 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF  TRUST   ESTATE.  385 

SPKAKAIAN  V.  TATKM. 
(In  riiaiioery,  before  Vice  Chaneollor  Pitney,  ISOI.    48  X.  T.  E<i.  IHO.) 

Final  licaring  on  bill,  answer  and  proofs. 

Bill  by  cestui  que  trust  against  his  trustee  alleging  that  he  neg- 
lected to  collect  and  take  possession  of  the  trust  fund,  and  praying 
that  he  might  be  charged  with  what  he  ought  to  have  collected. 

The  trust  was  created  by  deed  by  husband  (complainant)  and  wife 
to  the  trustee.  It  recited  that  Mrs.  Speakman  was  entitled,  as  resid- 
uary legatee  to  a  fourth  part  of  the  residue  of  the  estate  of  her  father 
John  Draper,  devised  to  her  by  his  will  and  transferred  the  same  to 
John  C.  Tatem  in  trust  to  recover,  collect,  and  receive  and  hold  the 
one-fourth  part  of  the  residue  of  the  estate  of  John  Draper,  and  after 
the  death  of  either  the  said  T.  S.  Speakman  or  Emma  E.  Speakman 
to  pay  to  the  survivor  during  his  or  her  natural  life  one-third  of  the 
net  income,  and,  on  the  death  of  such  survivor,  to  pay  over  the  corpus 

desire  to  repel  ttiat  by  saying  that  if  he  had  clone  his  duty  no  good  would 
have  tlowed  from  it.  the  burden  of  sustainins  that  argument  is  plainly  on 
the  tru.^tee."  See,  in  accord.  Styles  v.  Guy,  16  Sim.  2;'>0  (1S4S) ;  Grove  v. 
Grace.  26  Beav.  103  (185S) ;  Re  Hurst.  6.",  L.  T.  K.  OOo,  668  (1890)  ;  In  re 
Sander.son.  74  Cal.  199,  15  Pae.  75;>  (1887):  Shephard's  Heirs  v.  Shephard's 
Adm'r.  19  Fla.  .'',00,  319  (1882)  ;  Gordon  v.  Gibbs.  3  Smedes  &  M.  (Miss.)  473, 
491  (1844)  ;  Moffatt  v.  I^ughridge,  ,51  Miss.  211,  224  (1875)  ;  Williams,  Adm'r. 
V.  Heirs  of  Petticrew,  62  Mo.  4()0.  471  (1S76) ;  .Julian  v.  Abbott,  73  Mo.  ,580 
(1881) ;  Booker  v.  Armstrong,  9.3  Mo.  49,  .59  (1887)  ;  Powell  v.  Hurt,  108  Mo. 
507,  17  S.  W.  985  (1891);  Harrington  v.  Keteltiis,  92  N.  Y,  40,  45  (1883): 
Johnston's  Estate,  9  Watts  &  S.  (Pa.)  107  (1845) ;  Anderson  v.  I*iercy,  20  W. 
Va.  282,  324  (1882). 

The  trustee  may  escape  liability  by  showing  that  probably  more  was  to  be 
got  by  indulgence  to  the  debtor  than  by  legal  jiroceedintrs.  Walker  v.  Simonds, 
3  Sw.  1,  71.  72  (1S18):  Ratcliffe  v.  Winch,  17  Beav.  217  (18,5.3):  In  re  Earl, 
39  W.  R.  107  (ISDO) ;  Waring,  Ex'x,  v.  Darnall,  10  Gill  &  .7.  (.Md.)  126  (1838)  ; 
Torrence  v.  I>avitL<on,  92  N.  C.  437,  53  Am.  Rep.  419  (1885) ;  Neff's  Appeal, 
57  Pa.  91  (1868) :  Dabney's  Appeal.  120  Pa.  344,  14  Atl.  158  (1888) ;  Tanner 
V.  Bennett's  Adm'r,  33  Grat.  (Va.)  251  (1880). 

Compromise. — The  trustee  may  justify  a  compromise  of  a  claim  by  showing 
that  more  was  got  thereby  than  could  probably  have  been  collected.  Blue 
V.  Marshall,  3  P.  Wms.  .381  (173.5)  :  I'enniiigton  v.  Healey,  1  Crompt.  &  M. 
402  (18.3:^):  Moulton  v.  Holmes,  ,57  Cal.  337  (1881):  Berry  v.  Parkes,  3  Smedes 
&  M.  (.Miss.)  625  (1844) ;  Long  v.  Shackloford,  25  Miss.  .5.59  (1853)  :  Wvman's 
Appeal,  13  N.  H.  18  (1842)  ;  People  v.  Pleas,  2  Johns.  Cas.  (N.  Y.)  376  (1801)  ; 
In  re  Scott  1  Redf.  Sur.  (N.  Y.)  234  (1847)  ;  Choteau  v.  Suydam,  Adm'r, 
21  N.  Y.  179  (18(i0)  ;  Bacot  v.  Heyward,  5  S,  C.  441  (1874)  ;  Pool  v.  Dial,  10 
S.  C.  440  (1878) :  Ale.Kander  v.  Kelso,  3  Baxt.  (Tenn.)  :U1  (1874)  ;  Boyd's 
Sureties  v.  Oglesby,  23  Grat.  (Va.)  674  (1873) ;  Pusey  v.  Clemson,  9  Serg.  & 
R.  (Pa.)  204  (182.3). 

A  trustee  is  justified  in  not  suing  to  collect  a  claim  where  there  is  no  rea- 
sonable ground  to  believe  that  anything  can  be  collected.  Bowen  v.  Mont- 
gomery, 48  Ala.  353  (1872):  Succession  of  Pool,  14  La.  Ann.  688  (ls.5',»): 
Smith  V,  Collamer,  2  Dem.  .Sur.  (N.  Y.)  147  (1X84);  Mitchell  v.  Trotter,  7 
Grat.  (Va.)  1.36  (1850);  Anderson  v.  Pierey,  20  W.  Va.  282  (1882).  I'nless  he 
is  indemnified  as  to  costs.  Griswold  v.  Chandler,  5  N.  H.  492.  494  (]s:{li; 
Sanliorn  v.  G^iodbue,  28  N.  H.  48.  59  Am.  Dec.  398  (185.3);  Hepburn  v.  IIei>- 
lurn,  2  Bradf.  Sur.  (N.  Y.)  74  (1851);    Utley  v,  Rawlins,  22  N.  C.  438  (1839). 

Ke.n.Tu.— 25 


.>  ■:  .i.  <„' 


386  THE   DUTIES   OF   A   TUUSTEE.  (Cll.  5 

to  the  three  children  of  said  T.  S.  Speakman  and  Emma  E.  Speak- 
man. 

Attached  to  the   deed  was  this  acceptance:    "John  C.   Tatcni,  the 
grantee  above  named,  hereby  assents  to  and  accepts  of  the  al)ove  con- 
'"  veyance  and  the  trusts  therein  contained.  John  C.  Tatem." 

June  9,  1870,  JNIrs.  Speakman  deserted  her  husband  and  on  No- 
vember 6,  1874,  he  obtained  a  decree  of  divorce  for  such  desertion. 
Mrs.  Speakman  died  in  1887.  During  her  life  the  trustee,  Tatem, 
permitted  the  executors  of  John  Draper  to  pay  over  to  Mrs.  Speak- 
man the  income  and  corpus  of  the  one-fourth  of  the  residue  of  her 
father's  estate. 

I'lTxKv,  \.  C.-"  *  *  *  Another  defence  set  up  is,  that  the 
couiplainant  never  requested  the  trustee  to  execute  the  trust.  If  there 
had  been  no  acceptance  in  writing,  and,  to  the  knowledge  of  complain- 
ant, nothing  had  been  done  by  the  trustee  under  the  trust,  there  would 
be,  as  it  seems  to  me,  great  force  in  that  position.  But  the  trustee 
accepted  in  writing,  and  undertook  to  execute  the  trust.  The  deed 
was  produced  by  him  at  the  hearing.  He  actually  did  in  part  execute 
it.  *  *  *  Says  Mr.  Lewin,  p.  243 :  "As  soon  as  a  trustee  has 
accepted  the  office  he  must  bear  in  mind  that  he  is  not  to  sleep  upon 
it,  but  is  required  to  take  an  active  part  in  the  execution  of  the  trust. 
The  law  knows  not  such  a  person  as  a  passive  trustee,  -i^  *  * 
When  a  trustee  has  entered  upon  the  trust  he  is  bound  at  once  to  ac- 
quaint himself  with  the  nature  and  particular  circumstances  of  the 
property,  and  to  take  such  steps  as  may  be  necessary  for  the  due  pro- 
tection of  it." 

To  the  same  effect  is  the  language  of  Mr.  Perry  in  his  treatise  on 

Trusts  §  266.     And  having  once  accepted  and  undertaken  the  trust, 

he  cannot  of  his  own  motion  abandon  it  and  evade  its   duties,   and 

can  only  be  relieved  by  the  aid  of  a  competent  court.     Perry,  Trusts 

§  401 ;   and  see  2  Pom.  Eq.  Jur.  §  1067,  and  note.     These  principles 

seem  to  me  to  be  beyond  dispute  or  question,  and  to  be  elementary 

and   fundamental   and   a  necessary  part  of   the  system  of   trusts.      I 

am   unable  to  perceive  any  difference  in   principle  in   respect  to  the 

question  now  in  hand  between  the  case  of  a  trustee  appointed  by  will 

and  one  by  deed,  where  both  have  accepted  the  trust  by  unequivocal 

acts.    In  fact,  it  seems  to  me  that  executors,  administrators,  guardians 

of  infants  and  lunatics,  assignees  in  insolvency  and  bankruptcy,  and 

trustees  under  marriage  or  other  voluntary  settlements,  a.11  stand  upon^ 

',  the  same_plane  in  this  respect,  viz.,  that  if  they  accept  the  office  they 

i  must  perform  its  duties  actively,  not  passively,  and  must^not  wait 

l'  upon  the  motion  of  the  persons  interested  as   cestuis  que  trust  to 

i  incite  and  prompt  their  actions.    The  trustee  must  act  in  and  look  after 

the  interest  of  all  the  cestuis  que  trust  with  perfect  impartiality.     The 

standard  is  this:    He  must  use  the  same  diligence  iii_seeking  for  and 

2c  Only  a  part  of  the  opinion  is  given. 


Sec.  4)  DUTIES   OP   MANAGEMENT  OF  TRUST   ESTATE,  387 

reducing  the  trust  property  to  possession,  and  the  same  care  in  pre-  T^,W" 
serving  it,  that  an  ordinarily  dihgent  and  careful  man  would  exercise 
and  take  in  respect  to  his  own  property.  It  would  he  highly  dangerous 
to  adopt  any  other  rule  or  to  ahate  its  rigor  in  the  least.  It  is  not 
necessary  to  illustrate  by  instances.  In  the  case  in  hand  some  of  those 
entitled  in  remainder  were  or  might  have  been  infants  at  the  time 
the  trustee  permitted  the  funds  here  in  question  to  pass  into  the  hands 
of  one  of  tlie  donors.  The  trust  was  irrevocable,  except  by  the  con- 
sent of  both  donors.  Suppose,  now,  Mrs.  Speakman  had  squandered 
these  funds  or  diverted  them  by  will  to  other  objects,  would  the  rights 
of  the  remaindermen  have  been  gone? 

The  disposition  of  courts  of  equity  to  hold  trustees  to  an  active 
attention  to  the  duties  of  their  office,  is  illustrated  by  the  case  of  Tay- 
lor V.  Millington,  4  Jur.  (N.  S.)  204,  which  in  many  of  its  aspects 
resembles  the  case  before  the  court.  See,  also,  Youde  v.  Cloud,  L. 
R.  18  Eq.  Cas.  634;  Ex  parte  Ogle,  L.  R.  8  Ch.  App.  711  (at  page 
716);  Butler  v.  Carter,  L.  R.  5  Eq.  Cas.  276;  Ex  parte  Graves,  2 
Jur.  (N.  S.)  651.     *     *     * 

In  my  opinion  the  complainant  is  entitled  to  relief  to  the  extent  of    j  '^•-t*^^ 
the  money  which  the  defendant  did  receive  and  might  have  received 
and  which  I  ascertain  to  be  the  sum  of  $12,895."^     *     *     ♦ 


Ex  parte  OGLE.     Ex  parte  SMITH. 
In  re  PILLING. 

(In  the  Court  of  Appeal  in  Cliaucery,  1873.    Law  Reports  8  Chancery  Appeal 

Oases,  711.) 

In  this  case  there  were  two  appeals  from  a  decision  of  the  judge 
of  the  County  Court  at  Manchester. 

The  question  in  dispute  arose  under  a  deed  of  assignment  dated  the 
21st  of  October,  1864,  by  which  David  Pilling,  a  leather  factor  ai 
Manchester,  assigned  all  his  property  to  Edward  Smith,  as  a  trustee 
for  his  creditors.  The  deed  w^as  assented  to  by  the  requisite  majority 
of  creditors,  and  was  registered  under  the  192d  section  of  the  Bank- 
ruptcy Act,  1861  (24  &  25  Vict.  c.  134). 

Mr,  Ogle  and  other  creditors  charged  the  trustee  with  negligence 
and  mismanagement  of  the  estate,  and  claimed  to  surcharge  him  in  the 
accounts  which  he  had  rendered  in  several  particulars,  and  the 
charges  were  referred  to  the  Registrar  to  report  on  the  facts.  The 
effect  of  his  report,  dated  the  7th  of  May,  1872,  so  far  as  material 
to  the  present  appeal,  was  as  follows : 

Item  1.  As  to  wine  sold  to  the  debtor  or  allowed  to  remain  in  his 
hands. ^^ 

2  7  Affirmed  50  N.  J.  Eq.  484,  27  Atl.  63G  (1892). 

2  8  Only  so  much  of  the  report  as  affects  item  1  is  given. 


u- 


388  THE    DUTIES   OF   A   TUUSTEE.  (Ch.  5 

The  trustee  discovered  on  the  19th  of  November,  1864,  that  there 
were  519  bottles  of  wine  and  84  of  brandy  in  the  debtor's  possession 
unaccounted  for.  The  trustee  instructed  his  sohcitor,  Mr.  Simpson, 
to  take  legal  steps  for  the  recovery  of  the  property.     *     *     * 

Mr.  Simpson's  managing  clerk  stated  that  the  reason  why  more 
active  measures  were  not  adopted  was  that  Mr.  Simpson  believed 
that  the  indebtor  intended  eventually  to  pay  for  the  wine,  and  that  he 
wished  to  treat  him  in  a  friendly  spirit  and  not  hostilely.     *     *     * 

The  charges  arising  out  of  the  report  were  brought  before  the 
Judge  of  the  County  Court,  and  his  Honor  made  an  order  to  the  fol- 
lowing effect  on  the  items  which  formed  the  subject  of  appeal: 
•  Item  1 :  That  the  trustee  should  be  surcharged  with  £130.  as  the 
value  of  the  wine  and  s])irit,  with  interest  at  £5.  per  cent.,  from  the 
3d  of  May,  1865.     *     *     =^- 

Mr.  De  Gex,  Q.  C,  and  Mr.  Bagley,  then  opened  the  cross-appeal: 

As  to  item  1 :  The  trustee  was  not  to  blame  in  permitting  the  wine 
to  remain  in  the  debtor's  possession.  He  did  all  that  he  could  by 
placing  the  matter  in  the  solicitor's  hands.  It  is  very  doubtful  wheth- 
er the  court,  under  the  Act  of  1861,  had  power  to  order  a  debtor  to 
give  up  property  which  he  kept  possession  of.  At  all  events  there 
is  no  authority  for  charging  the  trustee  with  interest  on  the  value 
of  the  wine.  A  trustee  is  never  charged  with  interest  unless  he  has 
himself  possessed  and  used  the  property.  Tebbs  v.  Carpenter  [1 
Madd.  290].  In  Grove  v.  Price  [26  Beav.  103]  no  interest  appears 
to  have  been  charged,  although  the  money  was  clearly  lost  by  the 
trustee's  negligence. 

Sir  W.  M.  J.\MES,  L.  J.  It  appears  to  me  that  this  was  not  merely 
a  debt,  but  a  deliberate  breach  of  trust.  No  proceedings  were  taken 
against  the  debtor  because  he  was  a  friend  of  the  solicitor.  The 
County  Court  Judge  was,  in  my  opinion,  right  in  charging  the  trustee, 
not  only  with  the  value  of  the  wine  but  with  interest,"^  on  the  ground 
that  it  was  a  breach  of  trust. 

Sir  G.  Mellisii,  L.  J.,  concurred. ^"^ 

2  9  Eppinger  v.  Canepa,  Ext,  20  Fla.  262,  2SS  (1883) ;  Scott  v.  Crewyi,  72 
Mo.  2()1,  267,  268  (1880) ;  Torbet's  Heirs  v.  McUeyiioUls,  4  Humph.  (Teiin.) 
215  (184:3)  ;  Lowry  v.  McCee,  3  Head  (Teiiii.)  269  (1859).  Contra:  Lowsou 
V.  Copeland.  2  Bro.  C.  C.  156  (1787) ;  Tebbs  v.  Carpenter,  1  Madd.  290,  29!) 
(1816)  ;    Pulliam  v.  PuUiam  (C.  C.)  10  Fed.  53,  60-67  (1881). 

30  Harrison  v.  Mock,  10  Ala.  185  (1816);  Id.,  16  Ala.  616  (1849);  Royall's 
Adm'r  v.  McKenzie,  25  Ala.  ?^\:\  372,  373  (1854);  TorbeL's  Heirs  v.  McKey- 
uolds,  4  Humpli   (Teun.)  215  (1843). 


sec.  4)  duties  of  management  of  trust  estate.  389 

11.  The  Trustee's  Duty  to  Convert  into   Money  So  Much  of  the 
Trust  Estate  as  is  Not  in  a  Proper  State  of  Investment. 

HOWE  V.  EARL  OF  DARTMOUTH. 

(In  Chancery,   before  rx)rd   Eldon,   Chancellor,   1802.     7  Vesey,   Jr.   1P,1.) 

William,  Earl  of  Strafford,  by  his  will,  dated  the  25th  of  October, 
1774,  gave  to  his  wife  Anne.  Countess  of  Strafford,  all  his  personal 
estate  whatsoever  (except  the  furniture  of  Wentworth  Castle)  for  her 
life,  subject  to  the  following  outpayments  and  legacies.  He  also  left 
to  her  all  his  houses,  gardens,  parks,  woods,  and  all  his  landed  es- 
tates for  her  life ;  and  afterwards  all  his  personal  and  landed  estates 
to  his  eldest  sister  Lady  Anne  Connelly,  for  her  life ;  and  then  to  the 
eldest  son  of  George  Byng,  Esquire;  and  afterwards  to  his  second, 
third,  or  any  later  sons  he  may  have  by  the  testator's  niece  Mrs. 
Byng;  and  then  to  the  eldest  son  and  other  sons  successively  of  the 
Earl  of  Buckingham  by  his  niece  Caroline ;  but  all  of  them  to  be 
subject  to  the  following  outpayments  and  legacies.  He  left  his  wife 
the  sum  of  il5,000.  to  dispose  of  forever  as  she  pleases,  and  the 
value  of  iSOO.  in  furniture  in  Wentworth  Castle,  of  whatever  sort 
she  chooses;  else  the  whole  furniture  to  be  hers,  if  she  meets  with 
any  difficulty  in  this  disposition.  He  gave  several  legacies  and  an- 
nuities; and  declared,  he  would  have  all  his  debts  paid;  and  gave 
all  his  servants  a  year's  wages. 

The  testator  died  on  the  10th  of  March,  1791.  Anne,  Countess  of 
Strafford,  died  in  his  life,  on  the  9th  of  February,  1785.  Lady  Anne 
Connelly  filed  ^Jbill  for  an  account  of  the  personal  estate,  etc.  By 
a  decree,  made  at  the~Rolls  on  the  17th  of  May,  1793,  the  usual  ac- 
counts were  directed;  and  it  was  declared,  that  the  plaintiff  would 
be  entitled  to  the  interest  of  the  clear  residue  of  the  testator's  personal 
estate  during  her  life;  and  an  inquiry  was  directed,  who  were  the 
next  of  kin  of  the  testator  at  the  time  of  his  death. 

The  Master's  report,  dated  the  7th  of  March,  1796,  stated  the  ac- 
count of  the  personal  estate ;  part  of  which  consisted  of  the  following 
stocks  and  annuities,  standing  in  the  testator's  name  at  his  death: 
£4,320.  bank  stock;  £9,572.  per  annum  long  annuities;  £750.  per 
annum  short  annuities. 

Ljider  orders  made  in  the  cause  the  sums  of  £15,000.  and  £4,000. 
had  been  paid  in  by  the  executors;  and  laid  out  in  3  per  cent,  con- 
solidated bank  annuities. 

By  a  decretal  order,  made  on  the  7th  of  May,  1796,  the  balance  of  .^ 
the  personal  estate  in  the  hands  of  the  executors,  and  of  the  interest,  - 
etc.,  was  ordered  to  be  paid  into  the  bank;    and  that  the  executors 
should  transfer  the  £4,320.  bank  stock,  the  £9,572.  per  annum  long 
annuities,  and  the  £750.  per  annum  short  annuities,  to  the  Accountant 
General,  in  trust  in  the  cause ;   and  that  the  said  funds,  when  so  trans- 


390  THE   DUTIES   OF   A   TRUSTEE.  (Ch.  5 

f erred,  should  be  sold  with  his  privity ;  and  that  the  moneys  to  arise 
by  such  sale  should  be  laid  out  in  the  purchase  of  3  per  cent,  annuities, 
in  trust  in  the  cause,  subject  to  farther  order;  and  that  the  Master 
should  appropriate  a  sufficient  part  of  the  said  bank  annuities,  when 
purchased,  to  answer  the  grcnving  payments  of  the  several  annuities; 
and  that  as  any  of  the  annuitants  should  die,  the  funds  appropriated 
respectively,  should  fall  into  the  general  residue;  with  liberty  to 
apply ;  and  it  was  ordered,  that  the  interest  of  the  residue  of  the  said 
bank  annuities  after  such  appropriation,  and  also  the  interest  and 
dividends  of  the  said  £4,320.  bank  stock,  should  be  paid  to  the  plain- 
tic  Lady  Anne  Connelly  for  her  life;  and  on  her  death  any  person 
or  persons  entitled  thereto  were  to  be  at  liberty  to  apply;  and  after 
providing  for  the  costs  out  of  the  balance  of  the  personal  estate,  and 
for  the  arrears  of  the  annuities  out  of  the  sum  of  £2,067.  6s.  Id.  the 
balance  of  the  interest  and  dividends  received  by  the  executors,  and 
ordered  to  be  paid  into  the  bank,  it  was  ordered,  that  the  remainder 
.should  be  paid  to  Lady  Anne  Connelly;  and  also,  that  £1,846.  9s.  7d. 
cash  in  the  bank,  which  had  arisen  from  interest  of  the  funds,  in 
which  part  of  the  testator's  personal  estate  had  been  invested,  should 
be  also  paid  to  her;  and  that  the  dividends  of  £24,619.  4s.  lOd. 
3  per  cent,  bank  annuities,  in  which  the  sums  received  by  the  execu- 
tors from  the  personal  estate  had  been  invested,  should  from  time  to 
time  be  paid  to  her  during  her  life;  and  on  her  death  any  persons 
claiming  to  be  entitled  were  to  l)c  at  liberty  to  apply;  and  it  was 
ordered,  that  the  executors  should  get  in  the  outstanding  personal 
estate ;  and  that  so  much  thereof  as  should  consist  of  interest,  should 
be  paid  to  Lady  Anne  Connelly;  and  so  much  as  consisted  of  prin- 
cipal, should  be  paid  into  the  bank,  subject  to  farther  order. 

The  Master's  farther  report,  dated  the  lOth  of  December,  1796. 
stated,  that  the  bank  stock  and  the  long  and  short  annuities  had  been 
sold,  and  the  produce  laid  out  in  3  per  cent,  annuities. 

Upon  the  death  of  the  plaintiff  Lady  Anne  Connelly,  the  suit  was 
revived  by  her  executors ;  and  the  cause  coming  on  before  Lord  Alvan- 
ley,  then  Master  of  the  Rolls,  for  farther  direction  on  the  subsequent 
,-rei)ort,  it  was  insisted  on  the  part  of  Mr.  Byng,  that  Lady  Anne  Con- 
'  nelly  had  received  for  interest  and  dividends,  accrued  on  the  bank 
stock,  and  the  long  and  short  annuities,  and  the  produce  laid  out  in 
bank  3  per  cent,  annuities,  large  sums  more  than  she  was  entitled  to. 
if  those  funds  had  been  sold,  as  they  ought  to  have  been,  immediately 
after  the  testator's  decease,  and  the  produce  invested  in  a  permanent 
fund,  viz.,  the  3  per  cent,  consolidated  bank  annuities.  The  Master  of 
the  Rolls  directed  inquiries  with  respect  to  that  question  between  the 
executors  of  Lady  Anne  Connelly  and  Mr.  Ryng  and  the  other  parties 
interested  in  the  residue  of  the  personal  estate ;  with  liberty  to  present 
a  petition  to  rehear  the  order  of  1796,  as  to  the  payments  thereby  di- 
rected to  be  made  to  Lady  Anne  Connelly. 

Mr.  Mansfield,  Mr.  Lloyd,  Mr.  W.  Agar,  Mr.  Wingfield,  Mr.  Sear- 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF   TRUST   ESTATE.  391 

gent  Palmer,  Mr.  Bill  and  Mr.  Richards,  for  different  parties,  in  sup- 
port of  the  petition  of  re-hearing. — The  tenant  for  life  of  such  funds 
as  bank  annuities,  carrying  a  higher  interest,  and  long  and  short  an- 
nuities, wearing  out  rapidly,  is  not  entitled  to  the  enjoyment  of  them 
in  specie;  but  there  is  a  standing  rule  of  the  court  for  the  benefit  of 
all  parties  interested,  that  those  funds  shall  be  laid  out  in  the  more 
equal  fund,  the  3  per  cents.  No  party  ought  to  suffer  by  the  circum- 
stance, that  what  ought  to  have  been  done,  and  what  the  court  would 
have  directed  to  be  done,  immediately  on  the  testator's  death,  was  not 
done. 

]\Ir.  Romilly  and  Mr.  Trevor,  for  the  executors  of  Lady  Anne  Con- 
nelly, in  support  of  the  decree. — The  first  question  is,  whether  Lady 
Anne  Connelly  was  entitled  to  the  annual  produce  of  the  personal  es- 
tate at  the  death  of  the  testator;  if  not,  the  next  consideration  is, 
whether,  the  executors  having  paid  it  to  her,  and  particularly  the  div- 
idends of  the  bank  stock,  those  payments  ought  to  be  called  back. 
The  personal  estate  is  given  to  her  for  life  specifically. 
Lord  Chancellor  [Eldon].^^  No  question  arises  upon  this  will, 
except,  whether  this  is  a  specific  bequest  of  such  personal  estate  as 
was  the  testator's  at  the  time  of  his  death.  *  *  *  I  am  clearly  of 
oiDinipn,  therefore,  that  this  is  not  a  case,  in  which  the  personal  estate 
is  in  this  sense  specifically  given,  with  a  direction,  that  it  shall  remain 
s^cifically  as  it  was  at  the  testator's  death;  and  the  purposes,  for 
which  it  is  given,  are  those,  for  which  it  is  admitted  there  is  a  gen;; 
eral  rule^..that  these  perishable  funds  are  to  be  converted  in  such  a  way 
as  to  produce  capital,  bearing  interest. 

I  was  astonished,  when  that  was  doubted,  from  general  recollection. 
I  have  considered  the  practice  to  be,  that  the  first  moment  the  observa- 
tion of  the  court  was  drawn  to  the  fact,  the  court  would  not  permit 
property  to  be  laid  out  or  to  remain  upon  such  funds  under  a  direction 
to  lay  it  out  in  government  securities ;  but  would  immediately  order  it 
to  be  converted  into  that,  which  the  court  deems  for  the  execution  of 
trusts  a  government  security.  I  pass  over  what  has  been  said  as  to 
real  securities,  for  there  is  a  great  difference  between  real  securities?, 
or  bank  stock,  for  instance,  and  government  securities.  Bank  stock 
is  as  safe,  I  trust  and  believe,  as  any  government  security,  but  it  is 
not  government  security;  and  therefore  this  court  does  not  lay  out, 
or  leave,  the  property  in  bank  stock;  and  what  the  court  will  decree 
it  expects  from  trustees  and  executors.  I  will  not  state,  what  the 
court  would  do.  where  executors  had  not  made  these  conversions. 
That  depends  upon  many  circumstances.  But  I  abide  by  Lord  Ken- 
yon's  rule  in  the  case  of  Mr.  Champion,  an  executor,  before  which 
time  it  was  doubted,  whether  an  executor  could  lay  out  the  property 
in  the  3  per  cents.  Lord  Kenyon,  who  was  a  repository  of  valuable 
knowledge,  produced  a  dictum  of  Lord  Northington,  that  the  court 

31  Only  a  part  of  the  opinion  is  given. 


.'^1)2  THE    DITIKS   OF   A   TUUSTEE.  (Cll.  5 

would  protect  an  executor  in  doinc:  what  it  would  order  him  to  do. 
The  court  in  this  case  wmild  order  him  to  do  that.  It  is  not  so  in  the 
case  of  a  mortsjag-e.  The  court  would  not  permit  a  real  security  to 
be  called  in  without  an  inquiry,  whether  it  would  be  for  the  benefit 
of  every  person  ;  and  it  is  accident,  that  some  part  of  the  assets  will 
produce  more  interest  than  a  ii^cnuinc  trust  security.  In  some  in- 
stances there  is  little  doubt,  it  may  be  not  only  for  the  benefit  of  the 
tenant  for  life,  but  for  the  substantial  interest  of  the  remaindermen  that 
the  property  should  not  be  shifted  from  a  good  real  security. 

The  (picstion  then  is,  whether  the  court  will  chang^e  the  fund,  not 
as  between  the  remaindermen  and  the  executor,  but  in  a  question  be- 
tween the  tenant  for  life  and  the  remainderman;  and  the  question  with 
the  executor  cannot  well  arise,  so  as  to  be  acted  upon,  till  a  failure  by 
the  tenant  for  life,  or  those,  who  represent  him;  for  the  justice  of  the 
case,  if  the  tenant  for  life  had  received  so  much,  would  be,  that  he 
should  bring-  it  back  in  case  of  the  executor,  who  paid  him.  If  the 
rule  is,  that  the  fund  shall  not  remain,  it  is  impossible  to  say,  the  date 
of  the  decree  shall  decide.  I  do  not  like  to  put  it  upon  the  possibility 
of  collusion :  but  that  is  not  to  be  totally  neglected  ;  for  it  may  hap- 
pen, that  the  executor  himself  may  be  the  tenant  for  life;  and  then 
he  has  an  interest  in  delay.  Of  necessity  there  must  be  great  delay, 
before  there  can  be  a  final  decree  in  a  cause  of  great  property ;  and 
it  may  be  very  much  protracted,  where  there  is  an  interest.  However, 
I  do  not  put  it  upon  that.  But,  if  the  principle  is,  that  the  court, 
wdien  its  observation  is  thrown  upon  it,  will  order  the  conversion,  it 
ought  to  be  considered  to  all  practical  purposes  as  converted,  wdien  it 
could  be  first  converted.  That  is  the  genuine  inference  from  the 
other  principle.  If  the  court  has  ever  attended  to  the  difficulties,  often 
thrown  before  it,  with  regard  to  perishable  property  of  other  kinds, 
as  leasehold  estate,  etc.,  it  never  has  as  to  stock.  You  can  learn  the 
I)rice,  at  which  it  might  be  converted  on  any  day ;  and  the  moment 
the  court  was  ordered  by  the  Legislature  to  lay  out  its  funds  in  stock, 
it  necessarily  held,  that  for  this  i)urpose  stock  must  always  be  consid- 
cred  of  the  same  value.  It  is  for  the  benefit  of  the  creditor,  that  it 
should  be  thrown  into  a  lasting  fund ;  and  it  is  equal  to  all  the  par- 
ties interested.  As  to  bank  stock,  the  court  has  ordered  4  per  cents, 
and  5  per  cents,  to  be  sold  and  to  be  converted  into  3  per  cents,  upon 
this  ground;  that,  however  likely  or  not,  that  thcv  may  be  redeemed, 
the  court  looks  at  them  as  a  fund,  that  is  not  permanent,  though  it  may 
remain  forever ;  and  considers,  that  from  that  quality  there  is  an  ad- 
vantage to  the  present  holder ;  who  gets  more  interest,  because  they 
are  liable  to  be  redeemed.  I  do  not  know,  whether  the  reasoning  is 
as  just  in  practice  as  it  is  in  theory.  Property  cannot  be  laid  out  by 
this  court  in  bank  stock,  in  the  execution  of  a  trust  to  lay  it  out  in 
government  security ;  for  it  is  not  a  government  security.  Convert- 
ing that  therefore  the  executors  would  have  done  what  this  court 
would  have  ordered;  and  that  falls  under  the  same  consideration;   and 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF   TRUST   ESTATE.  393 

the  advantage,  if  any,  ought  not  to  accrue  to  the  tenant  for  life.  The 
account,  therefore,  must  go  as  to  that  as  well  as  the  long  and  short 
annuities,  from  the  time,  at  which  it  would  have  been  converted,  if 
the  observation  of  the  court  had  been  drawn  to  the  fact,  that  the  ex- 
ecutors_were  possessed  of  these  funds.  ' 

This  petition  of  re-hearing  is  therefore  well  founded. ^^ 


HUGHES  V.  EMPSON. 

(In  Chancery,  before  Sir  John  Romilly,  Master  of  the  Rolls,  1S56.     22  Beav. 

181.) 

The  testator  gave  his  residue  to  his  two  executors,  upon  trust,  after 
converting  the  same  into  money,  to  lay  out  and  invest  the  same  in  or 
upon  government  or  real  securities,  or  upon  railway  bonds  or  deben- 
tures in  England,  and  hold  the  same  on  trust  for  the  plaintiff. 

The  testator  died  the  20th  of  September,  1853.  Part  of  his  estate 
consisted  of  seventy-five  original  Crystal  Palace  shares,  which  the  ex- 
ecutors retained. 

By  the  decree,  an  inquiry  was  directed,  under  what  circumstances 
the  defendant  had  retained  the  shares,  and  whether  any  and  what  loss 
had  been  occasioned  thereby. 

3  2  Powell  V.  Cleaver,  7  Ves.  Jr.  142.  note  3  (17SS) ;  Cranch  v.  Cranch,  7 
Ves.  Jr.  141,  note  2  (1797)  ;  Fearns  v.  Young,  9  Ves.  Jr.  549  (1803) ;  Dimes  v. 
Scott.  4  Russ.  19.5  (1828);  Mills  v.  Mills,  7  Sim.  501  (1835);  Lichfield  v. 
Baker,  2  Beav.  481  (1840) ;  13  Beav.  447  (1840) ;  Benu  v.  Dixon,  10  Sim.  636 
(1840) ;  Tavlor  v.  Clark,  1  Hare,  161  (1841) ;  Caldecott  v.  Caldecott,  1  Y.  & 
Coll.  N.  R.  312  (1842)  ;  Sutherland  v.  Cooke,  1  Coll.  498  (1844) ;  Wrey  v. 
Smith,  14  Sim.  202  (1844) ;  INIaekie  v.  Mackie,  5  Hare,  70  (1845) ;  Sparling 
V.  Parker,  9  Beav.  524  (1846)  ;  Johnson  v.  Johnson,  2  Coll.  441  (1846)  ;  Pickup 
V.  Atkinson,  4  Hare,  624  (1846)  ;  Hubbard  v.  Young,  10  Beav.  203  (1847) ; 
Kirkman  v.  Booth,  11  Beav.  273  (1848) ;  Morgan  v.  Morgan,  14  Beav.  72 
(1851) ;  Thornton  v.  Ellis,  15  Beav.  193  (1852)  ;  Blann  v.  Bell,  5  De  G.  & 
Sm.  658  (1852)  ;  2  De  G.  M.  &  G.  775  (1852) ;  Meyer  v.  Simonsen,  5  De  G. 
&  Sm.  723  (1852) ;  Murton  v.  Markby.  18  Beav.  196  (1854)  ;  Hood  v.  Clapban, 
19  Beav.  90  (18.54) ;  Johnstone  v.  Moore,  27  L.  J.  Ch.  4.53  (1858) ;  Craig  v. 
Wheeler,  29  L.  J.  Ch.  374  (18(30) ;  In  re  Llewellyn's  Trust.  29  Beav.  171  (1861)  ; 
Hume  V.  Richardson,  4  De  G.,  F.  &  J.  29  (1862)  ;  Green  v.  Britten,  1  De  G., 
J.  &  S.  649  (186.3)  ;  Allhusen  v.  Whittell.  L.  R.  4  Eq.  295  (1867) ;  Pidgeon  v. 
Spencer,  16  L.  T.  R.  S3  (1867) ;  Brown  v.  Gellatly,  L.  R.  2  Ch.  Ap.  Cas.  751 
(1867)  ;  In  re  Shaw's  Tiiists,  L.  R.  12  Eq.  124  (1871) ;  Tickner  v.  Old,  L.  R. 
IS  Eq.  422  (1874) ;  Porter  v.  Baddely,  L.  R.  5  Ch.  Div.  542  (1877)  ;  MaeDon- 
ald  V.  Irvine,  L.  R.  8  Ch.  Div.  101  (1878)  ;  In  re  Smith's  Estate,  48  L.  J.  Ch. 
205  (1879)  ;  In  re  Hill.  50  L.  J.  Ch.  551  (18S1) ;  Brannock  v.  Stocker,  Adm'r, 
76  Ind.  558  (ISSl) ;  Kinmonth  v.  Brigham,  5  Allen  (Mass.)  270  (1862)  ;  Minot 
V.  Thompson,  106  Mass.  583  (1871) ;  Westcott  v.  Nickerson,  120  Mass.  410 
(1870) ;  Ilemenwav  v.  Hemenwav,  134  Mass.  446  (1883) ;  Mudge  v.  Parker, 
139  Mass.  153,  29  N.  E.  543  (1885) ;  Edwards  v.  Edwards.  183  Mass.  581,  67 
N.  E.  658  (1903)  ;  Ashburst  v.  Potter.  29  N.  J.  Eq.  625  (1878) ;  Covenhoven 
V.  Shuler.  2  Paige  (N.  Y.)  122,  21  Am.  Dec.  73  (1830)  ;  WilHamson  v.  William- 
son, 6  Paige  (N.  Y.)  298  (1837) ;  Cairns  v.  Chaubert,  9  Pai^e  (N.  Y.)  160  (1841) ; 
Emmons  v.  Cairns,  2  Sandf.  Ch.  (N.  Y.)  .369  (1845);  Spear  v.  Tinkham,  2 
Barb.  Ch.  (N.  Y.)  211  (1847) ;  Smith  v.  Barbam.  17  N.  C.  420,  25  Am.  Dee. 
721  (183.3)  ;  Jones  v.  Sinunons,  42  N.  C.  178  (1851) ;  Saunders  v.  Haughton, 
43  N.  C.  217,  57  Am.  Dec.  581  (1852). 


T 


-R-i 


394 


THE    DUTIES   OF   A   TIU'STEE.  (Cll.  5 


The  chief  clerk,  by  his  certificate,  found  the  averacj^e  price  of  the 
shares  beiween  the  21st  of  October,  1853  (when  the  will  of  the  testator 
was  proved  by  the  defendant),  and  the  22d  of  December,  1853  (beint:: 
two  months  after),  and  deducting  therefrom  the  price  of  the  shares  on 
the  14th  of  November,  1855  (the  date  of  his  certificate),  he  found  that 
there  had  been  a  loss  of  £325.,  with  which  he  charg^ed  the  executor. 
The  executor  objected  to  the  finding,  and  his  objections  now  came 
on  for  argument. 

Mr.  R.  Palmer  and  Mr.  Selwyn,  for  the  executor,  contended,  that 
the  executor  ought  not  to  have  been  charged  with  the  price  of  the 
shares  at  the  end  of  two  months,  but  at  the  end  of  twelve  months, 
when  their  value  had  considerably  diminished,  and  that  no  rule  existed 
which  required  the  conversion  at  the  end  of  two  months. 

Mr.  Lloyd  and  Mr.  W.  W.  Cooper,  for  the  plaintiff,  argued,  that 
some  period  must  be  fixed  for  calculating  the  loss,  which  had  occurred 
by  the  executor  allowing  the  assets  to  remain  on  an  unauthorized  se- 
curity, and  that  two  months  was  a  reasonable  time  within  which  the 
executor  ought  to  have  converted  the  Crystal  Palace  shares. 

Buxton  V.  Buxton  [1  Myl.  &  Cr.  80]  ;  Bate  v.  Hooper,  [5  De  G., 
M.  &  G.  338]  ;  Morgan  v.  Morgan  [14  Beav.  72\  ;  Knott  v.  Contee 
[16  Beav.  77\,  were  cited. 

T-he  Master  of  the  Rolls,  though  he  now  seemed  to  think  that  the 
certificate  was  correct,  mentioned  the  case  on  a  subsequent  day. 

The  Master  of  the  Rolls.  I  was  desirous  to  reconsider  what  I 
had  done  in  this  case  on  a  motion  to  vary  the  certificate,  and  though 
I  concurred  in  the  general  effect  of  it,  yet  I  think  I  was  too  hasty  on 
the  subject  at  the  time,  and  I  propose  to  vary  it.  The  question  is 
this:  The  executors  found  a  portion  of  the  testator's  property 
invested  in  Crystal  Palace  shares.  It  was  clearly  their  duty  to  sell 
and  invest  the  produce,  and  not  having  done  so,  they  are  liable  for 
the  loss  which  has  occurred  by  their  omission,  and  that  is  what  I 
intended  to  determine  on  the  former  occasion.  But  then  the  question 
.  is,  at  what  time  is  the  loss  to  be  ascertained  ?  Because  the  price 
varied  considerably  between  the  death  and  the  sale.  I  said  that  two 
months  was  a  reasonable  time  for  that  purpose,  but  it  was  contended 
that  a  year  was  the  time  which  has  always  been  given,  and  that  such 
was  the  period  allowed  in  I'.ate  v.  Hooper;  but  that  case  does  not 
govern  me  on  this  occasion ;  there  must  necessarily  be  a  discretion, 
and  I  concur  with  the  argument  of  Mr.  Lloyd,  that  there  is  no  fixed 
period,  and  that  it  is  impossible  to  say  that  it  is  one  year.  You  can- 
not fix  one  period  for  selling  every  species  of  property.  Thus  suppose 
the  testator  possessed  a  large  quantity  of  horses,  it  would  be  culpable 
to  keep  them,  at  a  great  expense,  incurring  necessarily  a  great  outlay 
for  their  maintenance,  instead  of  selling  them  at  once.  But  with 
respect  to  other  property,  there  must  be  a  reasonable  time  allowed  for 
selling  it. 


Sec.  4)  DUTIES   OF  MANAGEMENT   OF   TRUST   ESTATE.  395 

With  respect  to  these  shares  this  was  their  situation :  The  insti- 
tution had  not  opened,  and  they  paid  no  dividend,  but  they  bore  a 
premium  in  the  market,  and  in  the  view  I  take  of  the  case,  I  should 
have  considered  it  prudent  to  sell  at  the  earliest  period ;  but  in  all 
these  ca?es,  a  large  discretion  is  allowed  to  the  executors.  In  Buxton 
v.  Buxton  [1  M-yl.  &  Cr.  80],  Lord  Cottcnham  held,  that  where  an 
executor  had  not  sold  Mexican  bonds  until  a  year  and  a  half  after 
the  death,  and  had  bona  fide  kept  them,  he  ought  not  to  be  charged  _.^ 
with  the  loss.  In  this  state  of  things,  I  consider  that  the  executor  "^^  ^ 
may  properly  exercise  a  reasonable  discretion,  and  I  cannot  fix  any  :  i,-*^ 
particular  period.  I  think,  in  my  own  view,  that  two  months  would 
have  been  reasonable  time,  but  he  might  fairly  have  considered  twelve 
months.  I  shall,  therefore,  only  charge  him  with  the  loss  which 
would  have  occurred  if  he  had  sold  them  at  the  end  of  twelve  months. 
I  have  considered  whether  I  could  lay  down  any  general  rule,  but 
find  it  impossible.  The  question  depends  on  the  particular  nature  of 
the  property  and  the  evidence  affecting  it.  I  shall,  therefore,  alter 
the  certificate  and  charge  the  executor  with  the  value  of  the  shares  at 
the  end  of  twelve  months. ^^ 


LICHFIELD  V.  BAKER. 

(In  Chancery,  before  Lord  Langdale,  Master  of  the  Rolls,  1840.    2  Beav.  4S1.) 

The  Master  oi^  the  Rolls. ^*  *  *  *  ^he  only  point  on  which 
I  need  call  on  the  plaintiff's  counsel  to  reply,  is  on  the  extent  of  relief 
now  to  be  granted.  As  to  the  other  question,  I  take  this  to  be  the 
rule  of  the  court,  that  when  a  testator  has  given  an  estate,  or  the 
residue  of  an  estate,  to  persons  in  succession,  as  to  one  for  life,  with 
remainder  to  another  person ;  the  court,  presuming  that  the  testator 
intended  the  remaindennan  should  have  something,  will  so  deal  with 
the  property,  if  it  be  property  that  is  wearing  out  and  may  terminate 
during  the  life  estate,  as  to  secure  the  accomplishment  of  that  intent, 
and  give  the  remainderman  something ;  for  that  purpose  it  will  convert 
the  perishable  into  a  permanent  property,  and  give  the  income  which 
arises  from  it  to  the  persons  entitled  for  life  in  succession,  and  pre- 
ss In  Graybnrn  v.  Clarkson,  L.  R.  3  Ch.  App.  Cas.  605  (1S6S),  at  page  GOG, 
Sir  W.  Page  Wood,  L.  J.,  .said:  "The  result  of  the  authorities  seems  to  be, 
that  there  is  no  fi.\;ed  rule  that  conversion  must  take  place  by  the  end  of  the 
year,  but  that  that  is  the  prima  facie  rule,  and  that  executors  who  do  not 
convert  by  that  time  must  show  some  reason  why  they  did  not  do  so." 

For  unreasonable  delay  in  conversion  trustees  were  held  liable  for  loss 
in  the  following  cases:  Bate  v.  Hooper,  5  De  G..  M.  &  G.  .338  (1855);  Gray- 
burn  V.  Clarkson,  L.  R.  8  Ch.  App.  Cas.  605  (1868);  Sculthorpe  v.  Tipper, 
L.  R.  13  Eq.  2.32  (1871) ;  Earl  of  Gainsborough  v.  Watcombe  Terra  Cotta 
Clay  Co..  54  L.  J.  Ch.  991  (1885)  ;  Hiddingh  Heirs  v.  Denyssen,  12  Ap.  Cas. 
624  (1887).  Delay  to  convert  for  more  than  a  year  was  held  excusable  in 
Buxton  V.  Buxton,  1  Myl.  &  Cr.  80  (183.5),  and  Marsden  v.  Kent.  L.  R.  5  Ch. 
Div.  598  (1877). 
8*  The  statement  of  facts  is  omitted  and  only  a  part  of  the  ease  is  given. 


?,96  THE   DUTIES   OF  A  TRUSTEE.  (Cll.  5 

serve  the  capital  for  the  person  entitled  in  remainder.  That  is  the 
rule;  and  the  court  only  acts  upon  the  general  intention  of  the  testa- 
tor, that  something  should  be  given  to  the  person  who  is  the  donee 
in  remainder;  but  if,  upon  the  construction  of  the  will,  it  appears  the 
testator  had  another  intention,  that  is  to  say,  an  intention  to  give  to 
one  or  more  persons  who  are  to  take  for  lives  or  during  a  succession 
of  lives,  the  enjoyment  of  the  property  in  the  state  he  left  it  at  the 
time  of  his  death,  then  the  court  will  carry  that  intention  into  efifect; 
and  every  one  of  the  cases  which  have  been  cited,  and  every  case  which 
can  arise,  will  turn  upon  this  question  of  construction,  whether  you 
can  find  upon  the  face  of  the  will,  an  intention  that  the  legatee  for 
life  shall  enjoy  the  property  in  the  way  in  wdiich  it  stood  at  the  tes- 
tator's death,  even  to  the  extent  of  defeating  the  testator's  intention 
to  bequeath  something  to  the  remainderman.  I  believe  that  in  all  the 
cases  which  have  been  cited  in  opposition  to  the  conversion,  there  have 
been  words  clearly  indicating,  from  the  testator's  description  of  the 
property  or  some  other  circumstance,  that  the  testator  intended  the 
donee  to  enjoy  it  for  life,  in  the  same  way  in  which  it  stood  at  his 
death. 

Having  attended  to  this  will  and  read  it  carefully  over,  and  having 
attended  to  the  ingenious  argument  by  which  it  has  been  attempted  to 
be  shown  that  the  intention  was  that  the  donee  for  life  was  to  enjoy 
it  as  it  stood,  I  think  that  there  is  not  enough  in  the  will  to  except  this 
case  from  the  general  rule.^^     *     *     * 


fill 


'XlO  ■ 


ABBY  M.  KINMONTH  v.  WILLIAM  BRIGHAM  and  Another. 
(Supreme  Judicial  Court  of  Massachusetts,  1862.    5  Allen,  270.) 

Hoar,  J.  This  is  a  bill  in  equity  by  which  the  widow  of  David  M. 
Kinmonth  seeks  to  enforce  against  the  executors  and  trustees  of  her 
deceased  husband  a  trust  created  by  his  will. 

The  material  facts  presented  by  the  bill  and  answers  are  these.  The 
testator,  who  died  February  22,  1860,  by  his  will,  after  certain  specific 

85  In  the  followins  cases  the  intention  of  the  creator  of  the  trust  was  held 
to  exclude  conversion,  under  the  rule  in  Howe  v.  Earl  of  Dartmouth:  Vin- 
cent V.  Newctimhe,  1  Younge,  51)9  (1S:}2) ;  Alcock  v.  Sloper,  2  Myl.  &  K.  CU'J 
(l.s:«);  Collins  v.  Collins,  2  Myl.  &  K.  70:}  (18o3) ;  Bethune  v.  Kennedy,  1 
-Mvl.  &  Cr.  114  (18.*}5);  Pickering  v.  Pickering,  2  Beav.  31  (1839),  affirmed  4 
Myl.  &  Cr.  289  (18:59) ;  Goodenough  v.  Tremamondo,  2  Beav.  512  (1840)  ; 
Vaughan  v.  Buck,  1  Phillips,  75  (1841) ;  llinves  v.  Ilinves,  0  Hare.  609  (1844) ; 
Cafe  V.  Bent,  5  Hare,  24  (1845) ;  Mackie  v.  Mackie.  5  Hare,  70  (1845) ;  Neville 
V.  Fortescue,  16  Sim.  333  (1818)  ;  Blann  v.  Bell,  10  Jur.  1081  (1852)  ;  Harris 
V.  Povner,  1  Drew.  174  (1852) ;  Crowe  v.  Crisford,  17  Beav.  507  (1853) ;  Hind 
V.  Selhy,  22  P.eav.  373  (1856)  ;  AV earing  v.  Wearing,  23  Beav.  99  (18,50) ; 
Skirvin'g  v.  Williams,  24  Beav.  275  (1857)  ;  Holgate  v.  .Jennings,  24  Beav. 
623  (1857) ;  Simpson  v.  Lester,  4  Jur.  N.  S.  1269  (1859) ;  Boys  v.  Boys,  28 
Beav.  437  (1860)  ;  Gray  v.  Siggers.  L.  R.  15  Ch.  Div.  74  (1880) ;  In  re  Pit- 
cairn.  I..  It,  (1S96)  2  Ch.  199  (1S95);  In  re  Nicholson,  L.  R.  (1909)  2  Ch.  Ill 
(declining  to  follow  Porter  v.  Baddely,  L.  R.  5  Ch.  Div.  542). 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF   TRUST   ESTATE.  397 

legacies  therein  set  forth,  bequeathed  the  whole  residue  of  his  estate 
to  trustees,  in  trust  to  invest  the  same  carefully,  and  to  keep  the  same 
safely  invested,  and  as  often  as  once  in  each  year,  to  divide  the  net 
income  thereof  into  three  parts,  one  of  which  they  should  pay  over 
to  his  wife,  during  her  natural  life.  The  same  persons  were  named 
as  executors  and  trustees. 

A  part  of  his  estate  was  his  interest  in  a  limited  partnership,  which 
was  formed  September  4,  1858,  to  continue  for  four  years;  and  to 
which  he  had  contributed  $50,QQ0,  .as.  special  partner.  By  the  articles 
of  partnership  he  was  to  be  entitled  to  one-half  of  the  profits,  and 
might  withdraw  the  same  semi-annually ;  he  was  to  bear  one-half  the 
losses,  to  the  extent  of  his  capital  invested,  and  make  good  the  same 
semi-annually ;  and  at  the  end  of  the  term  the  general  partners  were  to 
take  the  stock,  fixtures  and  good-will,  and  to  pay  over  to  him  the  capital 
which  he  had  contributed,  and  the  net  profits  then  due.  It  was  also 
provided  that  if  either  of  the  general  partners  should  violate  any  of 
the  partnership  covenants,  the  testator  and  his  representatives  should 
have  the  right  to  dissolve  it,  and  take  possession  of  the  stock,  stand, 
property,  and  business,  and  carry  on  the  business  on  his  or  their  own 
account ;  and  that  in  case  of  the  death  of  either  of  the  general  partners 
within  two  years,  the  partnership  should  continue  till  the  time  of  the 
next  semi-annual  accounting,  and  the  testator  and  his  representatives 
should  then  have  the  same  right  to  take  the  property  and  business. 
By  the  will,  the  executors  were  authorized  not  to  avail  themselves  of 
this  last  provision,  unless  they  should  see  fit. 

The  business  had  been  established  and  carried  on  by  the  testator, 
previous  to  the  formation  of  the  special  partnership.  The  special 
partnership  has  proved  extremely  profitable,  the  testator  having  re- 
ceived a  large  sum  as  profits  before  his  death;  and  the  executors  have 
received,  as  profits  and  capital,  $158,558.44  since  their  appointment. 

The  plaintiff  seeks  to  compel  the  executors  to  distribute  the  sum  of 
$108,558.44,  as  the  net  income  of  the  estate. 

The  case  has  been  most  ably  and  thoroughly  discussed  by  the  counsel 
for  the  respective  parties,  upon  principle  and  authority ;  and  it  will 
be  sufficient  to  state  briefly  the  result  at  which  we  have  arrived. 

The  English  rule  is  perfectly  well  settled,  that  where  the  residue  of 
personal  property  is  left  without  specific  description,  and  is  given  in 
succession  to  a  tenant  for  life  and  remainderman,  it  shall  be  invested 
in  a  permanent  fund,  so  that  the  successive  takers  shall  enjoy  it  in 
the  same  condition,  and  with  the  same  productive  capacity.  The 
reason  of  the  rule  is  the  obvious  and  just  consideration,  that  the  inten- 
tion of  the  testator  is  expressly  declared  to  give  the  enjoyment  of  the 
same  fund  to  the  successive  takers ;  and  that  this  can  only  be  done 
by  fixing  the  value  of  the  fund  at  the  time  when  the  right  of  the  first 
"taker  to  its  use  commences.  The  leading  case  is  Howe  v.  Dartmouth. 
7  Ves.  137.  This  was  followed  by  Fearns  v.  Young,  9  Ves.  549,  where 
the  doctrine  was  applied  to  the  case  of  money  invested  in  a  partner- 


398  THE   DUTIES   OF   A   TRUSTEE.  (Ch.  5 

sliip  at  the  death  of  the  testator.  Many  of  the  subsequent  cases  are 
collected  and  reviewed  in  2  White  &  Tudor's  Lead.  Cas.  in  E(iuity 
{.•\ni.  Ed.)  278  et  seq.,  in  the  notes  to  Howe  v.  Dartmouth,  and  these, 
with  others,  have  been  carefully  presented  in  the  argument  of  this 
cause. 

In  the  application  of  this  rule,  the  English  Courts  of  Chancery,  by 
a  long  course  of  decisions,  have  determined  that  an  investment  in  the 
three  per  cents,  is  to  be  generally  regarded  as  the  only  investment 
which  will  be  sanctioned  or  directed  by  the  court  as  safe  and  per- 
manent; though,  in  a  few  cases,  a  reference  has  been  made  to  a 
Master  to  find  whether  an  existing  security  at  a  higher  rate  of  inter- 
est is  not  absolutely  safe,  and  more  beneficial  to  all  the  parties.  Calde- 
cott  V.  Caldecott,  1  Y.  &  Coll.  312,  7Z7 . 

But  wherever  property  is  specifically  bequeathed,  or  where  the  inten- 
tion can  be  gathered  from  the  whole  will  that  it  should  be  enjoyed 
in  specie,  the  rule  does  not  apply. 

ir  And  the  rule  itself,  so  far  as  it  requires  an  investment  in  public 
I  securities,  has  never  been  adopted  in  this  Commonwealth.  As  was 
'said  by  Chief  Justice  Shaw,  in  Lovell  v.  Minot,  20  Pick.  119,  32  Am. 
Dec.  206.  "there  are  no  public  securities  in  this  country,  which  would 
answer  these  requisitions  of  an  English  Court  of  E(]uity."  The  only 
rule  which  has  been  recognized  by  this  court  as  obligatory  upon  a 
trustee  in  making  investments  is,  that  he  shall  act  with  good  faith, 
and  in  the  exercise  of  a  sound  discretion. 

In  Lovell  v.  Minot,  an  investment  by  a  guardian  in  the  promissory 
note  of  a  person  in  good  credit,  secured  by  a  pledge  of  stock  in  a 
manufacturing  company  which  was  then  selling  in  the  market  at  above 
its  par  value,  at  the  rate  of  about  three-quarters  of  its  par  value,  was 
held  to  be  made  with  sound  discretion. 

In  Harvard  College  v.  Amory,  9  Pick.  446,  an  investment  was  made 
by  trustees  under  a  will,  of  a  fund,  the  profits  and  income  of  which 
were  to  be  paid  to  the  testator's  widow^  for  her  life,  and  after  her  de- 
cease the  fund  to  be  distributed.  It  was  held  that  the  trustees  were 
authorized  to  invest  in  the  capital  stock  of  an  incorporated  manu- 
facturing com])any,  and  of  an  incorporated  insurance  company;  and 
that  the  actual  profits  and  dividends  received  from  such  investment 
were  rightly  paid  to  the  widow.  The  will  itself  expressly  empowered 
the  trustees  to  invest  the  fund  "in  safe  and  productive  stock,  either 
in  the  public  funds,  bank  shares  or  other  stock,  according  to  their 
best  judgment  and  discretion;"  and  enjoined  attention  "in  the  choice 
of  funds,  and  in  the  punctual  collection  of  the  dividends,  interest  and 
profits  thereof."  A  large  part  of  the  testator's  property  consisted  of 
manufacturing  and  insurance  stock. 

[      But  although  in  this  Commonwealth  there  are  no  investments  re- 

I  garded  as  so  absolutely  secure  as  to  make  a  choice  of  them  obligatory 

upon  trustees,  and  in  all  cases  a  considerable  latitude  is  allowed,  yet 

)  it  has  never  been  held  that  trustees  for  successive  takers  were  at 


Sec.  4)  DL'TIES   OF   MANAGEMENT  OF  TRUST  ESTATE.  309 

liberty  to  disreg-ard  the  security  of  the  capital  in  order  to  increase  the 
income.      Nor  where  property  is  of  a  wasting  nature,  is  an  invest- 
ment Tn 'it  consistent  with  their  duty,  in  the  absence  of  specific  direc- 
tions in  the  creation  of  the  trust.    They  are  equally  bound  to  preserve 
the  capital  of  the  fund  for  the  benefit  of  the  remainderman,  and  to 
secure  the  usual  rate  of  income  upon  safe  investments  for  the  tenant 
for  life ;    and  to  use  a  sound  discretion  in  reference  to  each  of  those 
objects.     If  there  is  no  specific  direction,  and  they  are  charged  merely 
with   the  general  duty  to  invest,  they   cannot  postpone  the  yielding 
of   income   for  the   increase  of   the   capital,  nor  select  a  wasting  or 
hazardous  investment  for  the  sake  of  greater  present  profit.    And  the 
rjLile  is  the  same  in  regard  to  property  which  comes  to  the  trustees 
from  the  testator,  not  specifically  bequeathed,  as  it  is  in  regard  to  mak- 
ing new  investments.    If  the  investment  is  not  such  as  this  court  would 
su^tain   them   in  making,   it  should  not  be  allowed  to  continue,  but 
should  be  converted.     Its  value  as  a  fund  should  be  ascertained  as- of 
the  time  when  the  enjoyment  of  the  income  of  it  is  to  commence; 
,:  ancTTli^iund  treated  as  if  it  had  been  at  that  time  converted  into 
Siich    an   investment   as    the   court    would   sanction.      In   determining 
this   value,   it  is   not   always   practicable  to   settle   it   with  exactness, 
until    the    conversion    is   actually   made;     especially   in   cases    where 
the  capital  is  more  or  less  at  risk.     The  most  just  rule  seems   to 
be,  where  reasonable  care  and  prudence  have  been  used  by  the  trustees 
in  making  the  conversion,  to  treat  the  whole  sums  received  from  time 
to  time,  until  converted,  as  parts  of  the  estate ;   and  to  find  what  sum 
at  the  time  to  which  the  conversion  has  reference  would  be  equivalent 
to  the  amount  actually  received,  at  the  time  it  was  received;    and  to 
treat  that  sum  as  capital,  and  the  remainder  as  income.     Thus  if  the 
residue  consisted  of  notes  or  obligations  payable  at  a  future  day,  with- 
out interest;    and  the  tenant  for  life  were  entitled  to  the  income  from 
the  death  of  the  testator ;  when  the  money  was  received,  so  much  of  it 
only  would  be  treated  as  capital,  as,  if  invested  at  the  death  of  the 
testator,  would  have  produced  the  whole  amount  at  the  time  the  notesj 
or  obligations  were  payable;    and  the  rest  would  be  income.     If  the^ 
property  were  embarked  in  a  commercial  adventure,  or  were  in  the 
shape  of  a  bottomry  bond,  or  other  hazardous  condition,  the  trustees 
would  be  required  to  use  suitable  skill  and  caution  in  collecting  what- 
ever could  be  obtained  from  it,  and  the  value  of  whatever  was  or  ought 
to  have  been  realized  from  it  would  be  fixed  as  of  the  time  of  the 
testator's  death,  and  treated  as  capital.     And  on  the  other  hand,  where 
the  property  is  of  a  wasting  nature,  as  terminable  annuities,  leases  or 
the  like,   the  value   of   the  whole  investment  at  the  testator's  death 
should  be  ascertained,  and  what  should  be  regarded  as  income  be  com- 
puted upon  that  basis. 
^  In  applyingLJhe  principles  which  we  have  stated  to  the  case  at  bar, 
k  is  conceded  that  the  income  to  which  the  plaintiff  is  entitled  should 
commence  and  be  computed  from  the  death  of  her  husband.    We  are 


400  TIIK   DUTIKS   OF   A   TUUSTKE.  (Cll.  5 

of  opinion  there  is  nothing  in  the  will  which  indicates  an  intentiort 
that  she  should  enjoy  the  income  of  any  particular  property  which  the 
testator  possessed,  in  specie,  but  the  whole  resitlue  was  to  be  ahke 
subject  to  investment  by  the  trustees.     The  reference  to  the  special 
partnership  is  only  in  connection  with  instructions  to  the  executors  as 
to  their  duty  in  a  certain  contingency.     In  the  next  place;  we  cannot 
regard  the  investment  by  a  special  partner  in  a  trading  partnership 
as  such  an  investment  as  the  court  would  sanction.     It  is  obviously 
^difficult,  in  this  case,  to  determine  what  was  the  value  of  the  invest- 
ment at  the  testator's  decease,  by  any  other  mode  than  a  computation 
based  upon  the  whole  product  ultimately  realized  from  it.     It  included 
not  merely  the  fifty  thousand  dollars  contributed  by  the  testator  to  the 
enterprise',  but  the  interest  in  an  established  and  lucrative  business,  with 
the  right  to  the  services,  for  a  fixed  period,  of  all  the  general  partners. 
The  whole  was  at  risk  until  the  partnership  concerns  were  all  settled. 
It  somewhat  resembles  property  invested  in  a  ship,  or  upon  a  whaling 
voyage,  or  long  commercial  adventure;    from  which  returns  are  re- 
ceived from  time  to  time,  but  with  liability  to  losses  w^hich  may  require 
the  whole  to  be  refunded ;    and  where  the  successful  progress  of  the  ■  , 
enterprise  so  far  may  have  enhanced  the  value  of  the  property  far    ^'^%. 
beyond  its  original  cost.     We  think  such  returns  could  not^  be  iustly-  '^^^'^ 
treated,  between  tenant  for  life  and  remainderman,  as  the  income  of.    i^  ^  ^ 
.an  investment. 

We  think,  therefore,  that  upon  a  just  construction  of  the  will, 
equity  w'ill  regard  that  the  profits  received  by  the  executors  from  the 
special  partnership  should  not  be  regarded  or  treated  exclusively  as 
income,  but  that  they  should  be  treated,  when  received  from  time  to 
time,  as  property  belonging  to  the  estate,  a  part  of  which  is  to  be 
invested  as  capital,  and  a  part  distributed  as  income ;  which  parts  are 
to  be  ascertained  by  finding  what  sum,  if  received  at  the  death  of  the 
testator,  would  amount  with  interest  at  six  per  cent.,  and  making 
annual  rests,  to  the  sum  actually  received,  at  the  time  it  was  received ; 
and  that  the  sum  so  found  should  be  invested  as  principal,  and  the  re- 
mainder distributed  as  income. 

The  costs  of  the  litigation  are  to  be  paid  from  the  whole  fund.  De- 
cree accordingly. 

DHIES  V.  SCOTT. 

(In  Chancery,  before  Lord  Chancellor  Lyndhiirst,  1S27.     4  Russell,  195.) 

Captain  Piercy,  by  his  will,  dated  the  24th  of  September,  1801,  be- 
queathed all  his  ready  money,  securities  for  money,  and  all  other  hij 
personal  estate  and  efi'ects  not  thereinbefore  specifically  disposed  of, 
unto  John  Atkins  and  John  Corderoy,  upon  trust  to  convert  the  same 
into  money,  and  thereout  to  pay  his  debts  and  funeral  and  testamentary 
expenses,  and  to  stand  possessed  of,  and  interested  in,  the  residue  qf 


,t-  o- 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF   TRUST   ESTATE.  401 

the  monev  to  arise  and  be  produced  by  his  estate  and  effects,  in  trust, 

to  place  out  or  invest  the  same  in  or  upon  government  or  real  securities, 

as  to  his  trustees  should  seem  meet,  and  to  stand  possessed  of  and 

interested  in  the  money  so  to  be  invested  or  placed  out  at  interest, 

upon  trust,  after  paying  certain  annuities,  to  pay  the  interest,  dividends, 

and  annual  produce  to  his  wife  Mary,  during  her  life;   and,  after  her 

decease,  to  stand  possessed  of  the  principal,  in  the  events  which  hap-    '^  .  V\J ^^Jj. 

pened,  in  trust  for  Elizabeth  Wintersgill,  her  executors,  administrators      ^^cO  yUZi 

and  assigns ;    and  he  appointed  Atkins,  Corderoy,  and  his  wife  Mary,   .y^^u^^^o^ 

executors  of  his  will.  ,^7^   •       /     ^ 

The  testator  died  on  the  30th  of  January,  1802;  and,  shortly  after- 
wards, his  widow^  and  Corderoy  proved  the  will. 

Part  of  Captain  Piercy's  property,  at  the  time  of  his  death,  con- 
sisted of  a  sum  of  i2,000.,  which,  when  in  Calcutta  in  1799,  he  had 
invested  in  a  fund  of  the  East  India  Company,  called  the  Decennial 
Loan.  That  loan  was  irredeemable  for  ten  years  from  the  1st  of  Jan- 
uary, 1800;  it  bore  interest  at  the  rate  of  £10.  per  cent.,  payable  an- 
nually either  in  cash  at  Calcutta  or  by  bills  drawn  upon  the  directors 
in  London^  and  payable  fifteen  months  after  date.  The  principal  was 
to  be  repaid  at  the  end  of  ten  years ;  a  power,  however,  being  re- 
served to  the  company  of  postponing  the  payment  for  one  or  two 
years  longer,  upon  paying,  during  such  additional  period,  interest  at 
either  £10.  per  cent,  or  £5.  per  cent.,  according  as  the  payment  was 
to  be  made  in  India  or  in  London.  The  shares  in  the  loan  were  trans- 
ferrable. 

Captain  Piercy,  before  he  left  India,  directed  the  interest  on  his  por- 
tion of  the  loan  to  be  paid  to  him  in  London. 

Tiie  £2,000.,^  invested  in  this  loan,  remained  upon  that  security  till 
1813,  when  the  principal  was  paid  off  and  laid  out  in  the  purchase  of 
£3.  per  cent,  stock.  Corderoy,  as  executor  and  trustee,  had,  during 
all  this  time,  received  the  interest,  and  paid  it  over  to  the  widow,  who 
had  intermarried  with  a  Mr.  Scott. 

In  June,  1820,  Elizabeth  Wintersgill,^  and  her  husband,  filed  their 
bill  against  the  executors  of  Corderoy,  and  the  widow  of  the  testator 
for  an  account  of  his  assets.  The  bill  charged,  that  "the  testator's 
interest  in  the  decennial  loan  ought,  as  being  a  beneficial  property,  to 
have  been  sold,  or  otherwise  the  interest  ought  to  have  been  invested 
as  principal  money  for  the  benefit  of  the  testator's  estate;  and  that 
Mary  Scott  and  Richard  Scott,  or  the  personal  representatives  of 
Corderoy,  ought  to  be  charged  with  the  interest  received  by  Corderoy 
and  Alary  Scott  in  respect  of  the  said  loan." 

At  the  hearing,  the  common  accounts  were  directed.  The  Master 
in  his  r£pQrt  allowed  to  the  executors  of  Corderoy  the  payments  of 
the  interest  on  the  decennial  loan,  which  Corderoy  had  made  to  Airs. 
Scott,  the  tenant  for  life  of  the  residue. 

The  plaintiffs  excepted  to  this  part  of  the  report,  on  the  ground 
Ken.Tb.— 26 


-r' 


402  THE   DL'TIES   OF  A   TRUSTEE.  (Ch.  5 

that  "Mary  Scott,  being  only  tenant  for  life  of  the  residue,  was  not 
entitled  to  be  paid  the  interest  upon  the  subscription  of  £2,000.  to  the 
decennial  loan,  to  the  prejudice  of  the  plaintifif,  who  was  the  person 
entitled  to  the  residue  immediately  after  the  death  of  Mary  Scott; 
but  that  the  interest  .upon  the  said  subscription  ought,  as  it  became 
due  and  was  received  by  Corderoy,  to  have  been  considered  and  treated 
by  him  as  part  of  the  general  residue  of  the  testator's  personal  estate, 
a!id,  as  such,  during  the  life  of  ]\Iary  Scott,  and  the  interest  thereof, 
when  so  laid  out  and  invested,  paid  to  her  during  her  life." 

Air.  Barber,  in  support  of  the  exceptions. 

The  decisions  pronounced,  and  doctrines  laid  down  by  Lord  Hldon, 
in  Gibson  v.  Bott  [7  Ves.  89],  Howe  v.  Earl  of  Dartmouth  [7  \^es. 
137],  and  Fearns  v.  Young  [9  \'"es.  549],  establish  the  rule,  that, 
where  a  general  residue  of  personal  property  is  given  to  one  person 
for  life,  with  remainder  over  to  others,  that  residue  is  to  be  considered 
as  converted  into  3  per  cent,  stock  so  soon  as  it  could  have  been  so 
converted,  and  the  tenant  for  life  is  to  take,  not  the  annual  profit 
which  it  has  yielded  in  its  unconverted  state,  but  the  dividends  which 
would  have  arisen  from  it,  if  the  conversion  had  taken  place. 

Mr.  Pemberton,  contra. 

The  present  case  has  no  resemblance  to  any  of  the  authorities  whicH 
have  been  cited ;  leaseholds  and  long  annuities  are  a  perishing  fund ; 
they  aiC  yearly  diminishing  in  value;  every  annual  payment  con- 
sists partly  of  what  is  truly  a  payment  of  interest,  and  partly  also  of 
what  is  a  repayment  of  capital.  Here  the  principal  was  not  sustaining 
any  diminution. 

Lord  GiFFORD,  Master  of  the  Rolls,  held  that  these  payments  to 
the  tenant  for  life  were  an  improper  application  of  the  trust  moneys. 

The  order  made  was  as  follows :  "His  Lordship  held  the  plaintiff's 
said  exception  to  be  good  and  sufficient,  and  doth  therefore  order  the 
same  to  stand  and  be  allowed ;  and  his  Lordship  doth  order  that  the 
said  Master  do  review  his  said  report,  as  to  the  said  decennial  loan. 
And  his  Lordship  doth  declare,  that  the  testator  John  Wintersgill 
Piercy's  subscription  of  ±2,000.  to  the  decennial  loan,  raised  at  Cal- 
cutta, ought  to  have  been  sold  upon  the  decease  of  the  testator;  and 
it  is  ordered  that  it  be  referred  to  the  said  Master  to  inquire  what  sum 
the  said  £2,000.,  subscribed  by  the  testator  to  the  decennial  loan,  would 
have  sold  for  one  year  after  the  testator's  death,  and  what  sum  of 
bank  £3.  per  cent,  annuities  the  money,  which  the  said  Master  shall 
find  the  said  £2,000.  subscribed  to  the  said  decennial  loan  would  have 
sold  for  would  have  purchased,  if  the  same  had  been  sold  by  John 
Corderoy,  the  executor  of  said  testator,  one  year  after  the  said  tes- 
tator's death ;  and  it  is  ordered  that  the  said  Master  do  inquire,  how 
much  would  have  arisen  from  dividends  of  such  bank  £3.  per  cent, 
annuities,  in  case  the  same  had  been  purchased  as  aforesaid,  to  the 
time  the  said  testator's  subscription  to  the  said  decennial  loan  was  paid 
off;    and  his  Lordship  doth   declare,   that   the   defendants,   Thomas 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF   TRUST   ESTATE.  403 

James,  John  Stanbank,  and  William  Green,  the  executors  of  John 
Corderoy,  the  executor  of  the  testator,  are  entitled  to  be  allowed  such 
sum  as  the  Master  shall  find  would  have  arisen  from  dividends  of  the 
said  bank  £Z.  per  cent,  annuities,  as  payments  on  account." 

On  appeal  by  the  representatives  of  Corderoy  the  said  order  was 
affirmed. 

The  Lord  Chancellor.^®     This  testator  left  his  property  to  trus- 
tees, who  were  directed  to  convert  it  into  money,  and  to  invest  the 
proceeds  in  government  or  real  securities  ;    and  he  gave  the  interest     /-^st.^' 
of  the  money  so  to  be  invested  to  his  widow  for  life,  with  remainder 
to  the  lady  who  is  one  of  the  present  plaintiffs.     Part  of  his  property 
consisted  of  a  sum  which  he  had  subscribed  to  what  is  called  a  de- 
cennial loan.     The  trustees  did  not  convert  his  share  of  the  loan  into 
money;    but,  suffering  it  to  remain  as  they  found  it.  paid  the  interest,    ,q 
which  was  £10.  per  cent.,  to  the  tenant  for  life.     Was  that  a  proper  -^''^^^^-''^ 
performance  of  their  duty?  / 

The  directions  of  the  will  were  most  distinct;  and,  according  to 
the  case  of  Howe  v.  Lord  Dartmouth  [7  Ves.  137],  and  the  principles 
of  this  court,  it.w,a^..tJie._(iuty.-Qf  the  trustees  to  have  sold  the  property 
within  the  usual  period  after  the  testator's  death.  If  they  neglected 
to  sell  it,  still,  so  far  as  regarded  the  tenant  for  life,  the  property  was 
to  be  considered  as  if  it  had  been  duly  converted.  Had  the  conversion 
taken  place,  and  the  proceeds  been  invested  in  that  which  is  considered 
in  this  court  as  the  fit  and  proper  security,  namely,  £3.  per  cent,  stock, 
the  tenant  for  life  would  not  have  been  entitled  to  more  than  the  inter- 
est which  would  have  resulted  from  such  stock.  The  executor  is 
therefore  cliarggable_j^'it]i  the  difference  between  the  interest  which 
th£_iund,  if  so  converted,  would  have  yielded,  and  the  £10.  per  cent./  "-^ 

wdiich  was  actually  produced  1)\'  the  fund,  and  was  paid  over  by  himj/ 
iQ_the  tenant  for  lift?.     *     *     * 

I  think,  therefore,  that  the  judgment  of  the  blaster  of  the  Rolls 
must  be  affirmed. 

Mr.  Sugden  submitted  that  the  tenant  for  life  was  entitled  to  the 
actual  interest  produced  by  the  investment  in  the  decennial  loan  till 
the  time  when  it  was  the  duty  of  the  executors  to  have  converted  it, 
namely,  till  the  end  of  the  first  year  from  the  testator's  death,  and 
therefore  that  the  executors  ought  to  be  allowed  in  their  accounts, 
the  extra  interest  received  in  respect  of  that  year. 

Mr.  Home  admitted  that,  according  to  the  principle  of  Angerstein 
V.  Martin  [1  Turn.  &  Russ.  232],  and  Hewitt  v.  Morris  [1  Turn.  & 
Russ.  241],  the  tenant  for  life  was  entitled  to  the  income  of  the  res- 
idue, not  merely  from  the  end  of  the  first  year  after  the  testator's 
death,  but  from  the  time  of  his  death.  The  income,  however,  during 
the  first  year  was  to  be  measured  in  the  same  way  as  during  any  sub- 
sequent year,  and  could  therefore  amount  only,  so  far  as  the  share  in 

3  0  The  opinion  of  the  Master  of  the  Rolls  is  omitted,  aud  only  a  part  of 
the  Lord  Chancellor's  opinion  is  given. 


c> 


404  Tin;  DUTiKs  of  a  tuustee.  (Ch.  5 

the  decennial  loan  was  concerned,  to  the  dividends  on  the  £3.  per  cent, 
stock,  which,  at  the  end  of  a  year  from  the  testator's  death,  might  have 
been  purchased  with  the  proceeds  of  that  share. 
'"'  vti'\^  ^  The  Lord  Chancellor.     During  the  first  year  after  the  testator's 

death  the  tenant  for  Hfe  is  entitled,  not  to  the  interest  on  the  decen- 
nial loan,  but  to  the  dividends  on  so  much  £3.  per  cent,  stock  as 
would  have  been  produced  by  the  conversion  of  the  property  at  the 
end  of  that  year." 


BROWN  V.  GELLATLY. 

(In  (ho  Tonrt  of  Appeal.  1SG7.     Law  Reports  2  Chancery  Api)eal  Oases,  751.) 

Duncan  Dunbar  died  March  6th,  1862.  testate.  By  his  will,  exe- 
cuted July  13th,  1859,  he  left  all  his  property,  personal  or  freehold,  in 
trust  to  William  Smith  Brown  and  Edward  Gellatly ;  giving  them  full 
power,  except  as  thereinafter  provided,  to  realize  the  same  when  and 
in  such  manner  as  they  might  see  fit.  without  being  personally  respon- 
sible for  such  realization,  and  "to  sail  my  ships  for  the  benefit  of  my 
estate  until  they  can  be  satisfactorily  sold,  without  being  responsible 
for  any  loss  on  any  voyage." 

He  made  some  specific  gifts  and  gave  a  number  of  pecuniary  leg- 
acies upon  trust.  His  residuary  estate  he  gave  in  trust  to  tenants  for 
life,  with  remainders  over.  He  appointed  William  Smith  Brown  and 
Edward  Gellatly  executors,  and  gave  them  "full  power  to  invest  at. 
their  discretion,  or  allow  to  remain  as  at  present  invested,  all  my  funds 
in  government  and  colonial  government  securities,  guaranteed  railway 
stock  and  debentures,  East  India  bonds  and  stock,  marine  insurance 
shares,  and  shares  in  the  London  Chartered  Bank." 

At  his  death,  the  testator  was  carrying  on  business  on  a  large  scale 
as  a  ship  owner  and  merchant.  The  ships  which  he  owned  at  his  death 
were  nearly  all  of  them  out  on  voyages.  The  rest  sailed  after  his 
death.    The  result  was  a  large  profit. 

He  possessed  a  large  amount  of  such  stocks,  shares,  and  securities,- 
as  were  mentioned  in  the  last  clause  of  his  will.  These,  to  a  consid- 
erable extent,  remained  unconverted.  He  also  possessed  a  large 
amount  of  stocks,  shares  and  securities,  not  coming  under  any  of  those 
descriptions,  and  not  being  proper  investments  for  trust  moneys. 
These  also,  to  a  great  extent,  remained  unconverted. 

In  a  suit  to  administer  the  trusts  of  the  will,  questions  had  arisen 
between  the  tenants  for  life  of  shares  of  the  residue  and  the  persons 
entitled  in  remainder.    A  summons,  having  been  taken  out  to  take  the 

37  See,  also,  Taylor  v.  Chirk,  1  Hare.  101  (1841) ;  Morgan  v.  Morgan,  14 
Beav.  72  (1851);  Ilolgate  v.  .Jennings,  24  Reav.  02:5  (1857);  In  re  Llewellyn's 
Trust,  2D  Beav.  171  (1861) ;  Hume  v.  Itichardson,  4  De  G.,  F.  &  J.  29  (1862)  ; 
Allhusen  v.  Whittell,  L.  R.  4  Eq.  295  (1867);  Brown  v.  Gellatly,  L.  R.  2  Ch. 
App.  Cas.  751   (1867). 


X 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF   TRUST   ESTATE.  405 

oiiinion  of  the  Master  of  the  Rolls,  he  made  an  order  declaring  his^^^'"^-""^ 
opinion  and  from  that  order  the  tenants  for  life  appealed. 

Lord  Cairns,  L.  J.    There  are  three  questions  in  the  case ;  the  first/' 
as  to  the  ships;    the  second,  as  to  what  I  will  term  the  authorized  se- 
curities ;    and  the  third,  as  to  the  securities  which  are  not  authorized 
by  the  will. 

With  regard  to  the  ships,  I  think  that  the  case  of  Green  v.  P.ritten  [1 
De  G.,  J.  &  vS.  649]  does  not  apply.  In  Green  v.  Britten  there  was  an 
absolute  prohibition  against  converting  the  ships  for  seven  years,  ex- 
cept in  an  event  which  did  not  happen,  and  the  court,  resting  upon  the 
prohibition,  held  that  it  was  a  sufficient  warrant  for  giving  to  the  ten- 
ant for  life  the  income  which  those  ships  earned  during  the  seven 
years.  It  is  not  necessary  here  to  consider  whether  that  was  a  cor- 
rect construction  or  not;  it  is  enough  to  say  that  the  principle  on 
which  the  court  proceeded  does  not  apply  to  the  present  case,  in  which 
we  find  no  indication  whatever  of  an  intention  that  the  ships  were  to 
remain  unconverted  for  any  specific  time.  The  testator,  who  had  been 
engaged  in  the  shipping  business,  knew  perfectly  well,  and  shows  that 
he  knew,  that  some  time  would  necessarily  be  taken  in  converting  the 
ships,  and  therefore  he  very  wisely  provided  that  until  they  were  sold 
the  executors  should  have  a  power  which  otherwise  they  would  not 
have  possessed,  namely,  the  power  to  sail  the  ships  for  the  purpose  of 
making  profit,  but  in  giving  that  power;  he  does  not  give  it  as  a  power 
to  be  exercised  for  the  benefit  of  the  tenant  for  life  as  against  the 
^rties  in  remainder,  or  for  the  benefit  of  the  parties  in  remainder  as 
against  the  interest  of  the  tenant  for  life,  but  says  that  it  is  to  be  exer-, 
cised  for  the  benefit  of  the  estate,  ^meaning,  as  I  apprehend,  for  the 
benefit  of  the  estate  generally,  without  disarranging  the  equities  be- 
tween the  successive  takers. 

I  think,  therefore,  that  with  regard  to  the  ships,  the  testator  put 
them  simply  in  the  position  of  property  which  was  to  be  converted 
cautiously,  _and  in  proper  time,  and  as  to  which  there  w'as  to  be  no 
breach  of  trust  in  the  executors  delaying  to  convert  it,  but  wdiich,  when 
converted,  was  to  be  invested,  and  when  invested,  to  be  enjoyed  as 
the  residue  of  his  estate. 

In  that  state  of  things,  it  seems  to  me  that  the  case  falls  exactly 
within  the  third  division  pointed  out  by  Sir  James  Parker  in  the  case 
of  Meyer  v.  Simonsen  [5  De  G.  &  Sm.  723],  and  that  a  value  must  be 
set  upon  the  ships  as  at  the  death  of  the  testator,  and  the  tenant  for 
li^must  have  4  per  cent,  on  such  value,  and  the  residue  of  the  profits 
must  of  course  be  invested,  and  become  part  of  the  estate.^^ 

Then,  secondly,  as  to  the  authorized  securities.     By  those.  I  mean     JJ^ 
the  securities  wdiich  are  specified  in  the  last  clause  of  the  will,  gov- 

38  See,  also.  In  re  Thomas,  D.  R.  (1801)  3  Ch.  482.  486;  In  re  Woods,  L. 
R.  (1904)  2  Cb.  4  ;  In  re  Chaytor,  L.  R.  (100.5)  1  Ch.  233  (1904).  The  interest 
now  allowed  in  En.uhuid  under  such  circumstances  is  not  4  per  cent.,  but  3 
per  cent     See  the  last  two  cases. 


.A 


'7- 


406  THE   DUTIES   OF  A   TIUSTEE.  (Cll.  i) 

crnmcnt  and  colonial  govcrninent  securities,  guaranteed  railway  stock 
and  debentures,  marine  insurance  shares,  and  shares  in  the  London 
Chartered  Bank.  The  first  thirteen  items  in  the  list  of  securities  con- 
t:iined  in  the  statement  submitted  to  the  Master  of  the  Rolls,  are  ad- 
mitted to  come  under  one  or  the  other  of  those  descriptions.  In  my 
opinion,  according  to  the  construction  of  the  will,  the  executors  have 
full  power  to  retain  upon  those  securities,  for  as  long  as  they  think 
it  advantageous,  the  money  invested  by  the  testator  in  those  securities, 
or  to  invest  upon  securities  of  any  of  those  descriptions  the  money 
obtained  by  the  conversion  of  any  part  of  the  testator's  estate,  and 
while  any  such  securities  form  part  of  the  testator's  estate  the  tenant 
for  life  is,  in  my  opinion,  entitled  to  the  specific  income  of  the  securi- 
ties, just  as  if  they  had  been  £3.  per  cent,  consols.  I  understand  the 
words  of  the  will  as  amounting  to  the  constitution  by  the  testator  of 
a  larger  class  of  authorized  securities  than  this  court  itself  would  have 
approved  of,  and  the  court  has  merely  to  follow  his  directions,  and 
treat  the  income  accordingly,  as  being  the  income  of  authorized  se- 
curities. 

Then  comes  the  third  question  in  the  case,  the  securities  not  ranging 
themselves  under  any  of  those  mentioned  in  the  last  clause  of  the  will. 
They  appear  to  have  been  securities  possessed  by  the  testator  himself, 
but  that,  I  think,  makes  no  difference ;  as  they  do  not  come  within  the. 
class  of  authorized  securities  it  was  the  duty  of  the  trustees  to  convert 
them  at  the  earliest  moment  at  which  they  properly  could  be  converted. 
I  do  not  mean  to  say  that  the  trustees  were  by  any  means  open  to 
censure  for  not  having  converted  them  within  the  year,  but  I  think 
that  the  rights  of  the  parties  must  be  regulated  as  if  they  had  been  so 
converted.  I  think  the  proper  order  to  make  is  that  which  was  made 
in  Dimes  v.  Scott  [4  Russ.  195],  followed  by  Vice-Chancellor  Wigram 
in  the  case  of  Taylor  v.  Clark  [1  Hare,  161],  namely,  to  treat  the  ten- 
ant for  life  as  entitled,  during  the  year  after  the  testator's  death,  to 
the  dividends  upon  so  much  3  per  cent,  stock  as  would  have  been  pro- 
duced by  the  conversion  and  investment  of  the  property  at  the  end  of 
one  year.  This  will  involve  a  variation  of  the  order  under  appeal  as 
to  those  securities,  since  it  proceeds  upon  a  somewhat  dififerent  footing, 
and  aggregates  the  amount  produced  by  conversion  at  the  end  of  the 
year  with  the  dividends  produced  during  the  year,  which  is  not  pre- 
cisely in  accordance  w'ith  Dimes  v.  Scott  and  Taylor  v.  Clark. 


In  re  STRAUBEXZEE. 
BOUSTEAD  V.  COOPER. 

(In  Chancery,  before  Lord  .Tustice  Cozons-IIai-dy.   l!)l)l.     Law  Reports  (1001) 
2  Chancery  Division,  779.) 

By  a  settlement  dated  November  13,  1841,  and  made  between  Gen- 
eral John  Luther  Richardson  of  the  first  part.  Miss  Charlotte  Louisa 
Richardson   of  the   second  part,   General   Sir   Charles   Thomas   Van 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF  TRUST   ESTATE.  407 

Straubenzee   (then  Captain  Van  Straubenzee)  of  the  third  part,  and 
certain  trustees  of  the  fourth  part  (on  the  marriage  of  Miss  Richard- 
son and  Captain  Van  Straubenzee),  a  sum  of  £2,000.  East  India  stock, 
the  property  of  General  Richardson,  was  settled  upon  trust  for  the 
wife  for  life,  and  then  for  the  husband  for  life,  with  usual  trusts  for  .    . 
the  issue  of  the  marriage;   and  in  the  event,  which  happened,  of  there  -V"  '^^  ^    ^ 
not  being  any  child  of  the  marriage,  then  the  trustees  were  to  transfer  ^  -^  .yxH, 
one  moiety  to  the  husband,  his  executors,  administrators  and  assigns      <6£-?^^,< 
absolutely,  and  to  transfer  the  other  moiety  to  General  Richardson,  his 
executors,   administrators   and  assigns.     The   settlement   contained   a 
covenant  by  the  husband  and  wife  that  in  case  at  any  time  or  times 
thereafter  during  the  coverture  any  real  or  personal  estate  or  effects 
of  any  kind  or  quality  of  estate  and  effects  should  come  to  or  vest  in 
the  wife,  or  the  husband  in  his  right,  at  law  or  in  equity,  by  devise,    ZL    ^^ 
descent,  gift  or  otherwise,  the  same  should  be  conveyed,  settled  and    -^-^■-^ 
assured  from  time  to  time,  without  any  delay  by  the  husband,  his  ex- 
ecutors, and  administrators,  and   the  wife,  and  all  persons  claiming 
under  her,  with  the  trustees,  their  heirs,  executors,  administrators,  and 
assigns  respectively,   according  to  the  nature  or  quality  of   the  said 
property  respectively,  upon  such  and  the  same  trusts,  and  to  and  for 
such  and  the  same  ends,  intents,  and  purposes,  and  with,  under,  and 
subject  to  such  and  the  same  powers,  provisions  and  limitations,  dec- 
larations and  agreements,  as  were  thereinbefore  mentioned,  expressed, 
and  declared  of  and  concerning  the  said  sum  of  £2,000.  East  India 
stock,  or  as  near  thereto  as  the  nature  of  the  property  or  other  inter- 
vening circumstances  should  permit.   •  The  settlement  did  not  contain 
any  power  to  vary  securities. 

General  Richardson  by  his  will,  dated  April   13,   1847,  and  proved  7<v'-^   '  '     , 
in  1849,  gave  all  his  residuary  personal  estate  to  trustees,  upon  trust  ,' 
as  soon  as  conveniently  might  be  to  sell  and  convert  into  money  all 
sticJl- parts  of  his  estates  and  effects  as  should  not  consist  of  money;    , 
and  to  stand  possessed  of  the  moneys  which  should  arise  from  the  said  j'   CT-  -^ 
sale  of  the  said  residuary  estate  and  effects,  as  to  one  equal  third  part  ^  ^  -/      - 
in  trust  for  his  daughter  Mrs.  Ellis,  for  her  separate  use ;    as  to  an- 
other equal  third  part  for  Lady  Van  Straubenzee  absolutely ;    and  as 
to  the  remaining  third  part  in  trust  for  his  daughter,  Catherine  Frances 
Richardson  absolutely. 

Lady  Van  Straubenzee  died  in  1900,  a  widow  and  without  issue. 

An  originating  summons  was  taken  out  by  John  Boustead,  Williami 
Naughtin,  and  Lindsay  Farrington,  the  then  trustees  of  the  settlement 
of  1841,  to  which  summons  the  following  persons  were  defendants, 
namely :  J.  H.  Cooper  and  D.  Hale,  the  legal  personal  representatives 
of  the  surviving  trustee  of  the  settlement ;  J.  F.  Rochf ord,  the  legal 
representative  of  Lady  Van  Straubenzee,  Frances  G.  M.  Naughtin, 
(wife  of  W.  Naughtin)  and  T.  Van  Straubenzee  and  J.  P.  Jervoice, 
who  with  the  plaintiff  Farrington  were  the  legal  personal  representa- 


408  Tin;  ditiks  of  a  tiustiu-:.  (Ch.  5 

tives  of  General  Van  Strauhcnzcc ;    and  A.  J.  King,  the  Icc^al  personal 
representative  of  General  Richardson. 

As  reji^ards  one  of  the  questions  raised  hy  the  summons,  Cozens- 
Hardy,  |.,  held  that  the  one-third  share  which  Lady  Strauhenzee  took 
in  her  father's  residuary  estate  was  bound  by  the  covenant  to  settle 
after-acquired  property.  This  residue  included  one  moiety  of  the  set- 
tled propertv,  which,  on  her  death,  a  widow  and  without  issue,  fell  to 
General  Richardson's  executors. 

A  further  question  was  then  argued,  whether  the  rule  in  Howe  v. 
Earl  of  Dartmouth  [7  Ves.  137]  applied. 

■      Cozens-Hardy,  J.,  after  stating  the  facts  as  above  set  out,  contin- 
ued as  follows :     Now,  so  far  as  I  am  aware,  the  rule  in  Howe  v.  Earl 
of  Dartmouth   [7  Ves.  137]  has  never  been  applied  except  to  a  dis- 
position by  will  of  residuary  personal  estate  given  as  one  fund  to  be 
enjoyed  by  several  persons  in  succession.     The  court  assumes  an  in- 
tention that  the  legatees  should  enjoy  the  same  thing  in  succession, 
and,  as  the  only  mode  of  giving  effect  to  such  intention,  it  directs  the 
conversion   into  permanent  authorized  investments  of  all  such   parts 
of  the  residuary  estate  as  are  of  a  wasting  or  reversionary  or  unau- 
thorized character.     See  Pickering  v.  Pickering   [4  My.  &  Cr.  289], 
and  IMacdonald  v.  Irvine  [8  Ch.  Div.  101,  112].    But  the  rule  does  not 
apply  to  any  bequest  which  is  specific,  as  distinguished  from  residuary. 
On  principle,  I  can  see  no  ground  for  applying  the  rule  to  the  present 
case.     The  covenant  to   settle   after-acquired   property   is   a   contract 
which  has  to  be  performed  in  strict  accordance  with  its  terms.     It  op- 
erates  upon   that  which  must  be   regarded   as   a   specific   property — 
namely,  the  lady's  share  in  her  father's  estate.     This  share  is  to  be 
vested  in  the  trustees  upon  the  same  trusts  as  are  declared  with  refer- 
ence to  the  India  stock.     Those  trusts  do  not  include  a  trust  for  sale 
of  the  India  stock,  nor  is  there  even  a  power  to  sell  it,  apart  from  leg- 
islation since  1841.     I  cannot  imply  a  trust  to  convert  that  which  is 
brought  into  the  settlement,  whether  it  be  real  or  personal  estate.     It 
is   remarkable  that  there  is  no  direct  authority   on   the   point.      ^Ir. 
Vaizey,  in  his  book  on  Settlements,  p.  421,  says:     "There  are  two 
cases  in  which,  probably,  the  rule  is  applicable  to  trusts  in  settlements 
created  by  deed.     One  is  that  in  which  the  unrealized  estate  of  a  de- 
ceased person,  or  of  the  share  in  such  an  estate  to  which  the  settlor 
is  entitled,  is  settled.     The  other  is  the  case  of  a  covenant  to  settle 
after-acquired  property."    In  support  of  this  view  no  judicial  decision 
is  cited,  and  there  are  two  cases  which  tend  in  the  opposite  direction. 
In  Milford  v.  Peile  [17  Beav.  602],  which  is  more  fully  reported  in 
2  W.  R.  181,  the  point  seems  to  have  arisen.     By  a  settlement  made 
in   1848,  on  the  marriage  of   Mrs.   Milford,  a  sum  of  £10,000.  con- 
sols was  held  by  trustees,  upon  trust  either  to  retain  the  same  in  its 
then  present  state  of  investment,  or  to  sell  the  same  and  invest  the 
proceeds  in  other  securities,  with  power  to  vary  securities,  and  upon 
trust  to  pay  the  income  to  the  wife  and  husband  during  their  respective 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF   TUUST   ESTATE.  409 

lives.  The  settlement  contained  a  joint  and  several  covenant  by  Mr. 
and  Mrs.  Milford  that,  in  case  any  real  and  personal  estate  to  the 
amount  of  £100.  sterling  at  any  time  should  during  the  coverture,  by 
gift,  devise,  bequest  or  intestacy,  from  or  of  her  father,  Mr.  Thames 
Locke  Lewis,  come  to  or  devolve  on  her,  then  the  same  real  and  per- 
sonal estate  should,  by  such  acts,  deeds,  and  assurances  as  should  be 
necessary  for  the  purpose,  be  duly  vested  in  the  trustees  or  trustee  for 
the  time  being  of  the  marriage  settlement,  their  and  his  heirs,  exec- 
utors, administrators,  and  assigns,  and  be  held  upon  and  for  such 
trusts,  intents  and  purposes,  and  with,  under  and  subject  to' such  pow- 
ers, provisos,  and  declarations  (as  far  as  the  nature  of  the  property 
would  admit)  as  were  thereby  declared  of  and  concerning  the  prem- 
ises thereby  assigned  and  settled  by  and  on  the  part  of  the  said  Frances 
Harriott  Lewis,  and  the  dividends  and  annual  produce  thereof,  or 
such  and  as  many  of  the  same  as  should  be  subsisting  and  capable  of 
taking  effect.  Mr.  Lewis,  the  father,  died  in  November,  18.^2,  hav- 
ing by  his  will  bequeathed  a  certain  leasehold  house  and  premises,  and 
all  the  furniture  and  effects  therein,  to  trustees,  in  trust  for  Mrs.  Mil- 
ford  for  her  separate  use.  The  bill  was  filed  by  Mrs.  Milford  against 
her  husband  and  the  trustees  to  take  the  opinion  of  the  court  whether 
the  leasehold  house  and  furniture  were  bound  by  the  covenant,  and, 
if  so,  whether  they  ought  to  be  enjoyed  in  specie,  or  be  converted  into 
money,  and  the  proceeds  invested.  The  Master  of  the  Rolls  (Sir  John 
Romilly)  held  that  the  property  was  bound  by  the  covenant,  and  was 
of  opinion  that  there  was  no  trust  for  conversion  in  the  settlement, 
and  that  the  property  should  be  assigned  to  the  trustees  and  enjoyed 
in  specie.  Howe  v.  Earl  of  Dartmouth  [7  Ves.  137],  does  not  seem 
to  have  been  cited,  and  no  clear  reasons  are  given  for  the  conclusion 
arrived  at.  The  decision,  however,  was  inconsistent  with  the  view  that 
the  rule  in  Howe  v.  Earl  of  Dartmouth  applied,  unless  Sir  John  Rom- 
illy relied  upon  the  express  option  given  to  the  trustees  either  to  re- 
tain or  to  sell. 

In  the  following  year,  1855,  the  question  arose  for  consideration  be- 
fore Kindersley,  V.  C,  in  Hope  v.  Hope,  which  is  reported  only  in 
1  Jur.  (N.  S.)  770.  By  a  marriage  settlement  certain  funds  were 
vested  in  trustees  upon  trust  to  pay  the  interest  of  one  moiety  to  the 
wife  for  her  separate  use,  and  upon  trust  to  pay  the  other  moiety  to 
the  husband  for  life,  and  upon  trust  after  the  death  of  one  to  pay  the 
interest  of  the  wdiole  to  the  other,  and  trusts  were  declared  as  to  the 
trust  funds  after  the  death  of  the  survivor  for  the  benefit  of  the  chil- 
dren of  the  marriage ;  and  in  the  settlement  was  contained  a  cove- 
nant to  settle  after-acquired  property  upon  and  for  the  trusts  therein- 
before declared  as  to  the  funds  vested  in  the  trustees  above  mentioned : 
provided  always,  and  it  was  thereby  agreed  and  declared,  that  it  should 
be  lawful  to  and  for  the  trustees,  at  the  request  in  writing  of  the  hus- 
band and  wife  during  their  joint  lives,  and  of  the  survivor  of  them 
during  his  or  her  life,  and  after  the  decease  of  such  survivor  at  the 


410  THE   DUTIES   (U'   A    IIUSTKE.  (Ch.  ."") 

discretion  of  the  trustees,  absolutely  to  sell  and  dispose  of  all  or  any 
of  the  real  estate  or  personal  estate  (not  consistinp;  of  money,  stocks, 
funds,  or  securities)  which  under  the  covenants  thereinbefore  contained 
should  become  subject  to  the  trusts  thereof  in  manner  therein  men- 
tioned;   and  that  the  trustees  should  stand  and  be  possessed  of  the 
moneys  which  should  arise  from  such  sale  or  sales  upon  the  like  trusts 
and  subject  to  the  like  provisions  and  ai^reements  as  were  thereinbe- 
fore declared  and  contained  of  and  concerninp^  the   funds  vested   in 
trustees  as  above  mentioned.     The  lady's  father  by  his  will  g-ave  and 
bequeathed  to  her  his  leasehold  house  in  which  he  then  resided,  to- 
gether   with   certain   chattels.      He   died   in    1851,   and   the   leasehold 
house,  which  was  held  for  a  term  of  which  twenty-two  years  was  un- 
expired, was  assigned  to  the  trustees  of  the  settlement.     A  question 
having  arisen  as  to  whether  the  leasehold  house  and  the  specific  chat- 
tels bequeathed  by  the  will  ought  to  be  retained,  or  ought  to  be  con- 
verted into  money  and  the  proceeds  invested  upon  the  trusts  of  the 
settlement  or  whether  they  ought  to  be  enjoyed  in  .specie,  a  special 
case  was  submitted  to  the  court.    Howe  v.  Earl  of  Dartmouth  and  Mil- 
ford  v.  Peile  were  cited.     Kindersley,  V.  C,  said  he  was  not  aware 
of  any  case  in  which  the  principle  of  Howe  v.  Earl  of  Dartmouth  had 
been  applied  to  a  settlement,  which  was  a  contract  between  the  par- 
ties, whilst  in  a  will  there  was  no  contract.    But  whatever  might  be  the 
general  principle,  in  this  particular  case,  so  far  from  there  being  any 
trust,  implied  or  otherwise,  for  conversion,  conversion  was  only  to  take 
place  at  the  request  of  the  husband  and  wife  during  their  lives,  and  aft- 
er their  death  at  the  discretion  of  the  trustee,  the  intention  being  that 
the  property,  whatever  it  was.  coming  to  the  wife,  should  be  settled. 
There  would,  therefore,  be  a  declaration  that  the  property  was  not  to 
be  converted  during  the  lives  of  the  husband  and  wife  without  their 
request.     Hope  v.  Hope  is  important  as  indicating  that  in  the  opinion 
of  the  Vice-Chancellor,  the  rule  does  not  apply  to  a  marriage  settle- 
ment,  but  I  cannot  treat  it  as  a  positive  decision  to  that  effect.    Under 
these  circumstances  I  feel  at  liberty  to  follow  my  own  view.     And  I^ 
therefore  hold  that  the  rule  in  Howe  v.  Earl  of  Dartmouth  has^  no^p-^ 
plication  to  the  present  case. 


In   re  OLIVER. 
WILSON  V.  OLIVER. 

(Tn  Chancory,  heforo  Warriuuton,  .Justice,  1908.     Law  Reports   (1008)   2 

Chancery,  74.) 

Originating  summons. 

Thomas  Blossom  Oliver,  by  his  will  dated  September  12,  1905,  after 
bequeathing  to  his  wife  Mary,  an  immediate  legacy  of  i2,000.,  and  all 
of  his  household  furniture  and  effects,  gave  and  devised  all  his  real 
and  personal  estate  unto  his  trustees  upon  trust  for  sale  and  conver- 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF   TRUST    ESTATE.  411 

^sion,  and  after  payment  of  his  debts,  funeral  and  testamentary  ex- 
penses and  the  said  legacy,  upon  trust  to  invest  the  net  residue  and 
pay  the  income  thereof  to  his  wife  durinq-  her  life,  and  after  her  death 
to  pay  and  divide  the  corpus  from  which  the  said  inc<Mne  was  derived 
and  the  investments  equally  between  and  amongst  all  his  brothers  and 
sisters  in  equal  shares  as  tenants  in  common.  The  will  contained  no 
power  to  postpone  the  conversion  of  the  estate. 

The  testator  died  on  September  13,  1905,  possessed  of  considerable 
real  and  personal  estate. 

Part  of  the  real  estate  and  the  whole  of  the  personal  estate  had  been 
converted  and  the  proceeds  applied  in  payment  of  the  debts,  funeral 
and  testamentary  expenses,  and  in  or  towards  the  discharge  of  incum- 
brances on  the  unsold  real  estate,  which  now  constituted  the  entire 
estate  and  had  been  retained  unconverted  in  the  interests  of  the  several 
beneficiaries. 

The  present  summons  was  taken  out  by  the  trustees  of  the  will  for 
the  determination  of  the  question  (inter  alia)  whether  the  plaintiffs  as 
trustees  ought  to  make  any,  and  if  any  what,  payment  to  the  defendant 
]\Iary  Oliver,  by  way  of  income  in  respect  of  the  real  estate  of  the  ■A-t-_e.^ 
testator  remaining  unconverted  and  on  what  principle  the  amount  of 
such  payment  ought  to  be  calculated. 

Warrington,  J.,  read  the  following  judgment: 

The  question  in  this  case  is  whether  the  defendant  IMary  Oliver, 
the  tenant  for  life  under  the  testator's  will,  is  entitled  to  the  rents  of  ^ 
certain  unsold  real  estate  or  whether  such  real  estate  ought  to  be  val- 
ued and  interest  on  such  value  paid  to  her.  [His  Lordship  stated  the 
facts,  observing  that  the  unsold  real  estate. had  been  properly  retained 
unconverted  in  the  interests  of  the  several  beneficiaries.  He  contin- 
ued:]    On  these  facts  the  question  I  have  stated  arises. 

In  the  case  of  a  simple  devise  of  real  estate  in  trust  for  sale  where 
the  proceeds  are  to  be  held  for  several  in  succession,  I  think  it  is  set-j  j  ^^r  .-.  ^ 
tied  that  until  sale  the-tenant  for  life  is  entitled  to  the  rents  and  profits./..!  U 
Casamajor  v.  Strode  [19  Ves.  390,  note]  ;    [Hope  v.  D'Hedouville,  L. 
R.  (1893)  2  Ch.  361].    On  the  other  hand,  in  the  case  of  a  similar  be- 
quest of  personal  estate,  the  tenant  for  life  would  not  be  entitled  to 
the  income  of  the  estate  in  specie,  so  far  as  it  is  not  derived  from  au- 
thorized investments,  but  would  be  entitled  to  a  sum  representing  in-     '   ' 
terest  at  a  fixed  rate  on  the  value. 

It  has  indeed  been  argued  that  there  is  no  such  distinction  between  ''■ 

real  and  personal  estate,  but  that  the  rule  as  to  personalty  is  universal 
in  its  application,  and  in  support  of  this  argument  reliance  is  placed     -i.i^i     ,- 
on  a  passage  in  the  judgment  of  Lord  Macnaghten  in  Wentworth  v.     />     o 
Wentworth  [L.  R.   (1900)  A.  C.  171].     That  passage  is  as  follows:  '  f' 

"In  this  country,  in  the  case  of  income-producing  property  directed     -^^    \3 
by  will  to  be  converted,  but  retained  for  a  time  unconverted  for  the 
benefit  of  the  estate,  it  has  been  the  practice  of  the  court  to  put  a  value- 
on  the  property,  and  to  allow  the  tenant  for  life  out  of  the  income 


^^. 


o 


412  Tin;    DITIKS    OF   A    TRUSTKE.  (Ch.  5 

actually  produced  a  sum  c<.\mi\  to  4  per  cent,  on  such  value.  That  was 
the  rule  laid  down  by  Parker,  V.  C,  in  Meyer  v.  Simonsen  [5  De  O. 
&  Sm.  723].  and  followed  by  Lord  Cairns  in  Drown  v.  Gellatly  [L. 
R.  2  Ch.  751]."  But  the  subject-matter  of  that  case  was  mining-  prop- 
erty, and  the  c|uestion  which  the  Privy  Council  had  to  determine  was 
not  whether  the  tenant  for  life  was  entitled  to  the  mining-  rents  in 
specie — for  to  them  she  was,  of  course,  not  entitled — but  in  what  man- 
ner her  interest  was  to  be  ascertained.  The  court  below  had  given 
her  only  the  income  of  the  mining  rents  when  invested.  This  the 
Privy  Council  thought  unfair  to  her  and  gave  her  interest  on  the  value 
of  the  estate.  What  might  have  been  her  rights  as  to  the  ordinary 
rents  and  profits  in  real  estate  was  not  considered,  nor  was  cither  Cas- 
amajor  v.  Strode  or  Hope  v.  D'Hedouville  cited;  and  I  do  not  think- 
under  the  circumstances  that  I  can  regard  the  passage  I  have  quoted 
from  Wentworth  v.  W'cnlworth  as  overruling  the  express  decisions 
above  mentioned. 

lUit  in  this  case  the  real  and  personal  estate  are  devised  and  be- 
queathed together,  and  the  proceeds  of  both  are  to  be  held  as  one  fund, 
and  it  is  contended  that  in  such  a  case  the  rules  regulating  personal 
estates  ought  to  prevail.  Against  this  contention  there  are  two  ex- 
press decisions  of  a  judge  of  co-ordinate  authority,  which  are  bind- 
ing on  me,  unless  it  can  be  shown  that  there  are  other  decisions  which 
are  directly  in  conflict  with  them,  or  that  they  are  contrary  to  some 
established  principle  of  law.  The  two  decisions  I  refer  to  are  those 
in  In  re  Searle  [L.  R.  (1900)  2  Ch.  829]  and  In  re  Earl  of  Darnley 
[L.  R.  (1907)  1  Ch.  159].  In  the  first  of  these  cases  Kekewich,  J., 
after  argument  reviewed  the  cases  on  the  subject,  and  held  that  there 
is  in  law  the  distinction  I  have  mentioned  between  realty  and  person- 
alty, and  that  this  distinction  exists  notwithstanding  that  they  are  both 
comprised  in  a  single  trust  for  conversion.  This,  therefore,  is  a  case 
directly  in  point.  In  the  second  case  the  same  learned  judge  followed 
his  previous  decision,  and  it  is  of  importance  only  because  in  it  Went- 
worth V.  Wentworth  was  cited.  There  is  no  express  decision  to  the 
contrary,  but  it  is  said  that  there  is  an  established  principle  that  where 
realty  and  personalty  are  combined  in  one  fund  rules  relating  to  per- 
sonalty will  be  applied  to  both  constituents  of  such  fund,  and  that 
the  decisions  that  I  have  mentioned  are  inconsistent  with  that  prin- 
ciple and  therefore  ought  not  to  be  followed.  But  the  answer,  I  think, 
is  that  no  such  general  principle  has  been  established.  Reliance  is 
placed  on  Genery  v.  Fitzgerald  |  Jac.  468]  and  Bellairs  v.  Bellairs  [L. 
R.  18  Eq.  510|.  The  first  of  these  related  to  intermediate  rents  of 
real  estate  devised  so  as  to  vest  at  a  future  time,  and  the  second  to 
conditions  subsequent  in  restraint  of  marriage.  In  both  the  effect  of 
applying  dififerent  rules  to  the  two  classes  of  property  would  have  been 
to  give  the  beneficial  interest  in  the  two  classes  to  dififerent  persons 
though  they  were  comprised  in  the  same  gift,  and  this,  I  think,  is  the 
true  ground  of  decisions  of  that  class. 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF   TRUST   ESTATE.  413 

The  strong-est  expression  of  opinion  in  favor  of  the  supposed  gen- 
eral principle,  is  that  of  Sir  George  Jessel  in  Bellairs  v.  Bellairs.  He 
says :  "But  there  is  another  ground  upon  which  again  I  am  bound 
by  authority.  This  is  a  mixed  fund ;  and  the  proceeds  of  realty  and 
personalty  directed  to  be  converted  are  thrown  together  as  an  entire- 
fund.  Now  the  rules  as  to  mixed  funds  are  very  different  from  the 
rules  governing  simple  funds,  arising  from  one  or  the  other  kind  of 
property.  The  general  rule  in  modern  times  has  been  to  govern  this 
mixed  fund  by  the  rules  of  personalty,  and  in  some  cases  it  has  been 
carried  so  far  that  even  where  the  only  mixture,  so  to  say,  was  giving 
the  funds  to  the  same  objects,  that  has  been  carried  out.  The  case  of 
Genery  v.  Fitzgerald  is  a  notable  example.  That  was  not  the  case  of 
a  true  mixed  fund,  but  a  simple  gift  of  realty  and  personalty  to  the 
same  object.  When  we  come  to  true  mixed  funds  we  find  the  law  has 
been  largely  modified  in  favor  of  the  rules  regulating  personal  estate, 
as  is  shown  by  the  decisions  in  the  well-known  cases  of  Roberts  v. 
Walker  [1  Russ.  &  Myl.  752],  Boughton  v.  Boughton  [1  H.  L.  C.  406] 
and  Tench  v.  Cheese  [6  De  G.,  M.  &  G.  453].  Therefore,  if  it  de- 
pended simply  on  this  consideration,  I  should  be  bound  to  hold  that, 
having  a  mixed  fund,  you  are  not  to  sever  it  into  two,  and  say  it  is 
valid  as  to  so  much  as  arises  from  realty,  and  invalid  as  to  so  much  as 
arises  from  personalty,  but  to  hold  that  the  two  funds  are  to  be  kept 
together,  and  that  the  rules  as  to  personal  estate  apply."  I  think  the 
key  to  this  is  to  be  found  in  the  words,  "the  two  funds  are  to  be  kept 
together,"  and  that  the  passage  was  not  intended  to  have  the  general 
application  contended  for.  No  such  general  principle  as  is  contended 
for  has,  in  my  opinion,  been  established.  There  is  no  question  here 
of  keeping  the  two  funds  together,  and  no  difficulty  in  applying  one 
rule  to  the  rents  of  realty  and  another  to  the  income  of  personalty, 
anv  more  than  there  would  be  in  giving  the  tenant  for  life  income  in 
specie  of  authorized  investments  and  some  conventional  sum  in  lieu  of 
income  of  unauthorized  investments. 

On  the  whole  I  must  follow  In  re  Searle  and  In  re  Earl  of  Darnley 
and  I  declare  that  J\Iary  Oliver  is  entitled  to  the  rents  of  the  unsold 
real  estate.^* 


SARAH  E.    N.   EDWARDS    and    Another,    Trustees,   v.    HENRY 
EDWARDS  and  Others. 

(Supreme  Judicial  Ck)urt  of  Massachusetts,  190.3.    183  Mass.  581,  67  N.  E.  658.) 

Bill  in  equity,  filed  March  2*5,  1903,  by  the  trustees  under  the  will 
of  James  Edwards,  for  instructions  as  to  the  application  of  the  pro- 

39  In  re  Searle,  L.  R.  (1000)  2  Ch.  820;  In  re  Earl  of  Darnley,  L.  R.  (1007) 
1  Ch.  150  (1906).  See.  also,  Hope  v.  D'Hedouville,  D.  R.  (1S93)  2  Ch.  361 ; 
Casamajor  v.  Strode,  19  Yes.  390,  note  11. 


414  THE   DUTIES   OF  A   TRUSTEE.  (Ch.  5 

ceeds  of  sale  of  a  certain  valuable  tract  of  vacant  land  on  Huntington 
Avenue  in  Boston. 

The  case  came  on  to  be  heard  before  Braley,  J.,  who  reserved  it 
upon  the  bill  and  answer  and  an  ag"reed  statement  of  facts  for  the  con- 
sideration of  the  full  court,  such  order  to  be  made  therein  as  justice 
and  equity  might  require. 

Knowi-Ton,  C.  J.  This  is  a  bill  for  instructions  by  trustees  ap- 
pointed under  the  will  of  James  Edwards.  By  the  will  he  gave  all  his 
property  to  these  trustees,  stating  the  trust  as  follows:  "To  invest 
and  reinvest  the  same  at  their  discretion,  in  such  securities  as  the 
laws  of  this  Commonwealth  allow  Savings  Banks  to  invest  their 
funds  in,  and  the  whole  net  income  therefrom  shall  be  paid  to  my 
wife  as  long  as  she  shall  live,  for  her  own  use  and  disposal,  with  the  ex- 
ception that  I  direct  that  from  said  income  there  shall  be  paid  monthly 
to  my  son,  William  Edwards  and  his  wife,  Alice  J.  Edwards,  in  ecjual 
shares,  the  sum  of  one  hundred  dollars,  as  long  as  my  said  wife  shall 
live."  At  the  death  of  his  wife  the  trustees  are  to  pay  the  income 
to  his  children  and  to  the  wife  of  one  of  them,  and  at  the  termination 
of  the  trust,  to  pay  over  the  remainder  to  his  grandchildren  or  to  his 
heirs  at  law.  The  value  of  the  personal  property  that  came  into  the 
hands  of  the  trustees  was  nearly  $70,000,  and  the  value  of  the  real 
estate  was  more  than  $200,000.  Much  of  the  personal  property,  that 
he  left,  w-as  stock  carried  by  brokers  on  margins  and  the  most  valu- 
able part  of  the  real  estate  was  unproductive  land  on  Huntington 
Avenue  which  was  appraised  in  the  executor's  inventory,  filed  No- 
vember 11,  1896.  at  $150,000,  and  in  the  trustees'  inventory,  filed 
Decem.ber  31,  1898,  a^  $155,000.  and  was  sold  by  the  trustees  on 
September  1,  1899,  for  $196,.500.  The  question  relates  to  the  ap- 
portionment of  income  and  principal  between  the  life  tenant  and  the 
remaindermen,  from  the  proceeds  of  the  sale  of  the  land  on  Hunting- 
ton Avenue.  It  is  argued  that  the  value  of  this  land  at  the  time  of 
the  testator's  death  was  the  sum  at  which  it  was  appraised  in  the  ex- 
ecutor's inventory,  and  that  the  trustees  used  every  reasonable  effort 
to  sell  it,  and  in  view  of  the  imi^rovements  in  that  vicinity,  exercised 
a  sound  judgment  in  holding  it  until  the  time  of  the  sale.  It  did  not 
produce  sufficient  incc^ne  to  pay  the  taxes  and  expenses  upon  it. 
Under  language  like  that  of  this  will,  which  gives  the  trustees  all  the 
property,  real  and  personal,  and  does  not  indicate  an  intention  that 
the  time  for  establishing  the  fund  shall  be  postponed,  and  which  gives 
to  a  life  tenant  the  annual  income,  it  is  well  settled  law  in  this  Com- 
monwealth that  the  income  is  to  be  computed  from  the  time  of  the 
testator's  death.  Sargent  v.  Sargent,  103  Mass.  297,  299;  Westcott 
V.  Nickerson,  120  Mass.  410.  In  the  present  case  the  testator  ob- 
viously intended  that  the  entire  property  should  be  converted  into 
one  fund,  and  that  the  unproductive  and  speculative  investments  wdiich 
he  had  at  the  time  of  his  death  should  be  changed  without  unreason- 
able delay.     Much  of  the  property  held  on  margins  was  not  of  such 


iieC.  4)  DUTIES   OF   MANAGEMENT   OF   TRUST   ESTATE.  415 

a  kind  "as  the  laws  of  this  Cominonvvealth  allow  Savings  Banks  to 
invest  their  funds  in,"  and  the  land  on  Huntington  Avenue  was  not 
in  a  condition  to  be  held  as  a  permanent  investment.  It  was,  there- 
fore, the  duty  of  the  trustees  to  convert  this  property  into  an  income- 
producing  fund,  and  this  they  did  according  to  their  best  judgment 
and  discretion.  The  testator  is  presumed  to  have  expected  that  some 
time  would  be  required  to  accomplish  this.  At  the  same  time,  he  is 
presumed  to  have  intended  that  the  rights  of  the  life  tenant  to  income 
sTTould  be  ascertained  on  the  creation  of  the  fund,  as  if  the  fund  had 
come  into  existence  immediately  after  his  death.  This  is  in  accord- 
ance with  the  rule  repeatedly  stated  by  this  court.  Kinmonth  v.  Brig- 
Ham,  5  Allen,  270,  278;  Sargent  v.  Sargent,  103  Mass.  297;  West- 
cott  V.  Nickerson,  120  Mass.  410;  Mudge  v.  Parker,  139  Mass.  153, 
29  N.  E.  543.  The  rule  is  applicable  as  well  when  the  delay  in  con- 
verting the  property  is  necessary  as  when  it  is  caused  by  the  voluntary 
act  or  default  of  the  trustees^  Loring  v.  Massachusetts  Horticultural 
Society,  171  Mass.  401,  404,  50  N.  E.  936.  In  Westcott  v.  Nicker- 
son, ubi  supra,  Chief  Justice  Gray  says  of  the  property  in  such  cases, 
"The  necessary  inference,  and  the  established  rule  are  that  it  must 
be  invested  as  a  permanent  fund,  and  the  value  thereof  fixed  at  the 
time  when  the  right  of  the  first  taker  begins,  that  is  to  say,  at  the  death 
of  the  testator."  In  Sargent  v.  Sargent,  ubi  supra,  the  same  justice 
says:  "The  general  rule  is  established,  that  the  tenant  for  life  is  en- 
titled to  the  income  of  a  residue  given  in  trust  from  the  time  of  the 
testator's  death." 

The  question  raised  by  this  bill  for  instructions  relates  only  to  the 
proceeds  of  the  sale  of  the  land  on  Huntington  Avenue.  The  life 
tenant,  the  widow  of  the  testator,  is  one  of  the  trustees  who  bring 
the  suit,  and  in  the  bill  she  states  her  claim  as  follows :  "The  widow 
of  the  testator,  w^ho  with  the  annuitants,  is  entitled  to  the  income 
of  the  trust  fund  from  the  time  of  the  testator's  death  to  the  filing  of 
this  bill,  claims  that  she  is  entitled  to  receive  a  proportionate  part  of 
the  proceeds  of  the  sale  of  said  Huntington  Avenue  land,  as  the 
income  of  that  part  of  the  trust  estate,  and  contends  that  all  the  taxes, 
assessments  and  brokers'  commissions,  which  the  trustees  and  execu- 
tors have  paid,  and  are  bound  to  pay,  should  be  charged  to  the  funds 
received  from  said  sale,  and  that  the  fund  should  then  be  so  divided 
as  to  constitute  a  fund  at  the  time  of  the  testator's  death,  which,  with 
interest  at  a  reasonable  rate,  to  wit,  four  per  cent.,  will  produce  the 
amount  for  which  the  said  estate  w'as  sold,  less  the  expenses  accruing 
on  the  same,  and  all  betterments  against  said  premises  which  the  trus- 
tees are  bound  to  pay,  and  that  then  she  is  entitled  to  said  interest  or 
income,  and  that  the  fund  determined  as  aforesaid  shall  form  a  part 
of  the  corpus  of  the  estate."  The  question  arises  wdiether.  in  ap- 
portioning the  principal  and  income,  we  are  to  assume  that  the  fund, 
if  established  at  the  time  of  the  testator's  death,  would  have  earned 
interest  at  the  rate  of  six  per  cent,  per  annum,  or  only  at  some  lower 


no  THE    DT'TIES   OF   A   THUSTEE.  (Ch.  5 

rate.  It  was  said  at  the  argument,  and  we  suppose  it  to  be  a  fact  of 
common  knowledge,  that  a  fund  invested  in  such  securities  as  savings 
banks  may  invest  in  umkr  our  laws,  cannot  be  made  to  produce  an 
income  of  nearly  so  much  as  six  per  cent,  per  annum,  and  the  life 
tenant  in  stating  her  claim,  suggests  the  allowance  of  "interest  at  a 
reasonable  rate,  to  wit,  four  ])er  cent."  In  this  statement  she  rec- 
ognizes the  principle  that  in  this  case  we  are  not  to  deal  with  interest 
as  an  allowance  made  by  law  to  represent  damages  for  the  failure  to 
pay  money  when  it  is  due.  We  are  to  deal  witli  the  income  which 
could  have  been  obtained  by  the  trustees  if  the  fund  had  been  ready 
for  investment  and  had  l)cen  invested  immediately  after  the  death 
of  the  testator.  The  failure  to  invest  it  then  was  not  the  fault  of  any- 
body, and  we  are  not  called  upon  to  allow  interest  as  interest,  but 
only  to  ascertain  the  probable  income.  Whenever  interest  is  to  be 
allowed  for  the  failure  to  pay  money,  the  law  knows  no  other  rate 
than  six  per  cent,  per  annum.  Welch  v.  Adams,  152  Mass.  74,  25 
N.  E.  34,  9  L.  R.  A.  244;  Loring  v.  ^Massachusetts  Horticultural 
Societv,  171  Mass.  401,  50  N.  E.  936;  Bartlett,  Petitioner,  163  Mass. 
509,  521,  40  N.  E.  899. 

But  we  are  to  ascertain  as  between  tenant  for  life  and  remainder- 
men, what  part  of  a  gross  sum  now  in  hand  shall  be  treated  as  capital 
and  what  part  as  income,  and  when  we  are  called  upon  to  find  out 
what  sum  at  an  earlier  date,  if  invested  by  trustees,  would  have  been 
sufficient  to  produce,  with  its  income,  the  gross  sum  now  in  hand,  we 
must  look  to  the  actual  income  that  can  be  obtained  from  investments, 
and  not  to  the  rate  of  interest  established  by  law. 

In  Westcott  v.  Nickerson,  ubi  supra,  it  is  said  that  the  amount  ob- 
tained "is  to  be  distributed  between  the  tenant  for  life  and  the  re- 
mainderman, by  computing  what  sum,  if  received  at  the  death  of  the 
testator,  adding  interest  at  six  per  cent,  with  annual  rests,  would 
produce  the  amount  afterwards  actually  received  *  *  *  ^^^1  \jy 
investing  the  original  sum,  so  computed,  as  principal,  and  distributing 
the  residue  as  income."  In  Kinmonth  v.  Brigham,  ubi  supra,  a  direc- 
tion is  given  in  similar  language.  But  in  neither  of  these  cases  was 
any  consideration  given  to  the  possible  difference  between  the  income 
actually  obtainable  and  the  rate  of  interest  prescribed  by  law.  The 
first  of  these  cases  was  decided  in  1876  and  the  other  in  November, 
1862,  and  at  the  time  to  which  the  decisions  relate  there  was  little  if 
any,  difference  between  the  actual  earnings  of  capital  and  the  rate  of 
interest  established  by  law.  Neither  the  parties  nor  the  court  had 
any  occasion  to  consider  the  question  now  raised. 

We  are  of  opinion  that  the  case  should  be  referred  to  a  master  to 
ascertain  what  sum  would  have  been  sufficient  if  invested  by  the 
trustees  immediately  after  the  death  of  the  testator,  to  produce,  with 
tlie  income  which  they  reasonably  could  have  obtained  from  it,  the 
sum  in  the  hands  of  the  trustees  as  the  net  proceeds  of  the  land  on 


b  % 


Sec.  4)                  DUTIES   OF   MANAGEMENT   OF   TRUST   ESTATE.  417 

Huntington  Avenue,  after  deducting  their  disbursements  on  account 

of  the  property.     That  sum  is   to   be  held  as  principal  and  the   re- 
mainder is  to  be  paid  over  as  income. 


III.  The  Trustee's  Duty  to  Invest  the  Trust  Funds.         /^  _  /y 

HARDEN  V.  PARSONS.  '^ ^  ^^-^-^ 

(In  Chancery,  before  Lord  Keeper  Northington,  1758.     1  Eden,  145.) 

John  Stokes  by  his  will,  bearing  date  the  6th  of  August,  1725,  gave 
the  sum  of  £1,000.  to  be  invested  in  land,  and  settled  to  the  use  of 
John  Stokes  and  his  heirs  lawfully  begotten,  with  remainder  to  Sam- 
uel Stokes  in  the  same  manner.     He  appointed  John  Lyde,  Andrew      ''■'-■  ^  d 
Parsons,  John  Thomas,  Benjamin  Milles,  and  William  Thornhill,  his       "   ^^  c-e-.,  •. 
executors.     By  a  codicil,  bearing  date  the  25th  of  August,   1726,  he  i£,ct-...,_-da£^ 
afterwards  reduced  the  sum  to  £400.,  and  died  in  1727.     All  the  ex-    _,.<-.^j_<z^ 
ecutors  acted  except  Milles. 

The  sum  of  £1,000.  which  was  due  to  the  testator  upon  mortgage  ' 

at  his  death,  having  been  called  in  and  paid  on  the  1st  of  October, 
1731,  was  lent  to  Lyde,  who  was  a  considerable  merchant  at  Bristol, 
who  gave  a  bond  to  the  other  executors,  which  was  deposited  with 
their  clerk. 

/'  By  indenture,  bearing  date  the  29th  of  March,  1738,  reciting  the 
devise  under  the  will  and  the  words  of  the  limitations,  the  names  of 
the  executors,  and  the  codicil  verbatim,  and  that  the  sum  of  £400. 
had  not  been  laid  out  in  lands  according  to  the  directions  of  the  said 
testator,  but  that  the  same  remained  in  the  hands  of  the  trustees,  some 
or  one  of  them,  the  said  John  Stokes  assigned  his  interest  in  the  same 
to  the  plaintiff  Harden. 

Lyde  regularly  paid  the  interest  upon  the  bond  till  1735,  when  he 
paid  off  the  sum  of  £565.,  which  reduced  the  principal  to  £400.;    and  _  _  S 

from  that  time  to  his  death  in  1744,  he  regularly  paid  the  interest  of 
the  £400.  to  Stokes.  Lyde  dying  insolvent,  the  present  bill  was 
brought  to  cJTarge._tlie.  ex£cu.tQr.s  with  the  legacy.  Y 

The  Lord  Keeper.*"  This  is  a  bill  brought  to  have  a  legacy 
invested  in  land,  pursuant  to  the  will  of  John  Stokes,  which  legacy 
became  due  in  the  year  1727,  being  thirty-one  years  ago ;  and  it  is 
to  have  it  paid  by  the  executors,  the  money  having  been  lost  by  an 
insolvent  security;,  and  the  claim  of  the  plaintiff  is  said  to  be  founded 
upon  two  legal  principles.  1st.,  That  two  executors  joining  in  a  re- 
ceipt are  each  chargeable  pro  toto.  2dly,  That  an  executor  lending 
out  money  on  a  personal  security,  is  guilty  of  a  breach  of  trust,  and 
liable  to  the  payment  of  the  money.     *     *     * 

40  Only  a  part  of  the  opinion  is  given, 
Ken.Tr.— 27 


418  THE  DUTIES   OF  A  TRUSTEE.  (Ch.  5 

The  next  consideration  must  proceed  upon  a  supposition  that  the 
money  was  received  and  lent  out  on  an  improper  security,  and  that 
they  are  guiUy  of  a  breach  of  trust.  It  is  said  that  they  cannot  place 
it  out  on  personal  security.  It  is  agreed  that  there  is  no  text  writer 
that  lays  down  that  rule,  nor  any  cases  which  establish  it.  If  so, 
we  must  resort  to  the  in(|uiry  into  the  nature  of  the  office  and  duty 
of  a  trustee  as  considered  in  a  court  of  equity.  No  man  can  require, 
or  with  reason  expect  a  trustee  to  manage  his  property  with  the  same 
care  and  discretion  that  he  would  his  own.  Therefore  the  true  touch- 
stone by  which  such  cases  are  to  be  tried  is,  whether  the  trustee  has 
been  guilty  of  a  breach  of  trust  or  not.  If  he  has  been  guilty  of  a 
gross  negligence,  it  is  as  bad  in  its  consequences  as  fraud,  and  is  a 
breach  of  trust.  The  lending  trust  money  on  a  note,  is  not  a  breach 
of  trust,  without  other  circumstances  crassas  negligentiae.  That  is 
plain  from  the  case  of  Ryder  v.  Bickerston  [3  Sw.  80),  where  a  sum 
of  money  was  left  to  be  placed  out  on  security,  with  the  best  interest 
that  could  be  got.  The  executor  had  lent  it  on  a  note  without  mter- 
est.  Did  the  court  say  that  it  was  a  clear  breach  of  trust  to  lend  it 
on  a  personal  security?  No.  The  court  heard  counsel,  and  gave  a 
solemn  opinion  to  show  the  gross  negligence  in  that  particular  case ; 
and  there  was  not  an  intimation  that  a  fair  loan  of  rational  credit  is, 
in  itself,  a  breach  of  trust.  But  it  is  said,  and  Mr.  Attorney  applies 
to  Mr.  Wilbraham,  knowing  his  habitual  timidity  about  money  mat- 
ters, and  asks  him,  whether  he  would  do  it?  Perhaps  not;  but  other 
prudent  men  do. 

The  confirmation  here  is  most  deliberate,  uniform,  and  steady,  both 
in  John  Stokes,  deceased,  and  in  Samuel,  the  present  plaintiff.  John 
Stokes  knew  of  the  will  and  the  trusts  of  it,  and  recites  them  in  his 
assignment ;  all  the  family  had  legacies,  particularly  the  remainder- 
man ;  they  consent  that  the  legacy  shall  continue,  by  not  bringing 
their  bill,  or  finding  a  purchase,  and  applying  to  the  executors  to  lay 
out  the  money  in  land.*^     Bill  dismissed. 

41  See  Hale's  Case,  3  Sw.  63  n.  (b.)  (1637). 

In  Walker  v.  Syiuonds.  3  Sw.  1  (1S18),  at  pases  02,  63.  Lord  Chancellor 
Eldon  says  of  the  principal  case:  "The  judgment  in  Harden  v.  Parsons  [1 
Eden,  1451  is^  in  more  respects  than  one,  a  envious  document  in  the  history 
of  trusts  as  administered  by  this  court.  Lord  Northinuton  says:  'The  lend- 
ing trust  money  on  a  note  is  not  a  breach  of  trust,  without  other  circumstances 
crassai  negllgentia^.  That  is  plain  from  the  case  of  Ryder  v.  Hickerston, 
where  a  sum  of  money  was  left  to  be  iilneed  out  on  security,  with  the  best 
interest  that  could  be  got.  The  executor  had  lent  it  on  a  note  without  in- 
terest. I>id  the  court  say  t^at  it  was  a  clear  bre.ich  of  trusl  to  lend  it  on 
a  personal  security?  No.'  The  fact  is.  that  the  court  said.  Yes;  declaring 
that  the  trustee  having  placed  out  the  money  neither  at  interest  nor  on  se- 
curity, had  commit  led  a  direct  breach  of  trust  in  both  resjiects.  Lord  North- 
ington  proceeds  to  state  a  most  material  circumstance  in  the  case;  a  'delib- 
erate, uniform,  and  steady  confirmation.'  The  editor  of  this  valuable  work 
has  taken  the  trouble  to  subjoin  a  great  variety  of  cases,  all  of  which  con- 
tradict the  doctrine  that  investing  trust  money  on  personal  security  is  not  a" 
breach  of  trust." 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF   TRUST   ESTATE.  419 

HOLMES  V.  BRING. 

(In  Chancery,  before  Sir  Lloyd  Kenyon,  Master  of  the  Rolls,  1788.     2  Cox, 

Equity  Cases,  1.) 

The  plaintiff  (an  infant)  was  entitled  to  a  sum  of  £300.  under  a 
vAU,  which  the  two  defendants,  the  executors,  residing  in  the  country, 
lent  on  private  security  of  a  bond  in  which  a  surety  joined,  and  which 
was  made  to  both  the  executors.  The  obligors  were  in  very  ample 
circumstances  at  the  time  the  money  was  lent,  but  afterwards  be- 
coming insolvent,  the  plaintiff  now  charged  the  executors  with  the 
money. 

Madocks  &  Mitford  for  the  executors  argued,  that  persons  in  the 
country  could  not  so  readily  invest  money  in  the  public  funds  as  those 
who  resided  on  the  spot,  and  that  if  they  lent  so  small  a  sum  as  this 
upon  such  security  as  might  reasonably  be  considered  at  the  time  as 
ample  and  unquestionable,  and  such  as  a  prudent  man  would  lend  his 
own  money  upon,  it  would  be  a  hard  measure  to  charge  them  with 
any  loss  that  might  happen  by  the  unexpected  failure  of  such  security. 
And  Madocks  mentioned  a  case  in  Gilb.  Rep.  10,  to  show  that  the 
court  considered  an  executor  as  justifiable  in  lending  trust  money 
on  private  security,  if  he  took  the  security  of  more  than  one  solvent 
person. 

The  Master  of  the  Rolls.  As  to  the  case  in  Gilbert,  it  cannot  be 
authority  for  what  is  contended  for ;  the  bond  of  several  persons 
cannot  be  distinguished  from  the  bond  of  one  person,  as  applied  to 
this  case.  It  was  never  heard  of  that  a  trustee  could  lend  an  infant's 
moneyion  private  security.  This  is  a  rule  that  should  be  rung  in  the 
ears  of  every  person  who  acts  in  the  character  of  a  trustee,  for  such 
an  act  may  very  probably  be  done  with  the  best  and  honestest  inten- 
tion, yet  no  rule  in  a  court  of  equity  is  so  well  established  as  this. 

1  must,   therefore,   direct  an   account   against  the   executors   of   this 

money,  and  order  them  to  pay  it  in  moieties,  with  interest  at  4  per^,  . _,^  _ 

cent.,  and  I  am  bound  to  make  them  pay  the  costs  of  the  cause. *^  ^-^Z-^oJ^j^ 

42  Terry  v.  Terry,  Prec.  in  Chy.  273  (1708);  Gilbert,  Eq.  10;  Ryder  v. 
Bickertou,  3  Sw.  80,  note  (1743)  ;  Anonymous,  Lofft,  492  (1774) ;  Adye  v. 
Feuilleteuu,  3  Sw.  84,  note  (1783) ;  1  Cox,  Eq.  24 ;  Keble  v.  Thompson,  3 
Bro.  C.  C.  112  (1790)  ;  Wilkes  v.  Steward,  G.  Cooper,  6  (1801)  ;  Pocoek  v. 
Redington,  5  Ves.  Jr.  794  USOl)  ;  Vigrass  v.  Binfield,  3  Mad.  62  (1818); 
Walker  v.  Symonds,  3  Sw.  1,  02,  63  (1818) ;  Clough  v.  Bond,  3  Myl.  &  Cr.  490, 
496  (1838)  ;    Darke  v.  Martyn,  1  Beav.  ,525  (1839)  ;    In  re  l\icker,  L.  R.  (1894) 

2  Ch.  724  (1893) ;  Perley  v.  Snow,  Ritchie,  Eq.  (Nova  Scotia)  373  (1879) ; 
Worts  V.  Worts,  18  Ont.  332  (1889) ;  Barney  v.  Saunders,  16  How.  535,  545, 
14  L.  Ed.  1047  (1853)  ;  Lewis  v.  Cook,  IS  Ala.  334,  337  (1850) ;  Moore  v.  ILamilton, 
4  Fla.  112  (1851)  :  Brown  v.  Wright,  39  Ga.  96  (1869) ;  State  v.  Johnson,  7 
Blackf.  (Ind.)  529  (1845)  ;  Benson  v.  Liggett,  78  Ind.  452  (1881) ;  Clay  v. 
Clay,  3  Mete.  (Ky.)  548  (1861)  ;  Mattocks  v.  :\Ioulton,  84  Me.  545,  552.  24 
Atl.  1004  (1892)  ;  Hunt  v.  Gontrum,  80  Md.  64,  30  Atl.  620  (1894)  ;  Harding 
V.  Larned.  4  Allen  (Mass.)  426  (1S62)  :  Clark  v.  Gartield,  8  Allen  (Mass.)  427 
(1864)  ;  Judge  v.  ^L-ithes,  60  N.  H.  433  (1881)  ;  Grav  v.  Fox,  1  N.  J.  E(i.  2.59, 
22  Am.  Dec.  508  (1831) ;    Vreeland  v.  Vreeland,  16  N.  J.  Eq.  512,  530  (1863) ; 


420  THE    DI'TIKS   OF  A  TRUSTEE.  (Cll.  5 

Appeal  of  FRAN'KENFIKLD.  '  '''  ' 

(Supreme  Court  of  Peimsylvauia.   I.ss2.     11   Wkly,  Notes  Cas.  373,  127  Pa. 

3G9.  note.) 

Appeal  of  Samuel  A.  Frankenfield  from  a  decree  of  the  Common 
Pleas  of  Lehigh  County,  dismissing  his  exceptions  to  and  confirming 
the  report  of  an  auditor  appointed  by  the  court  to  audit  appellant's 
final  account  as  committee  of  Samuel  Frankenfield,  a  lunatic.     *     *     * 

Green^  J.'*^  In  this  case  the  appellant,  who  was  the  committee  of 
a  lunatic,  having  trust  funds  in  his  hands,  made  a  deposit  of  $2,000 
thereof  in  the  Franklin  Savings  I>ank  of  Allentown,  Pa.,  and  took  a 
certificate  therefor  in  the  following  form : 

Certificate  of  Deposit. 
Franklin    Savings    Bank,   Allentown,    Pa.      [Stamp.] 

November  11  ih.  1876. 
S.   A.    Frankenfield,    Committee   of    Samuel    Frankenfield,   has   de- 
posited in  this  bank  two  thousand  dollars,  payable  to  his  order,  three 
months  after  date,  with  interest  at  the  rate  of  six  per  cent  per  annum, 
on  return  of  this  certificate. 

Thirty  days'  notice  to  be  given  of  the  intention  to  withdraw  this 
deposit. 
$2,000. 

J.  E.  Zimmerman,  Cashier.  D.  H.  Muller,  President. 

Per  J.  E.  Z. 

The  deposit  was  made  in  the  name  of  the  committee  as  such,  it 
was  done  by  the  advice  of  counsel,  and  at  the  time  of  the  transaction 
the  bank  was  in  good  repute.  So  far,  therefore,  as  these  considera- 
tions afifect  the  question  of  the  appellant's  liability  for  the  loss  of  the 
money  by  reason  of  the  insolvency  of  the  bank,  it  must  be  conceded 
at  once  that  no  liability  would  arise.  There  was  no  bad  faith  on  the 
part  of  the  appellant,  and  although  the  bank  was  really  insolvent  when 
the  deposit  was  made,  that  fact  was  not  known  in  the  community. 
The  question  at  issue  is  thus  reduced  to  the  narrowest  limits.  If  this  \  cv 
had  been  an  ordinary  deposit,  subject  to  the  check  of  the  depositor  from  i 
the  day  it  was  made,  it  is  very  probable  the  appellant  would  not  havey 

Sherman  v.  Lanier.  .39  N.  J.  Eq.  249,  252  (1SS4) ;  Dufford  v.  Smith,  40  N.  J. 
Eq.  216.  18  Atl.  10.^)2  (18.S9)  ;  Brewster  v.  Demare.st,  48  N.  J.  Eq.  5.59,  23  Atl. 
271  (1S9I)  ;  Smith  v.  Smith.  4  .[ohn.  Ch.  (N.  Y.)  281  (ISl'O) ;  Lefever  v.  Ilas- 
broucli,  2  Dem.  Sur.  (N.  'Y.)  5(;7  (1882);  Matter  of  Foster,  15  Hun  (N.  Y.) 
387  (1S78)  ;  Matter  of  Cant.  5  Dem.  Sur.  (X.  Y.)  209  (1880)  ;  In  re  Blau- 
velt's  Estate,  2  Con.  Sur.  4.58,  20  N.  Y.  Supp.  119  (1S9())  :  Nvee's  Estate.  5 
Watts  &  S.  (Pa.)  2.55.  2,50,  40  Am.  Dec.  498  (1843)  ;  Wills'  Appeal,  22  Pa.  325 
(1853);  Wynne  v.  Warren.  2  Ileisk.  (Tenn.)  118  (1870);  Simmons  v.  Oliver, 
74  Wis.  0.3.3,  43  N.  W.  501  (18891. 

Contra:  ITij,'Kins  v.  McClure,  7  Bush  (Kv.)  379  (1870):  Clark  v.  Anderson, 
13  Bush  (Ky.)  Ill,  119  (1877):  (ilover  v.  (Mover.  Mc.Mnll.  m-  (S.  C.)  153  (1841); 
Nance  v.  Nance,  1  S.  C  209  (1869)  ;  P.arnev  v.  Parsons,  54  Vt.  02:3,  41  Am. 
Rep.  858  (1882). 

^'■i  Statement  of  facLs  abridtted  and  only   part  of  the  opinion  given. 


^ 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF   TRUST   ESTATE.  421 

been  Hable.  But  it  was  not  such  a  deposit.  In  practical  effect,  it  was 
^  loan„to.  tll£Jbank_£or-a^-fixed-penod  and  payable  with  interest.  Dur- 
ing that  period  it  was  entirely  beyond  the  control  of  the  depositor. 
He  could  make  no  legal  demand  for  the  money  until  at  least  three 
months  had  expired,  and  not  even  then  unless  he  had  given  thirty 
days'  notice  of  his  intention  to  withdraw  the  fund.  In  n£  ejsential 
feature  does  this  transaction  differ  from  an  ordinary  loan.  It  is  true, 
the  borrower  is  a  bank  and  not  an  individual.  But  that  circumstance 
is  of  no  moment  in  determining  the  character  of  the  transaction.  It 
is  a  loan  still,  just  as  it  would  have  been  had  the  depository  been  a 
citizen  or  a  firm  of  the  greatest  wealth,  or  a  manufacturing  or  a  busi- 
ness corporation  of  large  capital  and  resources.  In  these  latter  cases 
the  security  would  apparently  have  been  greater,  for  the  capital  of 
this  bank  was  actually  very  small.  The  distinguishing  feature  of  the 
case  is,,  that  even  if  the  money  be  regarded  as  deposited  in  the  tech- 
nical sense,  it  was  also  loaned,  and  hence  was  subject  to  the  qualities 
and  jncidents  of  a  loan  superadded  to  those  which  belonged  to  it  as  a 
deposit.  Nor  does  the  brevity  of  the  time  affect  the  question.  There 
could  be  no  difference  in  principle  between  a  deposit  payable  in  three 
months  and  one  payable  in  twelve  or  twenty-four  months,  when  the 
question  relates  only  to  its  character  as  a  loan.  This  being  so,  the  law 
regulating  the  investments  by  committees  of  lunatics  becomes  ap- 
plicable to  the  case  and  controls  it.  The  Act  of  June  12,  1836,  §  25, 
expressly  directs  that  such  investments  must  be  made  under  the 
direction  of  the  Court  of  Common  Pleas,  and  only  exempts  the  com- 
mittee from  liability  for  loss  when  he  pursues  this  course,  and  in  good 
faith  (Purd.  Dig.  983,  pi.  25).  In  Hemphill's  Appeal,  6  Harr.  303, 
it  was  formally  and  definitely  settled  that  a  trustee  can  only  protect 
himself  from  risk  when  he  invests  the  trust  fund  in  real  or  govern- 
mental securities  or  makes  the  investment  in  pursuance  of  an  order 
by  the  court.  On  p.  306,  Black,  C.  J.,  says:  "It  has  never  been 
doubted  anywhere  that  a  loss  which  accrues  to  a  trust  fund,  invested 
on  personal  security,  must  be  borne  by  the  trustee."  These  considera- 
tions determine  that  the  auditor  and  the  court  below  were  right  in 
holding  the  appellant  liable  for  the  loss  of  the  sum  of  one  thousand 
dollars,  deposited  with  the  Franklin  Savings  Bank.  *  *  * 
[Decree  reversed  on  other  grounds.]** 


Estate  of  W.  W.  LAW,  a  Elinor. 

(Supreme  Court  of  Pennsylvania,  1801.     141  Pa.  499,  22  Atl.  831.  14  L.  R.  A. 

103.) 

On  October  13,  1890,  the  account  of  Henry  W.  Scott,  guardian  of 
William  W.  Law,  a  minor,  was  called  for  audit  before  Ashman,  J., 

44  See  Rehden  v.  Wesley.  29  Beav.  213  (1S61) ;  Baer's  Appeal,  127  Pa.  360, 
18  Atl.  1,  4  L.  IL  A.  609  (1SS9)  :  Law's  Estate,  144  Pa.  499,  22  Atl.  831,  14 
L.  R.  A.  103  (1S91) ;    Baskin  v.  Baskin,  4  Laus.  (N.  Y.)  90  (1871). 


£¥. 


422  THE    DITIKS    OF    A    TRUSTEE.  (Ch.  5 

when  a  credit  was  clainu'd  I)\-  ihe  acc(iuntant  for  the  sum  of  $3,339.12. 
The  allowance  of  the  credit  was  objected  to  by  the  Commonwealth 
Title  Insurance  &  Trust  Company,  substituted  guardian  of  said  minor. 

Before  the  auditing  judge,  it  was  made  to  appear  that  on  January 
29,  1890,  the  accountant  received  $3,339.12  of  the  money  of  his  ward, 
part  of  the  proceeds  of  a  policy  of  life  insurance,  and  immediately 
placed  it  in  the  Bank  of  America,  where  it  remained  until  the  bank 
failed  on  April  30,  1890;  that  the  money  was  deposited  in  the  ac- 
ccjuntant's  name  as  guardian  ;  that  the  accountant  had  been  advised 
by  an  ofificer  of  the  riiiladelphia  Finance  Company,  the  surety  on  his 
bond,  that  the  bank  mentioned  was  entirely  solvent  and  safe ;  that 
for  several  years  the  accountant  had  kept  his  personal  account  as  a 
depositor  in  the  same  institution  ;  that  there  was  nothing  upon  the 
deposit  book,  or  the  books  of  the  bank,  indicating  that  the  placing  of. 
the  ward's  money  in  the  bank  was  other  than  an  ordinary  deposit, 
but  the  accountant  testified  that  he  had  a  verbal  agreement  with  the 
bank  whereby  the  bank  agreed  to  allow  him  three  per  cent,  interest, 
if  he  would  allow  the  money  to  remain  until  he  should  find  an  invest- 
ment for  it,  and  he  was  to  give  two  weeks'  notice  before  withdraw- 
ing it- 

The  auditing  judge  allowed  the  credit  claimed,  and  decreed  a  balance 
of  $1,620.50  to  be  due  by  the  accountant. 

Exceptions  to  the  adjudication,  filed  by  the  Commonw^ealth  Com- 
pany, substituted  guardian,  were  sustained. 

A  formal  decree  having  been  filed,  adjudging  that  the  accountant 
pay  to  the  Commonwealth  Company,  the  substituted  guardian,  the  sum 
of  $5,126.58,  the  Philadelphia  Finance  Company,  surety  upon  the  bond 
of  the  accountant,  took  this  appeal,  specifying  that  the  court  erred  in 
not  confirming  the  adjudication  and  dismissing  the  exceptions  thereto. 

Mr.  Justice  Clark.*^  This  is  an  appeal  by  the  Philadelphia  Finance 
Company,  surety  upon  the  guardianship  bond  of  Henry  W.  Scott, 
guardian  of  William  W.  Law,  from  the  adjudication  of  the  Orphans' 
Court  of  Philadelphia  County,  upon  the  account  of  said  guardian. 
On  January  29,  1890,  Scott  received  $3,339.12  of  the  money  of  his 
ward,  and  immediately  deposited  the  same  in  the  Bank  of  America. 
The  accountant  had  kept  his  personal  account,  as  a  depositor,  in  the 
same  institution  for  several  years,  and  had  been  advised  by  an 
officer  of  the  Finance  Company,  which  latter  company  was  surety 
on  his  bond  as  guardian,  that  the  Bank  of  America  was  entirely 
solvent  and  safe.  The  deposit  was  in  a  separate  account,  in  the  name 
of  the  guardian  as  such.  No  certificate  was  issued ;  the  whole  trans- 
action was  evidenced  only  by  an  entry  of  credit  upon  the  books  of 
the  bank  in  the  usual  form.  The  accountant  was  in  search  of  an 
investment,  and  the  deposit  was  to  remain  only  until  he  could  find 
one.     The  bank  agreed  to  allow  him  three  per  cent,  interest,  but  he 

*5  A  i»;irt  of  the  opiniou  is  omitted. 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF  TRUST   ESTATE.  423 

was  to  give  two  weeks'  notice  before  withdrawing  it.  The  bank 
failed  on  the  thirteenth  of  April  following.  x'Vt  the  time  of  the  deposit 
the  bank  was  in  good  repnte,  and  there  is  no  allegation  of  bad  faith, 
or  want  of  due  care  or  diligence.  The  only  question  for  our  consider- 
ation is  whether  or  not,  under  such  circumstances,  the  trustee  is 
responsible  for  the  amount  of  the  deposit. 

As  a  general  rule,  the  measure  of  care  and  diligence  required  of// 
a  trustee  is  such  as  would  be  pursued  by  a  man  of  ordinary  prudence  f 
and  skill,  in  the  management  of  his  own  estate.  Fahnestock's  Appeal, 
104  Pa.  46.  It  is  equally  well  settled,  however,  that  a  trustee  who 
invests  the  funds  belonging  to  a  trust  on  personal  security  does  so 
at  his  own  risk.  This  is  so  well  settled  that  a  citation  of  authorities 
is  unnecessary.     *     *     * 

Banks  of  deposit  are  a  recognized  necessity  in  the  commercial 
world.  A  trustee  wdio  would  continuously  keep  for  any  considerable 
length  of  time  a  large  sum  of  money  about  his  person  or  in  his  house, 
rather  than  deposit  it  for  safe-keeping  in  a  solvent  and  reputable  bank 
oxjtrust  company,  where  all  the  precautions  may  be  exercised  for  its 
safety,  might  justly  be  regarded  as  derelict  in  duty.  No  one  would 
be  accredited  with  the  exercise  of  common  prudence  who  would  keep 
his  own  money  in  this  way ;  and  a  trustee,  as  we  have  said,  is  held 
generally  for  such  care  and  diligence  as  an  ordinarily  prudent  man 
would  exercise  in  the  conduct  and  management  of  his  own  busi- 
ness.    *     *     * 

Was  this  transaction  with  the  Bank  of  America  a  deposit  of  the 
money,  or  was  it  a  loan  or  investment  of  it?  A  deposit  is  where  a 
sum  of  mone3r  is  left  with  a  banker  for  safe-keeping  subject  to  order, 
and  payable,  not  in  the  specific  money  deposited,  but  in  an  equal  sum. 
It  rnay  or  it  may  not  bear  interest,  according  to  the  agreement. 
Whilst  the  relation  between  the  depositor  and  his  banker  is  that  of 
debtor  or  creditor  simply,  the  transaction  cannot  in  any  proper  sense 
be  regarded  as  a  loan,  unless  the  money  is  left  not  for  safe-keeping 
but  for  a  fixed  period  at  interest,  in  which  case  the  transaction  as- 
sumes all  the  characteristics  of  a  loan.  The  Orphans'  Court  decided 
this  case  upon  the  rulings  of  this  court  in  Frankenfield's  App.,  11 
Wkly.  Notes  Cas.  373,  and  Baer's  App.,  127  Pa.  360,  18  Atl.  1,  4 
L.  R.  A.  609;  but  we  think  these  cases  are  readily  distinguishable 
from  the  case  at  bar.  In  Frankenfield's  Appeal,  supra,  there  was  a 
loan  by  the  trustee  of  two  thousand  dollars  of  trust  funds  to  the 
Franklin  Savings  Bank  for  three  months,  with  interest  at  six  per 
cent. ;  thirty  days'  notice  to  be  given  of  the  trustee's  intention  to 
withdraw  the  deposit.  The  bank  was  in  good  repute,  and  there  was 
no  evidence  of  bad  faith  or  want  of  care  on  the  part  of  the  trustee. 
Our  Brother  Green,  in  the  opinion  filed,  said :  "If  it  had  been  an 
ordinary  deposit,  subject  to  the  check  of  the  depositor  from  the  day 
it  was  made,  the  appellant  would  probably  not  have  been  liable ;    but 


424  TIIK    DTTIKS    OF   A    TinSTKB.  (Cll.  O 

it  was  not  a  deposit,  it  was  a  loan  upon  merely  personal  security  for 
a  fixed  period,  at  interest ;  and  during  that  period  the  money,  because 
of  the  loan,  was  entirely  beyond  the  trustee's  control.  The  twenty- 
fifth  section  of  the  Act  of  June  12.  1836,  expressly  provides  that  such 
investments  must  be  made  under  the  direction  of  the  Court  of  Com- 
mon Pleas,  and  only  exemi)ts  the  trustee  from  liability  when  he  pur- 
sues this  course  in  good  faith."  In  liaer's  Appeal,  supra,  the  banker's 
certificate  of  deposit  was  substantially  in  the  same  form  as  in  Franken- 
field's  Appeal,  supra,  excepting  that  there  was  no  stipulation  for 
notice  of  the  withdrawal  of  the  deposit.  The  transaction  possessed 
all  the  qualities  of  a  loan  of  money  for  a  year  at  four  per  cent,  inter- 
est. It  is  of  no  consequence  that  the  borrower  is  a  bank,  for  a  bank 
may  borrow  money.  Parties  engaged  in  the  banking  business,  wheth- 
er as  individuals  or  as  members  of  a  partnership  or  of  a  corporation, 
may  take  a  loan  of  money  for  a  fixed  period  of  time  at  interest,  with 
like  effect  as  persons  engaged  in  other  pursuits.  The  transactions 
may  be  termed  a  time  deposit,  but  it  is  none  the  less  a  loan,  and 
subjects  the  lender  to  that  decree  of  responsibility. 

In  the  present  case,  the  money  was  placed  in  the  bank,  not  as  an 
'  investment  for  any  fixed  period,  but  merely  for  safe-keeping,  ana  at 
■  a  small  rate  of  interest  until  a  suitable  investment  could  be  found. 
This  was  the  express  understanding  of  both  parties  at  the  time.  The 
transaction  was  entered  upon  the  books  of  the  bank  as  a  deposit 
merely.  It  was  treated  as  a  temporary,  provisional,  or  precautionary 
I  arrangement.  No  person  would  speak  of  this  as  an  investment ;  an 
investment  carries  with  it  a  greater  or  less  degree  of  permanency, 
which  does  not  characterize  this  transaction.  It  is  true  that  two 
weeks'  notice  was  to  be  given  of  the  withdrawal  of  the  deposit,  but 
this  was  a  reasonable  provision  and  not  inconsistent  with  a  bank 
deposit.  Almost  all  savings  institutions  stipulate  for  notice  of  with- 
drawal with  their  depositors,  and  such  a  stipulation  is  for  the  benefit 
not  only  of  the  bank,  but  also  of  its  depositors ;  the  reasonableness 
of  the  time  is  a  question  in  each  case  to  be  determined  by  the  court. 
It  is  said  the  trustee  thereby  loses  control  of  the  money ;  but  that  is 
not  the  true  test.  The  depositor  always,  in  a  certain  sense,  loses  con- 
trol of  the  money  when  he  places  it  in  bank ;  for  the  bank  may  re- 
fuse payment  of  his  checks,  and,  as  he  then  has  no  claim  upon  this 
specific  money,  he  stands  u]:)on  the  footing  of  a  creditor  merely.  It_ 
js^true,  a  trustee,  as  a  general  rule,  is  not  allowed  to  part  with 
the  control  of  trust  money.  Salway  v.  Sahvay,  2  Russ.  &  INI. 
215.  But  he  may  do  so  by  way  of  precaution  against  loss,  by  a 
deposit  in  a  solvent  and  reputable  bank.  A  deposit,  as  we  have  said, 
is  a  temporary  disposition  of  money  for  safe-keeping;  and  it  is  upon 
this  ground  alone  that  the  trustee  is  justified  in  depositing  trust  funds 
in  bank,  and  it  is  upon  the  same  ground  that  a  deposit  is  distinguish- 
able from  an  investment. 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF   TRUST   ESTATE.  425 

We  are  of  opinion,  for  the  reasons  stated,  tliat  the  trustee  was  not 
properly  chargeahle  with  this  loss.  ,   ,.--'- 

Decree  reversed,  with  costs.'**' 


CANN  V.  CANN. 
(In  Chancery,  before  Kay,  Justice,  1884.     33  Weekly   Reporter,   40.) 

Adjourned  summons. 

This  was  an  application  by  the  defendants  to  vary  the  chief  clerk's 
certificate,  whereby  a  sum  of  £138.  lis.  4d.  had  been  disallowed. 

The  defendants  were  the  surviving  trustees  and  executors  of  the  will 
and  codicil  of  Samuel  Cann,  which  were  dated  in  1854  respectively. 
The  said  jwill  contained  a  trust  for  investment,  directing  the  trustees 
tqJnvesL  in  parliamentary  stock  or  funds,  or  on  government  or  real  se- 
curities in  England  and  Wales,  with  the  usual  power  to  vary  invest- 
ments^ The  trust  estate  produced  an  annual  income  of  about  £700.  In 
May,  1869,  the  trustees  deposited  the  sum  of  £500.  belonging  to  the 
trust  estate,  which  had  been  previously  invested  on  a  mortgage,  at 
Messrs.  Harvey  &  Hudson's  Bank  at  Norwich,  in  order  that  they  might 
look  for  another  mortgage.  The  money  remained  on  deposit  until  the 
16th  oTJuly,  1870,  when  the  banklailed.  The  said  sum  of  £138.  lis. 
4d.  represented  the  loss  thereby  occasioned,  and  the  question  was 
whether  the  trustees  were  liable  to  make  it  good. 

Kay,  J.  It  is  extremely  difficult  in  these  cases  to  know  where  to 
draw  the  line.  Here  there  is  an  estate  producing  £700.  a  year.  A 
mortgage  of  £500.  is  paid  ofif,  and  the  trustees  pay  that  money  into  a 
bank  for  the  purpose  of  getting  another  mortgage.  The  .question  is, 
whether  it  was  within  their  powers  as  trustees  to  leave  that  sum  in  the  7/ 
bank_for  fourteen  months.  It  seems  to  me  that  that  was  too  long.  If 
after  six  months  they  could  not  get  a  mortgage  they  ought  to  have  in- 
vested in  consols.  Without  attempting  to  draw  a  hard  and  fast  line — 
•for  I  consider  that  each  of  these  cases  must  be  judged  on  its  merits 
— I  say  that  leaving  that  money  in  the  bank  for  fourteen  months  was 

*6  Adams  v.  Claxton,  6  Ves.  Jr.  226  (1801) ;  France  v.  Woods,  Tamlyn,  172 
(1829) ;  Lord  Dorchester  v.  Earl  of  Effinj^ham,  Tamlyn.  279  (1829)  ;  Johnson 
V.  Newton.  11  Hare,  160  (18.5.S)  :  Wilks  v.  Groom,  3  Drew.  .584  (1856)  :  Swin- 
fen  V.  Swinfen,  29  Bear.  211  (1860)  ;  Feuwick  v.  Clarke.  4  De  G.,  F.  &  J. 
240  (1862)  ;  In  re  Marcon's  Estate,  40  L.  J.  Ch.  (N.  S.)  537  (1871) ;  In  re  Earl, 
39  W.  R.  107  (1890)  ;  Norwood  v.  Harness,  98  Ind.  1.34,  49  Am.  Rep.  739 
(1884) ;  Jacobus  v.  Jacobus,  37  N.  J.  Eq.  17  (1883) ;  People  v.  Faulkner,  107 
N.  Y.  477,  14  N.  E.  415  (1887) ;  Moore  v.  Eure,  101  N.  C.  11,  7  S.  E.  471.  9 
Am.  St.  Rep.  17  (1888) ;  Ramsey  v.  McGrewr.  1  Cine.  Super.  Ct.  R.  327  (1871) ; 
Odd  Fellows'  Ben.  Ass'n  v.  Ferson.  3  Ohio  Cir.  Ct.  R.  84  (1888). 

The  fact  that  the  deposit  draws  interest  is  immaterial.  See.  in  addition 
to  the  principal  case,  France  v.  Woods.  Tamlyn.  172  (1829) ;  Wilks  v.  Groom. 
3  Drew.  584  (1856):  Fenwick  v.  Clarke,  4  De  G.,  F.  &  J.  240  (1862):  In  re 
Marcon's  Estate.  40  L.  J.  Ch.  (N.  S.)  537  (1871) ;  People  v.  Faulkner,  107  N.  Y. 
477,  14  N.  E-.  415  (1887). 


426  THE    DT'TIES   OF   A   TRUSTEE.  (Ch.  5 

leaving  it  there  too  long.  The  nionient  they  hegan  to  leave  the  money 
there  too  long  they  became  responsible  for  all  the  consequences  of  their 
default:  and  they  are.  therefore,  liable  for  the  £138.  which  has  been 
lost.     1  must  dismiss  the  summons  with  costs.  "'^ 


In  re  ARGUELLO. 
(Snpronie  Court  of   California,   1S9:J.     97   Cal.   lOH.   31   Tnc.   937.) 

Appeal  from  an  order  of  the  Superior  Court  of  San  Diego  County, 
requiring  an  administrator  to  pay  the  creditors  of  the  estate  certain 
sums  of  money. 

Belch KR,  C.  *^  This  is  an  appeal  by  the  administrator  of  the  estate 
of  the  decedent  from  an  order  of  the  Superior  Court  of  San  Diego 
County  requiring  him  to  pay  to  the  creditors  of  the  estate  whose  claims 
had  been  duly  presented  and  allowed  certain  sums  of  money. 

The  sum  of  money  in  controversy  was  $4,846.80,  which  was  received 
by  the  administrator  for  and  on  account  of  the  estate,  between  July  5, 
1891,  and  October  15,  1891.  and  deposited  by  him  in  the  California 
Savings  Bank,  in  the  City  of  San  Diego  in  his  own  name. 

The  court  below  found  the  facts  to  be  as  follows: 

"That  at  the  time  said  funds  were  deposited  by  said  administrator  in 
said  California  Savings  Bank,  said  bank  was  reputed  to  be  and  was 
considered  a  safe  and  solvent  bank  and  place  of  deposit,  and  was  of 
good  credit  and  standing,  and  was  believed  by  said  administrator  to 
be  solvent  and  safe ;  that  said  deposit  was  m;ule  in  the  individual 
name"  of  the  administrator  "without  any  designaiidn  or  indication  of 
his  representative  capacity,  but  said  administrator  had  no  other  funds 
or  account  with  said  bank,  and  deposited  such  with  that  particular 
bank  for  the  express  purpose  of  keeping  the  same  separate  from,  and 
so  that  it  would  not  be  unnecessarily  mingled  with,  his  own  property 
or  individual  funds." 

"That  in  depositing  said  funds  in  said  California  Savings  Bank  as 
aforesaid,  said  administrator  acted  in  good  faith." 

4  7  In  the  followiiis  cases,  also,  trustees  were  charged  with  losses  caused 
by  the  faihn-e  of  l)anks.  hecause  they  had  left  trust  moneys  ou  deposit 
too  Ions.  Moyle  v.  Moyle,  2  Iluss.  &  Myl.  710  (1831) ;  Barney  v.  Saunders, 
16  How.  53.^.  14  L.  Ed.  1017  (1853)  ;  Woodley  v.  Holley,  111  N.  C.  380,  10 
S.  E.  419  (1S92). 

In  Whitecar's  Estate.  147  Pa.  .308.  23  Atl.  575  (1892),  a  trustee,  having  left 
trust  moneys  on  deposit  for  fifteen  years,  was  surcharged  with  1  per  cent, 
as  loss  to  the  cestui  que  trust  from  failure  to  invest. 

If  a  trustee  leaves  too  large  a  balance  ou  deposit,  he  will  be  liable  for  the 
excess  beyond  a  proper  balance.     Astbury  v.  Beasley,  17  W.  R.  038  (1809). 

When  it  is  a  trustee's  duty  to  pay  over  trust  moneys,  and,  instead  of  so 
doing,  he  leaves  them  on  deposit  in  bank,  he  does  so  at  his  peril.  I.unham 
V.  Rlundell,  27  L.  .1.  Ch.  179  (1858)  ;  Wilkinson  v.  Bewick.  4  .Tur.  (X.  S.)  1010 
(1858) ;  Gough  v.  Ettv.  20  L.  T.  R.  358  (1809) ;  Ricks  v.  Broyles,  Rec'r,  78  Ga. 
610,  3  S.  E.  772,  6  Am.  St.  Rep.  280  (1887). 

"»»  Only  a  part  of  the  opinion  is  given. 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF   TRUST   ESTATE.  427 

"That  on  the  12th  day  of  November,  1891,  said  California  Savings 
Bank  became  suddenly,  unexpectedly,  and  wholly  insolvent,  suspended 
business,  and  has  not  been  able  to  pay  the  amount  so  deposited  by  said 
administrator  with  it,  or  any  part  of  it." 

"That  said  administrator  has  been  guilty  of  no  negligence  or  want 
of  care  in  the  administration  of  said  estate,  except  that  he  deposited 
such  funds  in  the  California  Savings  Bank  in  his  own  name,  instead 
of  in  his  representative  capacity,  or  in  the  name  of  the  estate." 

And  as  conclusions  of  law  the  court  found  that  the  administrator 
was  responsible  for  the  money  so  deposited  by  him,  and  that  he  must 
pay  it  over  to  the  creditors  of  the  estate. 

The  appellant  contends  that  an  administrator  is  only  required  to 
act  in  good  faith,  and  to  exercise  such  skill,  prudence,  and  diligence  in 
managing  the  affairs  of  the  estate  as  men  ordinarily  bestow  upon  their 
own  affairs,  and  that  when  he  has,  in  good  faith  and  with  reasonable 
care,  deposited  funds  of  the  estate  in  bank,  which  have  been  subse- 
quently lost  by  the  failure  of  the  bank,  he  will  not  be  held  liable  for 
the  loss,  unless  he  has  wilfully  and  unnecessarily  mingled  the  trust 
property  with  his  own,  so  as  to  constitute  himself  in  appearance  its  ab- 
solute owner;  and  hence,  that,  under  the  facts  found  in  this  case,  the 
order  of  the  court  was  erroneous,  and  should  be  reversed. 

The  question  presented  has  many  times  been  before  the  courts  of 
England  and  of  this  country,  and  the  decisions  upon  it  have  been 
practically  unanimous,  and  to  the  same  effect  as  the  decision  of  the 
court  below  in  this  case. 

The  law  upon  the  subject  is  stated  in  Perry  on  Trusts,  §  443:  "A 
trustee  may  deposit  money  temporarily  in  some  responsible  bank  or 
banking  house ;  and  if  he  acted  in  good  faith  and  with  discretion,  and 
deposited  the  money  to  a  trust  account,  he  will  not  be  liable  for  its 
loss  *  *  =i=  but  he  w'ill  be  liable  for  the  money  in  case  of  a  failure 
of  the  bank,  or  for  its  depreciation,  if  he  deposits  it  to  his  own  credit, 
and  not  to  the  separate  account  of  the  trust  estate."  And  again,  in 
section  463 :  "So  if  the  trustee  pays  the  money  into  a  bank  in  his 
own  name,  and  not  in  the  name  of  the  trust,  he  will  be  responsible  for 
the  money  in  case  of  the  failure  of  the  bank."     [Authorities  cited.] 

But  whatever  may  be  the  rule  elsewhere,  appellant  insists  that  the 
rule  in  this  case  is  declared  in  section  2236  of  the  Civil  Code,  and  that 
that  does  not  make  him  liable.  The  section  referred  to  reads  as  fol- 
lows : 

"Sec.  2236.  A  trustee  who  wilfully  and  unnecessarily  mingles  the 
trust  property  with  his  own,  so  as  to  constitute  himself  in  appearance 
its  absolute  owner,  is  liable  for  its  safety  in  all  events." 

We  do  not  think  this  section  was  intended  to  change  the  rule  gener- 
ally prevailing,  or  to  limit  liability  under  it;  on  the  contrary,  the  sec- 
tion seems  to  be  in  entire  accord  with  the  general  rule,  and  in  effect 
to  declare  it  in  unmistakable  terms. 


428  THE    DUTIES   OF   A   TIU'STEE.  (Ch.  5 

In  our  opinion  the  order  appealed  from  should  be  affirmed. 
Vanclikf,  C,  and  Havxks.  C,  concur. 

For  the  reasons  given  in  the  foregoing  opinion,  the  order  appealed 
from  is  affirmed.'*"    Paterson,  J. ;    Garoutti;,  J.;    Harrison,  J. 


DHXTKK  et  al.  v.  HARRIS  et  al. 
(Court  of  Appeals  of  New  York,  ISSl.     S4  N.  Y.  S9.) 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme  Court, 
in  the  second  judicial  department,  entered  upon  an  order  made  Decem- 
ber 14,  1880,  affirming  a  judgment  in  favor  of  plaintiffs,  entered  upon 
a  decision  of  the  court  on  trial  at  Special  Term. 

Earl,  j.  ^"  For  some  time  before  his  death  the  testator  was  a  special 
partner  of  the  defendant  in  the  business  of  selling  agricultural  imple- 
ments ;  and  as  such  special  partner  he  had  contributed  to  the  capital 
of  the  joartnership  the  sum  of  $15,000.  *  *  *  C)n  the  17th  day  of 
July  tiiereafter  he  made  and  published  his  will,  in  which  he  nominated 
his  partner,  Reeves,  and  the  defendant  Harris  as  his  executors ;  and 
he  died  on  the  6th  of  September,  1879.  The  will  was  subsequently  ad- 
mitted to  probate,  and  the  executors  qualified  and  entered  upon  their 
duties  as  such.     *     *     * 

The  tenth  clause  of  the  will,  which  gave  rise  to  the  present  contro- 
versy, is  as  follows:   "It  is  my  will,  and  I  do  hereby  order  and  direct 

40  Ititinar  v.  Bofile,  53  Ala.  ICO  (1S75) ;  IIar^Yara  v.  Robinson,  14  111.  .\pp. 
560  (18Si) ;  Naltuer  v.  Dolan,  lOS  Ind.  500,  S  N.  E.  2S!),  58  Am.  Hep.  Ul 
(1SS6I ;  Succession  of  IMilmo,  47  La.  Ann.  126,  16  South.  772  (1S95) ;  Jenkins 
V.  Walter,  8  (iill  &  J.  LMd.)  21S,  20  Am.  Dee.  5.S0  (is:56)  ;  Estate  of  Horner, 
66  Mo.  App.  5::i  (1S0());  liaskin  v.  Haskin.  4  I^uis.  (X.  Y.)  00  (1871);  Sum- 
mers V.  RovnoUls,  05  X.  C.  404  (1886)  ;  Williams  v.  Williams,  55  Wis.  .'iOO,  12 
X.  W.  465.  i:\  X.  W.  274,  42  Am.  Kep.  708  (1882)  ;  P.ooth  v.  Wilkinson,  78 
Wis.  652,  47  x\.  W.  1128.  2.3  Am.  St.  Kep.  443  (1801);  O'Connor  v.  Decker, 
95  Wis.  202,  70  X.   W.  28()  (1807). 

Contra:  Atterbcrry  v.  McDuffee,  31  Mn.  App.  603  (1888),  explained  in 
Estate  of  Horner,  66  Mo.  App.  531  (1806);  I'arsley's  Adm'r  v.  INIartin.  77 
Va.  376.  46  Am.  Rep.  733  (1883) ;  Gr(>j,'ory  v.  Parker,  87  Va.  451,  12  S.  E. 
801    (1801). 

If  the  trustee  deposits  trust  money  in  his  individual  account  and  minsilos 
it  with  his  own  money  he  is,  a  fortiori,  answeralile  for  the  safety  of  the 
bank.  Wren  v.  Kirton",  11  Ves.  Jr.  3,77  (1805);  Fletcher  v.  Walker,  3  Mad. 
73  (1818)  ;  Massey  v.  Banner.  4  Mad.  413  (1810).  aflirnied  1  J.  &  \V.  241  (1820)  ; 
Roliinson  v.  AVard,  2  C.  &  P.  .50  (1825(;  Macdonuell  v.  Hardin.i:.  7  Sim.  178 
(18.34);  Pennell  v.  Deffell,  4  De  (J.,  M.  &  (i.  .372.  3.02  (18,53);  Henderson  v. 
Henderson,  .58  Ala.  582  (1877)  ;  Allen  v.  I^^ich,  7  Del.  Ch.  S3.  29  Atl.  1050 
(1804);  Webster  v.  Pierce,  .35  111.  1.58  (1864);  Cartmell  v.  Allard,  7  Bush 
(Ky.)  482  (1870)  ;  Xorris  v.  Hero,  22  Ea.  Ann.  605  (1870) ;  Coleman  v.  Lips- 
comb, 18  Mo.  App.  443  (1885)  ;  Matter  of  Staft"ord.  11  Barb.  (X.  Y.)  3.53  (1851)  ; 
Shaw  V.  Bauman.  .34  Ohio  St.  25  (1877)  ;  Commonwealth  v.  McAlister.  28 
Pa.  480  (1857);  Id..  .30  Pa.  .5:',6  (18.58):  Mason  v.  Wliitt borne,  2  Cold.  (Tenn.) 
242  (1805);    Vaiden  v.  Stubblefield.  28  Orat.  (Va.)   153  (1877). 

Contra:     Crane  v.  Moses,  13  S.  C.  561  (1879). 

tio  Only  a  part  of  the  opinion  is  given. 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF   TKUST   ESTATE.  429 

my  executors,  hereinafter  named,  to  allow  my  friend,  Robert  C. 
Reeves,  to  retain,  as  a  loan  to  him  out  of  my  personal  estate,  the  sum 
of  $15,000,  being  the  amount  now  invested  by  me  in  the  business  car- 
ried on  and  conducted  by  him,  and  in  which  I  am  a  special  partner,  to 
be  used  and  employed  by  him  in  carrying  on  and  conducting  the  said 
business,  and  to  be  continued  from  year  to  year  at  the  option  of  the 
said  Robert  C.  Reeves,  but  not  to  exceed  the  term  of  three  years,  upon 
his  paying:  the  interest  thereon  annually  at  the  rate  of  five  per  cent, 
per  annuni^^  Such  income,  when  received  by  my  executors,  to  be  from 
time_,to  time  paid  over  to  my  residuary  legatees,  and  at  the  expiration 
of  said  term,  or  the  sooner  determination  thereof  at  his  option  afore- 
said, I  direct  my  said  executors  to  receive  from  the  said  Robert  C. 
Reeves  the  said  sum  of  money  and  interest,  and  to  discharge  him  fully 
from  all  further  liability  on  account  or  by  reason  of  such  indebtedness, 
and  upon  such  payment  being  made  to  my  said  executors,  the  said 
sum  of  $15,000  is  to  become  a  part  of  my  residuary  estate,  and  to  be 
distributed  according  to  the  provisions  of  this  my  will  with  respect 
thereto."     *     *     * 

The  plaintiffs,  two  of  the  three  residuary  legatees  named  in  the  will, 
for  themselves  and  the  other  residuary  legatee,  commenced  this  action 
to  restrain  the  executors  from  making  the  loan  to  Reeves  mentioned  in 
the  tenth  clause  of  the  will,  without  requiring  of  him  security  therefor. 
They  alleged  in  their  complaint,  among  other  things,  that  the  executors 
proposed  and  intended  to  make  the  loan  without  taking  security ;  that 
the  business  in  which  Reeves  was  engaged  was  one  peculiarly  of  great 
risk,  and  that  he  had  but  little  or  no  property.  The  defendants  in 
their  answer,  among  other  things,  denied  that  the  business  of  Reeves 
was  one  peculiarly  of  great  risk,  as  alleged  in  the  complaint,  and  they 
denied  that  he  had  little  or  no  property,  and  alleged  that  he  was  and 
had  at  all  times  been  solvent  and  able  to  pay  all  his  debts. 

The  court,  at  Special  Term,  found,  upon  the  allegations  in  the  com- 
plaint and  answer  above  specified,  without  any  proof,  that  the  business 
in  which  Reeves  was  engaged  was  one  of  risk — not  that  it  was  pecul- 
iarly risky,  or  more  risky  than  other  kinds  of  commercial  or  mercantile 
business.  He  also  found  that  Reeves  intended  to  use  the  money,  if 
loaned  to  him,  in  his  business,  and  that  it  would  thus  be  at  risk,  peril 
and  jeopardy,  and  liable  to  be  lost ;  that  the  executors  intended  to  loan 
him  the  money,  and  refused  to  take  any  security  therefor,  although 
they  had  been  requested  to  do  so  by  the  plaintiffs.  And  the  court  or- 
dered judgment  for  plaintiffs,  among  other  things,  that  the  executors 
should  not  loan  the  $15,000  to  Reeves,  or  permit  him  to  retain  that, 
sum,  as  provided  in  the  tenth  clause  of  the  will,  without  requiring 
and  obtaining  from  him  sufficient  and  proper  security  for  the  safe  pay-  / 
ment  and  return  of  the  sum  thus  loaned  or  retained  at  the  end  of  the] 
three  years.  The  judgment  thus  ordered  was,  upon  appeal  by  the  de- 
fendants, affirmed  at  the  General  Term,  and  then  they  appealed  to 
this  court. 


430  THE   DUTIES   OP   A   TRUSTEE.  (Ch.  5 

The  claim  of  the  plaintiffs,  whicli  has  thus  far  been  sustained  by 
the  Supreme  Court,  is,  that  in  making  this  loan,  the  defendants  are  in 
the  position  of  all  trustees  authorized  to  loan  trust  funds,  and  that  they 
are  bound  by  the  general  rules  of  law  to  take  proper  security.  That 
rule  is  supposed  to  require  trustees  exercising  a  general  authority  to 
make  investments  to  take  government  or  real  estate  securities.  King 
V.  Talbot,  40  N.  Y.  76.  I5ut  the  creator  of  a  trust  requiring  the  in- 
vestment of  money  may  designate  how  the  investment  may  be  made, 
and  what  security  may  be  taken,  and  he  may  dispense  with  all  security. 
The  question  here  is,  did  the  testator  intend  that  Reeves  should  give 
security  for  the  sum  to  be  retained  by  or  loaned  to  him?  W'e  think  it 
clear  that  he  did  not.  *  *  *  The  language  used  precludes  the  idea 
of  security.  As  executor  he  was  required  to  give  no  security.  The 
property  was  then  in  his  hands,  and  as  surviving  partner  he  was  re- 
([uired  to  give  no  security.  He  was  to  be  allowed  "to  retain"  the  sum 
named.  If  the  testator  had  intended  that  security  should  be  exacted 
for  the  loan,  that  matter  would  have  been  in  his  mind  and  probably 
expressed.  Here  then  the  testator  designated  the  person  to  whom  the 
loan  should  be  made  and  the  rate  of  interest,  and  under  such  circum- 
stances and  in  such  language,  that  we  tliink  it  was  intended  that  the 
loan  should  be  without  security. 

It  matters  not  that  the  sum  thus  loaned  is  put  in  some  jeopardy — 
subjected  to  such  risks  as  ordinarily  attend  the  carrying  on  of  any 
business  or  the  loaning  of  money  upon  mere  personal  security.  The 
testator  contemplated  such  risks,  and  was  willing  his  executors  should 
take  them.     *     *     * 

The  sum  to  be  loaned  was  for  use  by  Reeves  "in  carrying  on  and 
conducting"  his  business.  He  could  not  claim  the  loan  for  any  other 
purpose.  If  he  was  actually  insolvent,  or  if  for  any  other  reason  he 
was  not  in  a  condition  to  go  on  with  his  business,  he  could  not  claim  the 
loan. 

We  are,  therefore,  of  opinion  that  no  case  was  made  justifying  the 
decision  rendered  herein,  and  the  judgment  should  be  reversed  and  a 
new  trial  granted,  costs  to  abide  event.^^ 
Judgment  reversed. 

SI  For  other  instances  of  authority  by  the  creator  of  a  trust  to  loan  on 
personal  security,  see  Forlies  v.  Koss,  2  Bro.  C.  C.  430  (1788) ;  s.  c.  2  Cox, 
Kq.  11.".;  Laniiston  v.  OUivant.  G.  Cooper,  33  (1807);  Brown  v.  Sansoine. 
McCl.  &  Y.  427  (1825);  Stickney  v.  Sewell,  1  Myl.  &  Cr.  8  (1835);  I'addon 
V.  Richardson,  7  De  G..  M.  iS:  G.  503  (1S55) ;  Pickard  v.  Anderson,  L.  R.  13  Eq. 
G08  (1.S72)  ;  Knox  v.  Mackiiinon.  13  App.  Cas.  753  (1888)  ;  Rae  v.  Meek,  14 
App.  Cas.  558  (1889)  ;  In  re  Karl,  39  W.  R.  107  (1890)  :  In  re  Tucker,  L.  R. 
(1894)  1  Ch.  724  (1S93) ;    Lowry  v.  McGee,  3  Head  (Teun.)  209  (1859). 


J^  I 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF   TRUST   ESTATE.  431 


NORBURY  V.  NORBURY. 

(In  Chancery,  before  Sir  John  Leach,  Vice  Chancellor,  1819. 
4  Haddock,  191.) 

On  the  coming  on  of  this  cause,  for  further  direction,  Air.  Bell  de- 
sired that  a  reference  might  be  made  to  the  Master,  to  ascertain 
whether  it  would  not  be  for  the  benefit  of  the  infants,  that  a  sum  of  ^^-^^-^ 
money  in  the  executor's  hands  should  be  laid  out  on  mortgage,  in-  ":i  -jj 
stead  of  being  applied  in  the  purchase  of  three  per  cents  consols,  as 
the  interest  on  the  mortgage  would  exceed  the  dividends  of  the  money 
if  laid  out  in  the  three  per  cents. 

The  Vice  Chancellor  said,  he  did  not  recollect  that  such  permission 
had  ever  been  given  unless  under  very  special  circumstances,  as  where 
there  was  a  mortgage  or  charge  on  the  infant's  estate,  it  being  the  con- 
stant course  of  the  court  to  order  the  money  to  be  laid  out  in  the  three 
per  cents ;  but  he  permitted  Mr.  Bell  to  mention  the  matter  again, 
if  he  should  find  any  authority. 

On  this  day  [May  27,  1819]  Mr.  Bell  mentioned  the  case  of  Poore 
V.  Hawker,  5th  August,  1816,  in  which  the  late  Master  of  the  Rolls 
directed  a  reference,  to  see  whether  it  was  for  the  benefit  of  the  infant, 
to  lay  out  a  sum  of  £20,000.  three  per  cents  and  £17,000.  three  per  cents 
reduced,  or  any  part  thereof,  on  real  security. 

The  Vice  Chancellor.  I  am  surprised  that  any  such  order  should 
have  been  made.  There  must  have  been  something  very  special  in 
that  case.  If  I  were  to  order  this  reference,  it  would  be  equally  right 
in  every  case  to  inquire  what  mode  of  investment  would  be  most  bene- 
ficial to  the  infant.  The  court  adopts,  as  a  general  rule,  that  the  in- 
vestment in  the  three  per  cent,  consols  is  most  beneficial  to  the  suitors 
of  the  court;  and  never  varies  from  this  rule  without  special  circum- 
stances.^^ 
Reference  refused. 

5  2  Mortgages  of  Real  Estate.— Lord  Harcourt,  in  Brown  v.  Litton,  1 
P.  Wms.  140  (1711),  Lord  Hardwicke,  in  Ryder  v.  Bicker  ton.  o  Sw.  80,  note. 
81  (1743).  and  Lord  Alvanley,  in  I'ocock  v.  Reddington.  5  Ves.  Jr.  794,  800 
(1801),  thought  trust  moneys  might  be  invested  upon  the  security  of  mort- 
gages of  real  estate.  Lord  Thuvlow,  however,  in  Ex  parte  Cathorpe,  1  Cox, 
Eq.  182  (178.5).  refused  to  allow  an  investment  of  trust  moneys  on  a  mortgage 
of  land,  and  his  view  was  generally  followed  in  England.'  Widdowson  v. 
Duck,  2  Mer.  494  (1817) ;  Re  Fust,  Cooper  t.  Cottenham.  157,  note  "c"  (1817)  ; 
Ex  parte  Ellice,  Jacob.  234  (1821) ;  Ridgeway  Minors,  1  Hogan,  309  (1825) ; 
Ex  parte  Johnson,  1  Molloy.  128  (1828)  ;  Ex  parte  Franklvn,  1  De  G.  &  Sm. 
528  (1848) ;  Barry  v.  Marriott,  2  De  G.  &  Sm.  491  (1S4S)  ;  Raby  v.  Ridehalgh, 
7  De  G.,  M.  &  G.  104  (18.55). 

In  1859,  what  is  known  as  Lord  St.  Leonard's  Act  (22  &  23  Yict.  c.  35) 
was  passed,  section  32  of  which  provided:  "When  a  trustee,  executor,  or  ad- 
ministrator shall  not,  by  some  instruments  creating  liis  trust,  be  expressly 
forbidden  to  invest  any  trust  fund  on  real  securities,  in  any  part  of  the 
United  Kingdom,  or  on  the  stock  of  the  Bank  of  England  or  Ireland,  or  on 
East  India  stock,  it  shall  be  lawful  for  such  trustee,  executor,  or  adminis- 
trator to  invest  such  trust  funds  on  such  securities  or  stock ;    and  he  shall 


432  .  THK   DLTIKS   OF   A   TKUSTEB.  (Ch.  5 

In  re  SALMON. 
PRIEST  V.  UPPLEBY. 

(In    iho   Pourt   of   Appoal,    ISSO.      I.;i\v    Ueports,   42   Chancpry   Division,   rj")!.) 

Eliza  v^almon  died  in  lir^41,  leavins;-  a  will  of  which  Uppleby  and  Fox 
were  the  trustees  and  executors.  She  beciueathed  to  them  her  personal 
estate  upon  trust  to  invest  in  parliamentary  stocks  or  funds,  or  on  real 
securities  in  England  or  Wales,  with  power  to  vary  investments.  The 
trusts  were  for  Annette  Bower  for  life,  and  then  to  such  of  her  chil- 
dren as  should  attain  twenty-one  or  marry. 

Annette  Bower  had  six  children,  all  of  whom  attained  twenty-one. 
Fox  died  in  1845. 

\n  1881  L'p])lel)y,  the  surviving  trustee,  sold  out  the  Government 
stock  held  upon  the  trusts  of  the  will,  and  on  the  18th  of  July,  1881, 
"invested  out  of  the  proceeds  £1,300.  on  a  mortgage  in  fee  of  thirteen 
small   freehold  houses  in  Kingston-upon-Hull,  with  a  power  of  sale. 

Before  taking  this  mortgage,  Uppleby  had  the  property  valued  by  a 

not  be  liable  on  tbat  account  as  for  a  l)reach  of  trust,  provided  tbat  sucb 
investment  sliall  in  otlier  respects  be  reasonable  and  proper." 

It  lias  been  decided  in  l'!ii.i,'iand  tbat  loans  by  trustees  on  contributory 
mortpajres  are  inipr<)i)er.  Webb  v.  Jonas.  L.  K.  '.','.)  Cb.  I)iv.  OGO  (l.SSS)  ;  In 
re  .Massin.ybenl's  Settlement,  U3  L.  T.  K.  lllKi  (ISIJU)  ;  In  re  Dive,  L.  K. 
(li)O!))  1  Cli.  :V2S  (lOKS).  The  creator  of  the  trust  may,  of  course,  authorize  a 
contributory  mortga.i^e.     In  re  (iodfrey,  L.  It.  -'A  Ch.  Div.  4S.3  (lS.S.'i). 

It  will  be  observed  that  Lord  St.  Leonard's  Act  authorized  loans  of  trust 
funds  "on  real  securities."  It  said  notbins;  of  "tirst  mortf^a^'es."  _In  this 
country  investments  of  trust  funds  on  mortiia.i^es  of  real  estate  have  been 
generally  permitted  without  a  statute. 

Second  Mokklvoks  ok  Kkal  Estate. — In  Ames  on  Trusts  (2d  Kd.)  485,  it  is 
said:  "In  several  jurisdictions  it  is  a  breach  of  trust  to  invest  in  second 
mortgages,  (ion.  St.  ("onn.  ISSS.  §  40."> ;  Mattocks  v.  MouUon.  84  Me.  545, 
24  Atl.  1004:  (Jilmore  v.  Tnttle.  ;J2  N.  J.  Va\.  611;  Id..  .30  N.  J.  Kq.  Gl7 ;  Por- 
ter v.  Woodruff,  '.a;  N.  J.  Eq.  174:  Savage  v.  Gould.  (50  Mow.  I'rae.  (X.  Y.) 
2.S4 ;  Re  I'etrie,  5  Dem.  Sur.  (N.  Y.)  .•',.'')2  ;  Singleton  v.  Lowndes.  9  S.  C.  405. 
There  are  dicta  to  the  same  effect  in  Thomson  v.  Christie,  1  Macq.  2.36,  238 ; 
Drosier  v.  Brereton,  15  Beav.  221;  Lockhart  v.  Ileilly.  1  De  G.  &  J.  464.  476; 
Sheffield   Society  v.  Aizlewood,  44  Ch.   Div.  412,  4.59." 

The  Connecticut  statute  ([noted  (now  (Jen.  St.  Conn.  1902.  §  254)  authorized 
the  investment  of  trust  funds  (inter  alia)  in  mortgages  on  unincumbered  real 
estate  in  Connecticut,  doiU)le  the  value  of  the  anidunt  loaned.  (^uaTo.  if  this 
necessarily  prohiliited  by  implication  second  niorlgaiics.  What  was  said  in 
.Mattocks  V.  Monlton.  84  Me.  545.  24  Atl.  lOOi  (1S92).  Savage  v.  (Jould.  60 
How.  I'rac.  (N.  Y.)  234  (1880).  and  Ke  Petrie.  5  Dem.  Sur.  (N.  Y.)  3.52  (1886), 
was  by  way  of  dictum,  and  no  one  of  the  dicta  sui)ports  the  [losition  that  an 
investment  of  trust  moneys  on  a  second  mortgage  of  real  estate  is  per  se  a 
breach  of  trust.  In  (Jilmore  v.  Tnttle,  32  X.  .T.  Eq.  611  (1880).  on  appeal 
.36  X.  J.  Eq.  617  (1883),  Porter  v.  Woodruff.  36  X.  .T.  Eq.  174  (1882),  and  Sin- 
gleton V.  Lowndes.  9  S.  C.  465  (1877).  trustees  who  had  invested  trust  moneys 
on  second  mortgages  were  charged  with  a  loss,  not  because  the  loans  were 
per  se  breaches  of  trust,  but  because  the  security  for  the  loans  when  made 
was  inadequate. 

The  dicta  in  Thomson  v.  Christie,  1  :Macq.  2.36  (18,52).  and  Lockhart  v. 
Ileilly.  1  De  G.  «&  J.  464  (1857),  had  refereiice  to  investments  on  second 
mortgages  made  before  22  &  23  Vict.  c.  35,  and,  therefore,  when  all  invest- 
ments  "on   real  securities,"  not  authorized  by  a  court  of  equity  or  by  the 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF   TRUST   ESTATE.  433 

local  valuer  of  reputation,  who  valued  them  at  £1,750.  They  were  not 
all  finished  at  the  time  of  the  mortgage,  and  were  let  at  weekly  rents. 

On  the   15th  of  November,  1884,  Uppleby  retired  from  the  trusts, \ 
and  under  a  power  in  the  will  appointed  Charles  U.  Bower  and  Thomas 
Bower,  two  of  the  sons  of  Annette  Bower,  trustees  and  duly  transfer- 
red the  i  1,300.  mortgage  to  them. 

On  the   14th  of  May,   1887,  the  new  trustees  sold  the  mortgaged 
pro_pertx.by  au_ction  under  .the  power  of  sale  in  the  mortgage  deed  for 
£840.  leaving-  £820.  net  after  deducting  the  costs  of  sale. 
""  That  the  sale  took  place  without  any  notice  to  Uppleby  was  not 
disputed. 

In  February,  1888,  the  plaintiff  (an  assignee  of  the  interest  of  one 
of  the  six  children  of  Annette  Bower)  commenced  this  action,  claiming 
a  declaration  that  the  investment  of  the  £1,300.  was  a. breach  of  trust, 
that  Uppleby  might  be  ordered  to  replace  the  stock  which  he  had  sold 
out  to  make  the  investment,  or  otherwise  to  make  good  the  loss  to  the 
estate  and  that  upon  his  replacing  the  stocks  the  investments  of  the 
£820.  might  be  transferred  to  him. 

creator  of  the  trust,  were  a  breach  of  trust.  In  Drosier  v.  Brereton,  15  Beav. 
221  (1S51),  the  creator  of  the  trust  authorized  investments  "on  real  securi- 
ties." An  investment  on  second  mortga.iie  resulted  in  a  loss,  with  which  the 
trustee  was  charged.  Lord  liomilly  said  (page  220):  "I  have  no  douht  it 
was  a  breach  of  trust  to  lend  this  money  on  a  second  mortgage  of  house 
property."  The  investment  was  condemned,  not  bec-iuse  per  se  a  breach  of 
trust,  but  because  the  security,  when  taken,  was  inadequate. 

In  Sheffield  Society  v.  Aizlewood,  44  Ch.  Div.  412  (ISbO),  Stirling,  J.,  says, 
at  page  459:  "Again,  part  of  the  security  consisted  of  a  second  mortg.-ige,  on 
which  the  rules  of  the  court  prohibited  ordinary  trustees  from  making  ad- 
vances." In  Want  v.  Campian,  Ch.  Div.  9  Times  L.  R.  254  (1S93),  Mr.  J. 
Wright  said:  "The  numerous  authorities  cited  showed  that  there  was  no 
fixed  rule  that  a  trustee  must  never  invest  on  the  security  of  a  second  mort- 
gage; but  having  regard  to  the  case  of  Swaffield  v.  Nelson,  Weekly  Notes 
1876,  p.  255.  and  the  decision  of  Mr.  Justice  Stirling  in  Sheffield  &  South 
Yorkshire  Building  Society  v.  Aizlewood,  44  Ch.  Div.  459,  the  burden  of 
proof  that  it  was  a  projier  investment  must  fall  upon  the  trustee."  This  po- 
sition is  supported  by  dicta  in  Waring  v.  Waring.  ,3  Ir.  Ch.  331.  337  (18.52), 
Shuey  v.  Latta.  90  Ind.  136,  139  (1883).  Whitnev  v.  Martine,  88  N.  Y.  535, 
5.39,  540  (1882).  and  King  v.  Mackellar,  109  N.  Y.  215,  221.  16  N.  E.  201  (1888). 

In  Re  Blauvelt's  Estate  (Snr.)  20  N.  Y.  Supp.  119  (1890),  and  Jack's  Ap- 
peal, 94  Pa.  367  (1880),  investments  in  second  mortgages  were  held  proper, 
and  the  courts  refused  to  charge  trustees  with  losses  thereon.  See,  fur- 
ther, Bogart  V.  Van  Velsor,  4  Edw.  Ch.  (N.  Y.)  718  (1848),  and  Lechler's 
Appeal,  21  Wkly.  Notes  Cas.  (Pa.)  505  (1888). 

If  an  investment  on  second  mortgage  were  necessarily  a  breach  of  trust, 
the  cestui  que  trust  would  have  an  absolute  right  to  reject  the  investment 
and  require  the  trustee  to  account  for  the  money  invested  with  interest. 
But  in  Porter  v.  Woodruff,  .36  N.  J.  Eq.  174  (1882),  Van  Elect,  V.  C,  at  page 
186,  says:  "I  know  of  no  authority  which  goes  to  the  length  of  declaring 
that  a  trustee  shall  be  liable,  whether  loss  is  sustained  or  net,  simply  because 
he  has  invested  the  funds  in  his  hands  in  a  second  mortgage." 

..  Equitable  Mokk; ages.— Investments  by  trustees  on  equitable  mortgages 
are  not  allowed.  Webb  v.  Ledsam,  1  Kay  &  J.  385  (1855)  ;  Swaflield  v.  Nel- 
son. W.  N.  255  (1876). 

Leasehold  Mortgages. — Investments  by  trustees  on  the  security  of  lease- 
holds are  not  allowed.     Wyatt  v.  Sharratt,  3  Beav.  -198  (1840) ;    Eyler  v.  Ey- 

Ken.Tr.— 28 


Uc-^ 


434  Till-:   DUTIES   OF   A   TRUSTEE.  (Ch.  5 

Uppleby  by  his  defence  denied  the  insufficiency  of  the  security,  and 
stated  that  the  plaintiff  had  been  fully  informed  of  the  investments  be- 
fore he  purchased  Augustus  Bower's  share.  He  alleged  that  the  sale 
was  made  by  the  new  trustees  with  the  i)rivity  and  at  the  instigation 
of  the  plaintifif  and  without  any  previous  notice  of  it  to  him  (Uppleby), 
and  that  he  never  had  the  option  given  him  of  taking  over  the  security 
on  his  paying  the  amount  secured  by  it. 

The  action  was  tried  by  Mr.  Justine  Kekcwich.  who  dismissed  the  bill 
Vk^ith  costs  as  against  Mr.  Uppleby  and  the  new  trustee  and  the  plain- 
tiff appealed. 

CoTTox,  L.  J.^^  This  is  an  appeal  by  the  plaintiff  from  a  decision  of 
Mr.  Justice  Kekewich  dismissing  an  action  brought  against  Uppleby, 
a  retired  trustee  of  the  will  of  Eliza  Salmon,  to  make  him  responsible 
for  an  improper  investment. 

There  are  two  questions  to  be  considered.  The  first  is,  wdiether  the 
investment  in  question  was  wrongful.  It  was  w'ithin  the  terms  of  the 
trust,  for  it  was  an  investment  on  mortgage  of  a  freehold  estate.  In 
one  sense,  therefore,  it  was  in  accordance  with  the  trusts,  and  if  the 

ler,  3  Beav.  550  (1841)  ;  Fuller  v.  Knight,  6  Beav.  205  (1843) ;  In  re  Chennell, 
L.  R.  8  Ch.  Div.  492  (1878) ;  In  re  Boyd's  Settled  Estates,  L.  R.  14  Gli.  Div. 
026  (1880).  Unless  the  leaseholds  are  lor  a  long  term  and  at  a  nominal  rent. 
McCleod  V.  Annesley,  10  Beav.  600  (1S53) ;  In  re  Chennell,  L.  R.  8  Ch.  Div. 
492  (1878). 

Formerly  leasehold  mortgages  were  not  "real  securities."  In  re  Boyd's 
Settled  Estates,  L.  R.  14  Ch.  Div.  620  (1880) ;  Leigh  v.  Leigh,  55  L.  T.  R.  634 
(1887). 

The  Trustee  Act  1888  (51  &  52  Vict.  c.  59)  §  9,  provided:  "A  power  to  invest 
trust  money  in  real  securities  shall  authorize  and  shall  he  deemed  to  have 
always  authorized  an  investment  upon  mortgage  of  property  held  lor  an  un- 
expirt^l  term  of  not  less  than  two  hundred  years  and  not  subject  to  any 
reservation  of  rent  greater  than  one  shilling  a  year,  or  to  any  right  of  re- 
demption, or  to  any  condition  for  re-entry  for  non-payment  of  rent."  See, 
also,  Trustee  Act  1893  (.56  &  57  Vict.  o.  53)  pt.  1,  §  5  (1)  (a). 

Trustees,  unless  authorized  by  the  terms  of  the  trust,  have  no  right  to 
purchase  land  with  the  trust  monev.  Ouseley  v.  Austruther.  10  Beav.  453, 
456  et  seq.  (1847);  Williams  v.  Williijms,  35  N.  J.  Eq.  100  (1882);  Eckford 
V.  DeKav,  8  Paige  (N.  Y.)  89  (1840)  ;  Baker  v.  Disbrow,  3  Redf.  (N.  Y.)  348 
(1878),  affirmed  18  Ilun  (N.  Y.)  29  (1879),  affirmed  79  N.  Y.  631  (1880);  Mc- 
Lean v.  Ladd,  m  Ilun,  ;'>41.  21  N.  Y.  Supp.  190  (1892);  Royer's  Appeal,  11 
Pa.  36  (1849)  ;  Morton  v.  Adams,  1  Strob.  Eq.  (S.  C.)  72,  76  (1846) ;  Mathews 
v.  Key  ward.  2   S.  C.  239  (1870). 

In  general,  investments  in  property  beyond  the  jurisdiction  of  the  trustees 
are  disapproved.  McCul lough's  Ex'rs  v.  McCullough,  44  N.  J.  Eq.  313,  14 
Atl.  123  (1888);  Ormiston  v.  Olcott,  84  N.  Y.  339  (1881);  Denton  v.  Sanford, 
103  N.  Y.  607,  9  N.  E.  490  (1886)  ;  :Matter  of  Reed.  45  Apj).  Div.  196,  61  N. 
Y.  Supp.  50  (1899);  Rush's  E>state,  12  Pa.  375,  378  (1849).  In  Amory  v. 
Green,  13  Allen,  413  (1S(;(!),  the  Supreme  Court,  of  Massachusetts  authorized 
the  purchase  of  land  by  trustees  outside  of  their  jui-isdiction  ;  and  in  Thayer 
V.  Dewey,  185  Mass.  08,  09  N.  E.  1074  (1904),  I  he  same  court  refused  to  dis- 
allow such  investments.  In  Ex  parte  Copelaiid,  Rice,  E<i.  (S.  C.)  69  (18:i9). 
the  court  refused  to  permit  a  guardian  appointed  in  Florida  to  receive  the 
ward's  property,  so  as  to  remove  the  same  to  Florida. 

5  3  Part  of  the  statement  of  facts,  a  part  of  the  opinion  of  Cottcm,  L.  J., 
and  the  concurring  opinions  of  Fry  and  Bowen,  L.  JJ.,  are  omitted. 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF  TRUST   ESTATE.  435 

trustee  took  good  care  as  to  its  sufficiency  there  would  be  no  l)reach  of 
trust,  and  nobody  could  complain,  though  it  ultimately  proved  insuf- 
ficient. The  case  differs  from  that  of  an  investment  not  within  the 
terms  of  the  instrument,  which  is  necessarily  a  breach  of  trust,  so  that 
if  any  loss  occurs  the  trustees  must  be  liable  for  it.  The  question  here  -.  ,  ,^ 
is,  whether  Uppleby  took  proper  care  in  seeing  to  the  sufficiency  of  the 
security. 

Now  as  regards  the  rule  which  has  been  so  much  discussed,  as  to 
the  amount  which  may  be  lent  on  a  given  security,  the  law  is  thus 
summed  up  in  Learoyd  v.  Whiteley,  12  App.  Cas.  727,  733 :  "As  a 
general  rule  the  law  requires  of  a  trustee  no  higher  degree  of  diligence 
in  the  execution  of  his  office,  than  a  man  of  ordinary  prudence  would 
exercise  in  the  management  of  his  own  private  affairs.  Yet  he  is  not 
allowed  the  same  discretion  in  investing  the  moneys  of  the  trust  as  if 
he  were  a  person  sui  juris  dealing  with  his  own  estate.  Business  men 
of  ordinary  prudence  may,  and  frequently  do,  select  investments  which 
are  more  or  less  of  a  speculative  character ;  but  it  is  the  duty  of  a 
trustee  to  confine  himself  to  the  class  of  investments  which  are  per- 
mitted by  the  trust,  and  likewise  to  avoid  all  investments  of  that  class 
which  are  attended  with  hazard.  So,  so  long  as  he  acts  in  the  honest 
observance  of  these  limitations,  the  general  rule  already  stated  will  ap-  , 

ply.    The  courts  of  equity  in  England  have  indicated  and  given  effect  to 
certain  general  principles  for  the  guidance  of  trustees  in  lending  money  ^ 

upon  the  security  of  real  estate.     Thus  it  has  been  laid  down  that  in  i±i_.^,  _^  J 
the  case  of  ordinary  agricultural  land  the  margin  ought  not  to  be  less  -^^  _^. 
than  one-third  of  its  value;    whereas  in  cases  where  the  subject  of  the  y 

security  derives  its  value  from  buildings  erected  upon  the  land,  or  its  p^  ^'^ 
use  for  trade  purposes,  the^ margin  ought  not  to  be  less  than  one-half. 
I  do  not  think  that  these  have  been  laid  down  as  hard  and  fast  limits  up 
to  which  trustees  will  be  invariably  safe,  and  beyond  which  they  can 
never  be  in  safety  to  lend,  but  as  indicating  the  lowest  margins  which 
in  ordinary  circumstances  a  careful  investor  of  trust  funds  ought  to 
accept."  ^*  These  rules  are  there  recognized,  though  they  have  been 
impeached  by  Mr.  Warmington  and  Mr.  Wood.  In  the  present  case 
the  value  of  the  property  was  mainly  derived  from  buildings.  I  do  not 
think  that  the  valuation  of  the  property  has  been  successfully  im- 
peached. We  must  take  the  property  as  having  been  worth  i  1,750. 
The  trustees  lent  £1,300.  upon  it.  Now,  we  must  have  regard  not  only 
to  the  value,  but  to  the  nature  of  the  property.  It  consisted  of  small 
houses  let  at  weekly  rents,  and  we  know  the  class  of  tenants  likely  to 
be  attracted  by  cottage  property  in  Hull.  It  was  certainly  not 
prudent  to  lend  to  this  extent  upon  property  the  value  of  which  de- 
pended on  labourers'  houses  being  wanted  in  that  part  of  Hull.     The    W 

5  4  See  in  re  Godfrey,  L.  R.  23  Ch.  Div.  483,  496  (1SS3) ;    In  re  Olive,  L. 
R.  34  Ch.  Div.  70,  73  (1886). 


436  THE   DUTIES   OF   A   TRUSTEE.  (Cll.  5 

-uaYeslraent,  therefore,  was  a  breach  of  trust  as  having  been  made  im- 

^rovidently.  ^■'' 

The  second  point  is  new,  and  no  authority  is  to  be  found  upon  it. 
It  was  contended  tliat  the  plaintift  had  taken  ])art  in  the  sale  of  the 
rnortgaged  property  by  the  new  trustees,  and  that  therefore  he  could 
not  call  on  the  late  trustee  for  the  loss,  because,  as  it  was  contended, 
the  late  trustee  was  entitled  to  notice  of  the  intention  to  sell,  so  that  he 
niight  have  an  opportunity  of  taking  to  the  mortgage  and  paying  to 
the  trust  fund  the  amount  lent  on  it.  Tf  that  Ije  the  law  the  late  trus- 
tee is  not  liable.  But  there  is  a  fallacy  in  this  argument ;  it  is  founded 
on  treating  the  mortgage  as  not  being  part  of  the  trust  estate.  That 
view  is  wrong.  The  money  was  invested  according  to  the  terms  of 
the  trust,  though  without  due  care,  and  the  mortgage  was  from  the 
first  a  part  of  the  trust  estate.  When  Uppleby  retired  he  transferred 
the  mortgage  to  the  new  trustees,  to  be  held  on  the  trusts  of  the  will, 
and,  unless  their  acceptance  of  it  exonerated  him  from  his  liability  for 
taking  an  insufficient  security,  I  do  not  see  how  he  was  exonerated 
from  the  consequences  of  his  neglect  of  duty.  The  case  is  entirely 
distinct  from  that  of  an  investment  outside  of  the  terms  of  the  trust, 
which  the  cestui  que  trust  must  accept  or  reject.  Here  the  trustee  is 
only  liable  for  the  loss,  and  that  liability  is  to  be  enforced  when  the 
investment  is  realized.  I  think  that  the  realization  was  according  to 
the  power  which  Uppleby  gave  to  the  new  trustees  by  handing  over 
the  investment  to  them,  and  he  is  liable  for  the  deficiency.  It  is  like 
a  sale  of  mortgaged  property  by  the  mortgagee  under  a  power  with- 
out the  concurrence  of  the  mortgagor.  If  the  sale  is  improperly  made 
it  may  be  impeached,  but  if  it  is  made  fairly  the  mortgagor  is  bound 
by  it  and  is  answerable  for  wdiat  remains  due  on  the  mortgage  after 
deducting  the  proceeds  of  sale.  I  think  that  this  mortgage  was  part 
of  the  trust  property,  that  no  duty  therefore  arose  in  the  cestuis  que 
trust  to  say  whether  they  would  accept  or  reject  it,  and  that  the  late 
trustee  is  liable  for  the  deficiency.     *     *     * 

I  cannot  agree  with  Mr.  Justice  Kekewich,  and  there  must  be  a  de- 
cree against  Air.  Uppleby  for  the  plaintiff's  share  of  the  deficiency. 

5  5  For  other  instances  in  which  trustees  were  held  liable  for  losses  upon 
investments  upon  real  estate  mort^'a^es  made  upon  insullicient  margin,  see 
Stkkney  v.  Sewell,  1  Myl.  &  Cr.  S  (1S.'35) ;  Norris  v.  Wrii^lit,  14  ilea  v.  21)1 
(IS.51) ;  '  Macleod  v.  Annesley,  1()  Beav.  tiOO  (lS.j;j)  ;  Stretlon  v.  Ashmall,  3 
Drew.  9  (1S,'54)  ;  In,i;le  v.  I'artri(l.i,'e,  .*>-4  lieav.  411  (lSG;j)  ;  lUulge  v.  Gunnuow, 
L.  R.  7  Ch.  App.  Cas.  719  (1.S72)  ;  Iloey  v.  Green,  W.  N.  2:50  (1S84) ;  Fry  v. 
Tapson,  L.  R.  28  Ch.  Uiv.  2G8  (1884)  ;  Sniethurst  v.  Hastings,  L.  R.  30  Ch. 
Div.  490  (1885) ;  Walcott  v.  Lyons,  54  L.  T.  R.  786  (1880) ;  In  re  Olive,  L. 
It.  34  Ch.  Div.  70  (18S(>) ;  In  re  Whiteley,  12  App.  Cas.  727  (1887) ;  Re  Part- 
ington, 57  D.  T.  R.  054  (1887)  ;  Knox  v.  :Mackinnon,  13  App.  Cas.  753  (1888) ; 
Rae  V.  iMeek,  14  App.  Cas.  558  (1880)  ;  In  re  Somerset,  L.  R.  (1894)  1  Ch. 
231  (1S93) ;  Guardianship  of  Cardwell,  .55  Cal.  137  (18S0)j  Bogart  v.  Van 
VelRor,  4  Kdw.  Ch.  (N.  Y.)  718  (1848) ;  Bhuivelt's  Estate  (Sur.)  20  N.  Y.  Snpp. 
119  (1890);  Girard  Trust  Co.'s  Appeal,  13  Wkly.  Notes  Cas.  (Pa.)  307 -(1882); 
Lechler's  Appeal.  21  Wkly.  Notes  Cas.  (Pa.)  505  (1888). 

See.  further.  Trustee  Act  1888  (51  &  52  Vict.  c.  59)  §§  4  and  5;  Trustee 
Act  1893  (56  &  57  Vict.  c.  53)  pt.  1,  §§  8  and  9. 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF   TRUST   ESTATE.  437 

KING  V.  TALBOT. 

(Court  of  Appeals  of  New  York,  1869.     40  N.  T.  76.) 

Woodruff,  J.^^  It  is  conceded,  that  in  England,  the  rule  is,  and 
has  long  been  settled,  that  a  trustee,  holding  funds  to  invest  for  the 
benefit  of  his  cestui  que  trust,  is  bound  to  make  such  investment  in  the 
public  debt,  for  the  safety  whereof  the  faith  of  their  government  is 
pledged ;  or  in  loans,  for  w^hich  real  estate  is  pledged  as  security.  And 
that,  although  the  terms  of  the  trust  commit  the  investment,  in  general 
terms,  to  the  discretion  of  the  trustee,  that  discretion  is  controlled  by 
the  above  rule,  and  is  to  be  exercised  within  the  very  narrow  limits, 
which  it  prescribes. 

As  a  purely  arbitrary  rule  resting  upon  any  special  policy  of  that 
country,  or  on  any  peculiarity  in  its  condition,  it  has  no  application  to 
this  country.  It  is  not  of  the  common  law.  It  had  no  applicability 
to  the  condition  of  this  country,  while  a  colony  of  Great  Britain,  and 
cannot  be  said  to  have  been  incorporated  in  our  law. 

So  far,  and  so  far  only,  as  it  can  be  said  to  rest  upon  fundamental 
principles  of  equity,  commending  themselves  to  the  conscience,  and 
suited  to  the  condition  of  our  affairs,  so  far  it  is  true,  that  it  has  ap- 
propriate application  and  force,  as  a  guide  to  the  administration  of  a 
trust,  here,  as  well  as  in  England. 

I  do  not,  therefore,  deem  it  material  to  inquire,  through  the  multi- 
tude of  English  cases,  and  the  abundant  texts  of  the  law  writers,  into 
the  origin  of  the  rule  in  England,  or  the  date  of  its  early  promulgation. 
Nor,  in  this  particular  case,  do  I  deem  it  necessary  to  determine  wheth- 
er it  should,  by  precise  analogy,  be  deemed  to  prohibit  here  investments 
in  any  other  public  debt,  than  that  of  the  State  of  New  York. 

Neither,  in  my  judgment,  are  we  at  liberty,  in  the  decision  of  this 
case,  to  propound  any  new  rule  of  conduct,  by  which  to  judge  of  the 
liability  of  trustees,  now  subjected  to  examination.  Under  trusts  here- 
tofore created,  the  managers  thereof  performed  their  duty  with  the 
aid  of  rules  for  the  exercise  of  their  discretion,  which  were  the  utter- 
ance of  equity  and  good  conscience,  intelligible  to  their  understanding, 
and  available  for  their  information ;  otherwise,  trusts  heretofore 
existing,  have  been  traps  and  pitfalls  to  catch  the  faithful,  prudent,  and 
diligent  trustee,  without  the  power  to  avoid  them. 

But  it  is  not  true,  that  there  is  no  underlying  principle  or  rule  of 
conduct  in  the  administration  of   a  trust,  which  calls  for  obedience. 
Whether.it.  has  been  declared  by  the  courts  or  not,  whether  it  has     '^,^^C^ 
been  enacted  in  statutes  or  not,  whether  it  is  in  familiar  recognition  in    ,  '     J^ 
the  affairs  of  life,  there  appertains  to  the  relation  of  trustee  and  cestui  '',    '^^;^~ 
que  trust,  a  duty  to  be  faithful,  to  be  diligent,  to  be  prudent  in  an 

56  The  statement  of  facts  and  a  part  of  the  opinion  of  Woodruff,  J.,  are 
omitted. 


438  THE   DUTIES   OF   A   TRUSTEE.  (Cll.  5 

acluiinistration  entrustcil  to  the  former,  in  confidence  in  his  fidelity, 
dihgence  and  prudence. 

To  this  general  statement  of  llie  duty  of  trustees,  there  is  no  want 
of  promulgation  or  sanction,  nor  want  of  sources  of  information  for 
their  guidance.  In  the  whole  history  of  trusts,  in  decisions  of  courts 
for  a  century  in  England,  in  all  the  utterances  of  the  courts  of  this 
and  the  other  states  of  this  country,  and  not  less  in  the  conscious  good 
sense  of  all  intelligent  minds,  its  recognition  is  uniform. 

The  real  inquiry,  therefore,  is,  in  my  judgment,  in  the  case  before 
us,  and  in  all  like  cases:  Has  the  administration  of  the  trust,  created 
by  the  will  of  Charles  \V.  King,  for  the  benefit  of  the  plaintifif,  been 
governed  by  fidelity,  diligence  and  prudence?  If  it  has,  the  defend- 
ants are  not  liable  for  losses,  which,  nevertheless,  have  happened. 

This,  however,  aids  but  little  in  llie  examination  of  defendants'  con- 
duct, unless  the  terms  of  definition  are  made  more  precise.  What  are 
fidelity,  diligence  and  discretion?  and  what  is  the  measure  thereof, 
which  trustees  are  bound  to  possess  and  exercise? 

It  is  hardly  necessary  to  say,  that  fidelity  imports  sincere  and  single 
intention  to  administer  the  trust  for  the  best  interest  of  the  parties 
beneficially  interested,  and  according  to  the  duty,  which  the  trust 
imposes.    And  this  is  but  a  paraphrase  of  "good  faith." 

The  meaning  and  measure  of  the  required  prudence  and  diligence 
has  been  repeatedly  discussed,  and  with  a  difference  of  opinion.  In 
extreme  rigor,  it  has  sometimes  been  said,  that  they  must  be  such  and 
as  great,  as  that  possessed  and  exercised  by  the  Court  of  Chancery 
itself.  And  again,  it  has  been  said,  that  they  are  to  be  such,  as  the 
trustee  exercises  in  the  conduct  of  his  own  affairs,  of  like  nature,  and 
between  these  is  the  declaration,  that  they  are  to  be  the  highest 
prudence  and  vigilance,  or  they  will  not  exonerate. 

My  own  judgment,  after  an  examination  of  the  subject,  and  bearing 
in  mind  the  nature  of  the  office,  its  importance,  and  the  considerations, 
which  alone  induce  men  of  suitable  experience,  capacity,  and  respon- 
sibility to  accept  its  usually  thankless  burden,  is  that  the  just  and  true 
rule  is,  that  the  trustee  is  bound  to  employ  such  diligence  and  such 
prudence  in  the  care  and  management,  as  in  general,  prudent  men  of 
discretion  and  intelligence  in  such  matters,  employ  in  their  own  hke 
affairs. 

This  necessarily  excludes  all  speculation,  all  investments  for  an  un- 
certain and  doubtful  rise  in  the  market,  and,  of  course,  everything  that 
does  not  take  into  view  the  nature  and  object  of  the  trust,  and  the  con- 
sequences of  a  mistake  in  the  selection  of  the  investment  to  be  made. 
'  It,  therefore,  does  not  follow  that,  because  prudent  men  may,  and 
often  do,  conduct  their  own  affairs  with  the  hope  of  growing  rich,  and 
therein  take  the  hazard  of  adventures  which  they  deem  hopeful,  trus- 
tees may  do  the  same;  the  preservation  of  the  fund,  and  the  procure- 
ment of  a  just  income  therefrom,  are  primar>^  objects  of  the  creation 
.of  the  trust  itself,  and  are  to  be  primarily  regarded. 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF   TRUST   ESTATE.  439 

If  it  be  said,  that  trustees  are  selected  by  the  testator,  or  donor  of 
the  trust,  from  his  knowledge  of  their  capacity,  and  without  any 
expectation  that  they  will  do  more  than,  in  good  faith,  exercise  the 
discretion  and  judgment  they  possess,  the  answer  is:  First,  the  rule 
properly  assumes  the  capacity  of  trustees  to  exercise  the  prudence  and 
diligence  of  prudent  men,  in  general ;  and,  second,  it  imposes  the  duty 
to  observe  and  know,  or  learn,  what  such  prudence  dictates  in  the 
matter  in  hand. 

And  once  more,  the  terms  of  the  trust,  and  its  particular  object  and 
purpose,  are  in  no  case,  to  be  lost  sight  of  in  its  administration. 

Lewin,  in  his  Treatise  on  the  Law  of  Trusts,  etc.  (page  332),  states, 
as  the  result  of  the  several  cases,  and  as  the  true  rule,  that  "a  trustee 
is  bound  to  exert  precisely  the  same  care  and  solicitude  in  behalf  of 
the  cestui  que  trust,  as  he  would  do  for  himself  ;  but  greater  measure 
than  this,  a  court  of  equity  will  not  exact."  In  general,  this  is  true, 
but  if  it  imports  that,  if  he  do  what  men  of  ordinary  prudence  would 
not  do,  in  their  own  affairs,  of  a  like  nature,  he  will  be  excused,  on 
showing  that  he  dealt  with  his  own  property  in  like  want  of  discretion, 
it  cannot  be  sustained,  as  a  safe  or  just  rule  towards  cestuis  que  trust; 
nor  is  it  required  by  reasonable  indulgence  to  the  trustee ;  it  would  be 
laying  the  duty  to  be  prudent  out  of  the  view  entirely,  and  I  cannot 
think  the  writer  intended  it  should  be  so  understood. 

The  Massachusetts  cases  (Harvard  College  v.  Amory,  9  Pick.  446; 
Lovell  V.  Minot,  20  Pick.  116,  Z2  Am.  Dec.  206),  cited  by  the  counsel 
for  the  defendant,  are  in  better  conformity  to  the  rule,  as  I  have 
stated  it. 

To  apply  these  general  views  to  the  case  before  us,  and  with  the  de- 
ductions, which  necessarily  flow  from  their  recognition :     The  testator      't- 
gave  to  each  of  his  children  fifteen  thousand  dollars,  the  interest  on     f^ 
fhe  same,  so  far  as  required,  to  be  applied  to  their  maintenance  and  TZ^^^^ 
education,  and  the  principal,  with  any  accumulations  thereon,  to  be'"-^<7^ 
paidtp.them  severally  on  their  majority;    appointed  the  defendant, 
Talbot,  and  his  partner,  Mr.  Olyphant,  executors,  "entrusting  to  their 
discretion  the  settlement  of  my  affairs  and  the  investment  of  my  estate 
for  the  benefit  of  my  heirs." 

If  I  am  correct  in  my  views  of  the  duty  of  trustees,  this  last  clause - 
neither  added  to,  nor  in  any  wise  affected  the  duty  or  responsibility  of 
these  executors ;  without  it,  they  were  clothed  with  discretion ;  with 
it,  their  discretion  was  to  be  exercised  with  all  the  care  and  prudence 
belonging  to  their  trust  relation  to  the  beneficiaries.  Such  is  the  dis- 
tinct doctrine  of  the  cases  very  largely  cited  by  the  counsel  for  the 
parties,  and  is,  I  think,  the  necessary  conclusion  from  the  just  rule 
of  duty  I  have  stated. 

What,  then,  was  the  office  of  the  trustees,  as  indicated  by  the  terms 
and  nature  of  the  trust?  If  its  literal  reading  be  followed,  it  directed 
that,  "fifteen  thousand  dollars"  in  money  be  placed  at  "interest."  The 
nature  of  the  trust,  according  to  the  manifest  intent  of  the  testator, 


440  THE   DUTIKS   OF  A   TRUSTEE.  (CIl.  5 

required  that,  in  order  to  the  maintenance  and  support  of  infant  chil- 
dren, whose  need,  in  that  rc<^ar(l,  would  be  constant  and  unremitting, 
that  interest  should  How  in  with  regularity  and  without  exposure  to 
the  uncertainties  or  lluctuation  of  adventures  of  any  kind.  And  then 
the  fund  should  continue,  with  any  excess  of  such  interest  accumulated 
for  their  bcncht,  so  as  to  be  delivered  at  the  expiration  of  their  mi- 
nority. 

Palpably,  then,  the  first  and  obvious  duty  was  to  place  that  fifteen 
thousand  dollars  in  a  state  of  security;  second,  to  see  to  it  that  it  was 
productive  of  interest ;  and,  third,  so  to  keep  the  fund,  that  it  should 
always  be  subject  to  future  recall  for  the  benefit  of  the  cestui  que 
trust. 

I  do  not  attach  controlling  importance  to  the  word  "interest"  used 
by  the  testator,  but  I  do  regard  it  as  some  guide  to  the  trustees,  as  an 
expression  of  the  testator,  that  he  did  not  contemplate  any  adventure 
with  the  fund,  with  a  view  to  profits  as  such. 

But,  apart  from  the  inference  from  the  use  of  that  word,  I  think 
it  should  be  said,  that  whenever  money  is  held  upon  a  trust  of  this 
description,  it  is  not  according  to  its  nature,  nor  within  any  just  idea 
of  prudence,  to  place  the  principal  of  the  fund  in  a  condition,  in  which 
it  is  necessarily  exposed  to  the  hazard  of  loss  or  gain,  according  to 
the  success  or  failure  of  the  enterprise  in  which  it  is  embarked,  and  in 
which,  by  the  very  terms  of  the  investment,  the  principal  is  not  to  be 
returned  at  all. 

It  is  not  denied,  that  the  employment  of  the  fund,  as  capital  in  trade, 
would  be  a  clear  departure  from  the  duty  of  trustees.  If  it  cannot  be 
so  employed  under  the  management  of  a  co-partnership,  I  see  no  rea- 
son for  saying  that  the  incorporation  of  the  partners  tends,  in  any  de- 
gree, to  justify  it. 

The  moment  the  fund  is  invested  in  bank,  or  insurance,  or  railroad 
stock,  it  has  left  the  control  of  the  trustees ;  its  safety  and  the  hazard, 
or  risk  of  loss,  is  no  longer  dependent  upon  their  skill,  care,  or  dis- 
cretion, in  its  custody  or  management,  and  the  terms  of  the  investment 
do  not  contemplate  that  it  ever  will  be  returned  to  the  trustees. 

If  it  be  said,  that,  at  any  time,  the  trustees  may  sell  the  stock,  (wdiich 
is  but  another  name  for  their  interest  in  the  property  and  business  of 
the  corporation)  and  so  repossess  themselves  of  the  original  capital, 
I  reply,  that  is  necessarily  contingent  and  uncertain ;  and  so  the  fund 
has  been  voluntarily  placed  in  a  condition  of  uncertainty,  dependent 
upon  two  contingencies :  First,  the  practicability  of  making  the  busi- 
ness profitable,  and,  second,  the  judgment,  skill,  and  fidelity  of  those 
who  have  the  management  of  it  for  that  purpose. 

If  it  be  said,  that  men  of  the  highest  prudence  do,  in  fact,  invest 
their  funds  in  such  stocks,  becoming  subscribers  and  contributors 
thereto,  in  the  very  formation  thereof,  and  before  the  business  is  de- 
veloped, and  in  the  exercise  of  their  judgment,  on  the  probability  of 
its  safety  and  productiveness,  the  answer  is,  so  do  just  such  men. 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF   TRUST   ESTATE.  441 

looking  to  the  hope  of  profitable  returns,  invest  money  in  trade,  and 
adventures  of  various  kinds.  In  their  private  affairs,  they  do,  and  they 
lawfully  may,  put  their  principal  funds  at  hazard ;  in  the  affairs  of  a 
trust  they  may  not.     The  very  nature  of  their  relation  to  it  forbids  it. 

If  it  be  said,  that  this  reasoning  assumes,  that  it  is  certainly  prac- 
ticable so  to  keep  the  fund,  that  it  shall  be  productive,  and  yet  safe 
against  any  contingency  of  loss ;  whereas,  in  fact,  if  loaned  upon  bond 
and  mortgage,  or  upon  securities  of  any  description,  losses  from  in- 
solvency and  depreciation  may,  and  do  often  happen,  notwithstanding 
due  and  proper  care  and  caution  is  observed  in  their  selection.  Not 
at  all.  It  assumes  and  insists,  that  the  trustees  shall  not  place  the  • 
fund  where  its  safety  and  due  return  to  their  hands  will  depend  upon 
the  success  of  the  business  in  w'hich  it  is  adventured,  or  the  skill  and 
honesty  of  other  parties  entrusted  with  its  conduct ;  and  it  is  in  the 
selection  of  the  securities  for  its  safety  and  actual  return,  that  there 
is  scope  for  discretion  and  prudence,  which,  if  exercised  in  good  faith, 
constitute  due  performance  of  the  duty  of  the  trustees. 

My  conclusion  is,  therefore,  that  the  defendants  were  not  at  liberty 
to  invest  the  fund  bequeathed  to  the  plaintiff,  in  stock  of  the  Delaware  ' 
and  Hudson  Canal  Company ;  of  the  New  York  and  Harlem  Rail-  )c^j 
road  Company;  of  the  New  York  and  New  Haven  Railroad  Com-  ; 
pany ;  of  the  Bank  of  Commerce ;  or  of  the  Saratoga  and  Washington  / 
Railroad  Company ;  and  that  the  plaintiff"  was  not  bound  to  accept  / 
these  stocks,  as,  and  for  his  legacy,  or  the  investment  thereof.  — ' 

In  regard  to  the  bonds  of  the  Hudson  River  Railroad  Company,  and 
of  the  Delaware  and  Hudson  Canal  Company,  it  appears  by  schedule 
B,  given  in  evidence,  that  the  former  were  mortgage  bonds ;  but  what 
was  the  extent  or  sufficiency  of  the  security  afforded  by  such  mort- 
gage, or  what  property  was  embraced  in  it,  does  not  appear,  nor  does 
it  appear,  whether  there  was  any  security  whatever  for  the  payment 
of  the  Canal  Company's  bond. 

It  is  not  necessary  for  the  decision  of  this  case  and  I  am  not  pre- 
pared to  say,  that  an  investment  in  the  bonds  of  a  railroad,  or  other 
corporation,  the  payment  whereof  is  secured  by  a  mortgage  upon 
real  estate,  is  not  suitable  and  proper,  under  any  circumstances. 

If  the  real  estate  is  ample  to  ensure  the  payment  of  the  bonds,  I  do 
not,  at  present,  perceive,  that  it  is  necessarily  to  be  regarded  as  inferior 
to  the  bond  of  an  individual,  secured  by  mortgage ;  it  would,  of  course 
be  open  to  all  the  inquiries  which  prudence  would  suggest,  if  the  bond 
and  mortgage  were  that  of  an  individual.  The  nature,  the  location, 
and  the  sufiiciency  of  the  security,  and  the  terms  of  the  mortgage, 
and  its  availability  for  the  protection  and  ultimate  realization  of  the 
fund,  must,  of  course,  enter  into  the  consideration. 

But  it  is  not  necessary  to  pursue  that  subject.  The  plaintiff,  in  his 
complaint,  rejects  the  entire  investment.  The  court  below  held,  that 
it  was  equitable  that  the  plaintiff  should  be  held  to  receive  the  whole 
or  none  of  the  stocks  and  bonds,  and  to  that  ruling,  neither  the  plain- 


442  THE   DUTIES   OF   A  TRUSTEE.  (Ch.  5 

tiff  nor  the  defendants  have  excepted;  and,  therefore,  the  question, 
whether  the  judgment  below  was  correct  in  that  respect,  is  not  be- 
fore us. 

It  is  proper,  however,  to  say,  that  I  do  not  clearly  a])prehencl  the 
propriety  of  that  ruling,  unless  it  be  on  the  ground,  that  the  plaintiff, 
in  his  complaint,  did  so  elect. 

The  rule  is  perfectly  well  settled,  that  a  cestui  que  trust  is  at  liberty 
to  elect  to  approve  an  unauthorized  investment,  and  enjoy  its  profits, 
or  to  reject  it  at  his  option;  and  I  perceive  no  reason  for  saying,  that 
where  the  trustee  has  divided  the  fund  in  parts  and  made  sejjarate 
investments,  the  cestui  que  trust  is  not  at  liberty,  on  e(|uitable  as  well 
as  legal  grounds,  to  approve  and  adopt  such  as  he  thinks  it  for  his 
interest  to  approve.  The  money  invested  is  his  money ;  and  in  respect 
to  each  and  every  dollar,  it  seems  to  me,  he  has  an  unciualificd  right 
to  follow  it,  and  claim  the  fruits  of  its  investment,  and  that  the  trustee 
cannot  deny  it.  The  fact,  that  the  trustee  has  made  other  investments 
of  other  parts  of  the  fund,  which  the  cestui  que  trust  is  not  bound  to 
approve,  and  disaffirms,  cannot,  I  think,  affect  the  power.  For  ex- 
ample, suppose,  in  the  present  case,  the  cestui  que  trust  on  delivery 
to  him  of  all  the  stocks  and  bonds  in  which  his  legacy  had  appeared 
invested,  had  declared:  Although  these  investments  are  improperly 
made,  not  in  accordance  with  the  intent  of  the  testator,  nor  in  the  due 
performance  of  your  duty,  I  waive  all  objection  on  that  account,  ex- 
cept as  to  the  stock  of  the  Saratoga  and  Washington  Railroad  Com- 
pany. That,  I  reject  and  return  to  you.  Is  it  doubtful  that  his  posi- 
tion must  be  sustained  ? 

The  result  is,  that  the  main  features  of  the  judgment  herein  must 
be  affirmed.     *     *     * 

All  the  judges  concur  in  the  result  to  which  Judge  Woodruff  ar- 
rived. 

Murray,  J.,  thought  it  a  settled  principle  of  laws  in  this  State,  that 
a  trustee,  holding  trust  funds,  for  investment  for  the  benefit  of  minor 
children,  must  invest  in  Government  or  real  estate  securities,  and  that 
any  other  investment  would  be  a  breach  of  duty,  and  the  trustee  would 
be  personally  liable  for  any  loss."  Grover,  D.\nii-ls,  and  J.\mFS,  JJ., 
concurred.    Hunt,  C.  J.,  and  Mason  and  Lott,  JJ.,  contra. 

sTTrafford  v.  Booliin,  3  Atk.  440  (1746);  Howe  v.  Earl  of  Dartmouth,  7 
Ves.  .7r.  1:17  (1802)  ;  Mills  v.  Mills,  7  Sim.  501  (18:3.5)  ;  Davles  v.  Hodgson, 
25  Beav.  177  (1858)  ;  llyiies  v.  Ucdiugton,  1  J.  &  La  T.  589  (1844)  ;  7  Ir.  Eq. 
405;  Itandolph  v.  East  Birminirham  I^md  Co.,  104  Ala.  355,  16  South.  126, 
53  Am.  St.  Hep.  64  (ISO:^) ;  White  v.  Sherman,  168  111.  589,  48  N.  E.  128,  61 
Am.  St.  Hep.  1.32  (1897) ;  Tucker  v.  State,  72  Ind.  242  (1880)  ;  Gilbert  v. 
Welsch,  75  Ind.  5.57  (18K1)  ;  Smith  v.  Smith,  7  J.  J.  Marsh.  (Ky.)  2.38  (18;{2)— 
see  now  Kv.  St.  190:}.  §  4706,  and  Robertson  v.  llA)bertson's  Trustee,  130  Ky. 
293,  113  S."^  W.  i:3.S,  1.32  Am.  St.  Hep.  368  (1908)— Ashhurst  v.  I'otter,  29  N. 
J.  Eq.  625,  631,  (^2  (1878) ;  Tucker  v.  Tucker,  33  N.  J.  Vai.  235  (1880) ;  Re 
Mundv,  3  N.  J.  I^iw  J.  185  (1880) ;  Executors  of  Voorhees,  3  N.  J.  Law  .7.  211 
(1,S80)^  Ackerman  v.  Emott,  4  Barb.  (N.  Y.)  626  (1848) ;  Adair  v.  Brinuner, 
74  N.  Y.  5:59  (1878)  ;  Mills  v.  IIoITman,  26  Ilun  (N.  Y.)  594  (1882)  ;  Hemphill's 
Appeal,  18  Pa.  303  (1852) ;    Worrell's  Appeal,  23  Pa.  44   (1854) ;    Pray's  Ap- 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF   TRUST   ESTATE.  443 


FREDERICK  DAVIS,  Appellant. 

(Supreme  .Tudicial  Court  of  Massachu^-etts,   1903.     183  Mass.   490,  G7   N.   E. 

604.) 

Appeal,  from  a  decree  of  the  Probate  Court  of  the  County  of  Suf- 
folk, disallowing  in  part  the  fourteenth  and  fifteenth  accounts  of  the 
surviving  trustee  under  the  will  of  Moses  Day,  late  of  Boston. 

Hammond,  J.,  reserved  the  case  for  the  determination  of  the  full 
court. 

The  details  of  the  investments  in  the  bonds  and  stock  of  the  Atchi- 
son, Topeka  &  Santa  Fe  Railroad  Company,  described  by  the  court, 
were  as  follows :       ' 

Jau.  1.5,  1883.     .$2000  0  per  cent,   bonds $  2,000.00 

Dec.  11,  1885.     5    shares   of   stock $    428.12 

Reduced  by  sale  of  ri;^'hts....        24.10 

$    404.02 

Dec.  24,  1886.     4.5  shares  of  stock .?4,246.8S 

Reduced  by  sale  of  rights....        97.65 

4,149.23 

Feb.  17,  1887.     6   shares   of    stock $    593..50 

Reduced  by  sale  of  rights....        13.02 

— 580.48 

Dec.  28,  1887.     2  shares  of  stock .?    185.88 

Reduced  by  sale  of  rights.  ...  .94 

184.94 

Total    stock 5.318.G7 

.Tune  18,  1887.     $5000  collateral  trust  bonds 4,995.00 

$12,313.67      ^ 

Morton,  J.^^     The  first  question   in   this  case  is  whether  in  the 
investiTient  of  the  trust  funds  in  the  stock  and  bonds  of  the  Atchison,  ^ 
Topeka  .and  Santa  Fe  Railroad  Company,  to  the  extent  to  which  they   r'- 
invested  in  them,  the  trustees  manifested  the  sound  judgment  and  rea- 
sonable discretion  and  prudence  which  is  required  of  trustees  in  such 

peals.  34  Pa.  100  (1859) ;  Ihmsen's  Appeal,  43  Pa.  431  (1862) ;  Simmons  v. 
Oliver,  74  Wis.  6.33.  43  N.  W.  .561  (1889). 

By  Lord  St.  I^onard's  Act  (22  &  23  Vict.  c.  35.  18,59)  §  32.  investments  of 
trust  fi;nds  In  Bank  of  England  stock.  Bank  of  Ireland  stock,  or  East  India 
stock  were  authorized.  By  23  &  24  Vict.  c.  .38  (1860)  §  10,  the  judges  therein 
named  were  empowered  to  make  general  orders  as  to  the  investment  of  cash 
under  the  control  of  the  court;  and  section  11  authorized  trustees  to  invest 
trust  funds  in  the  same  securities.  The  Trust  Investment  Act  1889  (52  &  53 
Vict.  c.  .32)  greatly  extended  the  field  of  investment  for  -trust  funds  in  Ens- 
land.  The  field  was  still  further  extended  by  the  Trustee  Act  1893  (56  &  57 
Vict.  c.  53)  pt.  1. 

The  Constitution  of  Alabama  of  1875  (article  4,  §  35)  provides  that  "no 
act  of  the  General  Assembly  shall  authorize  the  investment  of  any  trust 
fund  by  executors,  administrators,  guardians  and  other  trustees  in  the  bonds 
or  stock  of  any  private  corporation."  The  same  provision  is  found  in  the 
Constitution  of  Colorado  (article  5,  §  36)  and  that  of  Pennsylvania  (article 
3,  §  22). 

The  statutes  of  the  various  states  should  be  carefully  consulted  as  to  the 
investment  of  trust  funds. 

58  A  part  of  the  opinion  is  omitted. 


-/.. 


'^p 


444  THE   DUTIKS   OF   A   TRUSTEE.  (Cll.  5 

matters.  The  question  is  to  ])e  determined  as  of  the  time  when  the 
investments  were  made.  There  is  also  a  question  whether  the  general 
rule  is  affected  by  the  language  creating  the  trust.  It  is  agreed  that 
the  purchases  were  made  in  ])CTfect  good  faith  and  that  before  makmg 
them  the  trustee  took  the  advice  of  persons  on  whose  opinion  he 
thouglit  he  was  entitled  to  rely  as  to  the  value  of  the  securities.  It 
is  also  agreed  that  at  the  time  of  the  purchases  he  had  invested  his 
own  money  to  a  considerable  amount  in  stocks  and  bonds  of  the  com- 
pany. 

The  trust  estate  consisted  of  a  fund  of  $30,000  bequeathed  by  the 
-testator  to  the  trustees  in  trust,  to  invest  the  same  and  pay  over  the 
income  to  the  testator's  daughter  din-ing  her  life  and  upon  her  death 
to  distribute  and  pay  over  the  principal  amongst  her  children.  P'rom 
1883  to  1887  inclusive  the  trustees  invested  in  the  stock  and  bonds 
of  the  Atchison,  Topeka  and  Santa  Fe  Railroad  Company  upwards  of 
$12,000  of  the  trust  funds  as  follows:  On  January  15,  1883,  they 
purchased  $2,000  of  the  six  per  cent  sinking  fund  bonds  issued  by  that 
company  and  secured  by  mortgage  bonds  of  various  railroad  com- 
panies whose  lines  composed  a  part  of  the  Atchison  system.  On 
December  11,  1885,  they  purchased  five  shares  of  the  stock,  on  De- 
cember 24,  1886,  forty-five  shares  of  stock,  on  February  17,  1887,  six 
shares  of  the  stock,  on  June  18,  1887,  $5,000  collateral  trust  bonds 
issued  by  it  and  secured  by  mortgage  bonds  of  various  railroads,  and 
on  December  28,  1887,  two  shares  of  the  stock.  Prior  to  the  last 
purchase  of  bonds  and  the  last  two  purchases  of  stock  between  a 
quarter  and  a  fifth  of  the  trust  property  had  been  invested  in  the  stock 
and  bonds  of  the  company.  The  Probate  Court  disallowed  the  last 
y  .  purchase  of  bonds  and  the  last  two  purchases  of  stock  and  allowed 
the  other  investments.  In  Dickinson,  Appellant,  152  Mass.  184, 
where  the  facts  in  regard  to  the  situation  of  the  corporation  whose 
stock  was  purchased  were  very  similar  to  the  facts  in  this  case,  the 
decision  was  in  effect  that  so  much  of  the  investment  as  was  in  excess 
of  a  quarter  to  a  fifth  of  the  whole  trust  fund  could  not  be  sustained 
as  made  in  the  exercise  of  a  sound  discretion.  The  court  declined  to 
say  that  the  trustee  had  so  far  failed  to  exercise  a  sound  discretion 
that  the  investment  should  be  held  to  be  wholly  unauthorized,  but 
disallowed  them  in  part.  We  do  not  see  how  this  case  can  be  fairly 
distinguished  from  that,  the  fact  that  the  investment  was  partly  in 
stock  and  partly  in  bonds  of  the  company  not  being  sufficient,  it  seems 
to  us,  to  distinguish  it.  And  while  we  recognize  in  this  case  as  the 
court  did  in  that  "the  hardship  of  compelling  a  trustee  to  make  good 
out  of  his  own  property  a  loss  occasioned  by  an  investment  of  trust 
property  wdiich  he  has  made  in  good  faith,  and  upon  the  advice  of 
persons  whom  he  thinks  to  be  qualified  to  give  advice,"  we  cannot 
in  this  case  any  more  than  the  court  could  in  that  hold  upon  the  evi- 
dence the  trustee  was  justified  in  investing  in  the  stock  and  bonds 
in  question  so  large  a  proportion  of  the  trust  property. 


Sec.  4)  DUTIES   OP   MANAGEMENT   OF   TRUST   ESTATE.  445 

The  remaining  question  is  whetlier  the  language  of  the  will  cre- 
ating the  trust  takes  the  case  out  of  the  general  rule  and  relieves  the 
trustee  from  liability  on  account  of  imprudent  investments,  if  made 
in  good  faith.     *     *     ''' 

The  will  contains  no  direction  as  to  the  security  in  which  the  trus- 
tees are  to  invest.  That  matter  is  left  to  their  judgment  and  discre- 
tion, and  we  think  that  in  such  a  case  the  general  rule  applies,  and 
that  they  are  bound  to  exercise  a  sound  judgment  and  a  reasonable 
and  prudent  discretion.  Dickinson  Appellant,  ubi  supra ;  Mattocks  v. 
Moulton,  84  Me.  545,  24  Atl.  1004;  King  v.  Talbot,  40  N.  Y.  76; 
Kimball  v.  Reding,  31  N.  H.  Zh2,  64  Am.  Dec.  333. 

We  agree  with  the  judge  of  the  Probate  Court  in  thinking  that  the 
words  "with  full  power  to  make  purchases,  investments  and  ex- 
changes *  *  -'■  in  such  manner  as  to  them  shall  seem  expedient; 
it  being  my  intention  to  give  my  said  trustees  and  those  who  may  be 
made  such,  the  same  dominion  and  control  over  said  property  as  I 
now  have"  are  enabling  words  inserted  to  give  to  the  trustees  the 
power  to  deal  fully  and  expeditiously  with  the  estate,  and  that  they 
do  not  release  the  trustees  from  the  obligation  to  exercise  a  sound 
judgment  and  a  reasonable  and  prudent  discretion  in  regard  to  such 
investment   as   they   may   make   under   the   authority  given   to  them. 

*        *        >f;   D9 

Decree  of  Probate  Court  affirmed. 


Matter  of  HALL. 

(Court  of  Appeals  of  New  York,  1900.     164  N.  Y.  196,  58  N.  E.  11.) 

Appeal  from  an  order  of  the  Appellate  Division  of  the  Supreme 
Court  in  the  Second  judicial  department,  made  March  6,  1900,  af- 
firming a  decree  of  the  Surrogate's  Court  of  the  county  of  New  York 

5  9  For  other  decisions  justifying  investments  by  trustees  in  stoclcs  of  cor- 
porations, see  Lamar  v.  Micou,  112  U.  S.  452,  5  Sup.  Ct.  221,  28  L.  Ed.  751 
(18S4)  ;  Id.,  114  U.  S.  218,  5  Sup.  Ct.  857,  29  L.  Ed.  94  (1885)  ;  Gray  v.  Lvncli. 
8  Gill  (Md.)  403,  420-422  (1849) ;  McCoy  v.  Horwitz,  62  Md.  183  (1884) ;  Dick- 
inson, Appellant.  152  Mass.  184,  25  N.  E.  99,  9  L.  K.  A.  279  (1890) ;  Washing- 
ton V.  Emery,  57  N.  C.  32  (1858)  ;  Peckham  v.  Newton,  15  K.  I.  321,  4  Atl. 
758  (1886) ;    Boggs  v.  Adger,  4  Rich.  Eq.  (S.  C.)  408  (1852). 

"All  that  can  be  required  of  a  trustee  to  invest  is  that  he  shall  conduct 
himself  faithfully  and  exercise  a  sound  discretion.  He  Is  to  observe  how 
men  of  prudence,  discretion  and  intelligence  manage  their  own  affairs,  not 
in  regard  to  speculation,  but  in  regard  to  the  permanent  disposition  of  their 
funds,  considering  the  probable  income,  as  well  as  the  probable  safety  of  the 
capital  to  be  invested."  Harvard  College  v.  Amory,  9  Pick.  (Mass.)  446,  401 
(1830),  per  Putnam,  J. 

Trustees  in  Massachusetts  accordingly  have  a  wide  field  of  investment.  See 
Lovell  V.  Minot.  20  I'ick.  116,  32  Am.  Dec:  206  "(1838) ;  Brown  v.  French.  125 
Mass.  410  (1878) ;  Bowker  v.  Pierce.  130  Mass.  262  (ISSl) ;  Hunt,  Appellant, 
141  Mass.  515,  6  N.  E.  554  (1S86) ;  Thayer  v.  Dewey,  185  Mass.  68,  69  N.  E. 
1074  (1904). 


446  THE   DUTIES   OF   A   TKl'STEE.  (Ch.  5 


y(A.-A'j  adjudging  certain  iine-tnicnts  made  by  the  trustees  herein  to  have 
(   been  illegal  and  unautliorized. 

CuLLEN,  J.  The  question  in  the  ease  is  as  to  the  lialjility  of  the 
appellants  as  trustees  for  an  investment  of  twenty-five  thousand  dol- 
lars in  the  debenture  stoek  of  "The  I'mljrella  Company."  The  au- 
thority given  the  appellants  by  the  will  is:  "I  hereby  give  my  said 
executors  and  trustees  hereinbefore  named  full  power  to  reinvest  the 
proceeds  of  such  sale  or  other  act  as  aforesaid  in  any  security  real 
or  personal  which  they  may  deem  for  the  benefit  of  my  estate  and  cal- 
culated to  carry  out  the  intention  of  this  my  last  will."  The  testator 
himself  had  been  in  the  umbrella  business  and  by  the  sixth  clause  of 
his  will  he  directed  that  his  interest  in  the  business  be  closed  on  the 
first  day  of  July  or  the  first  of  January  immediately  following  his  de- 
cease. The  referee  acquitted  the  appellants  of  any  bad  faith,  but 
held  them  liable  on  the  ground  that  the  character  of  the  investment 
was  illegal.  This  report  was  confirmed  by  the  surrogate  and  the  sur- 
rogate's decree  unanimously  affirmed  by  the  Appellate  Division,  which, 
while  it  held  that  under  the  will  the  trustees  were  not  limited  to  what 
might  be  called  ordinary  trust  investments,  was  of  o])inion  that  the 
investment  was  speculative  and  hazardous,  and,  therefore,  improper. 
With  this  view  we  agree.  As  there  was  a  unanimous  affirmance  be- 
low, unless  we  are  prepared  to  decide  that  good  faith  exonerates  the 
the  trustees  from  liability,  no  matter  how  speculative,  hazardous  or 
unwise  the  investment  may  have  been,  we  must  affirm  the  judg- 
ment and  cannot  look  into  the  evidence  to  see  how  speculative  or  un- 
reasonable the  investment  was. 

The  investment  in  the  case  at  bar  was  in  the  preferred  stock  of  a 
corporation  organized  to  conduct  the  manufacture  and  sale  of  umbrel- 
las, and  formed  by  the  consolidation  of  several  firms  at  the  time  engag- 
ed in  that  business.  The  corporation  had  no  real  estate  or  plant.  The 
preferred  or  debenture  stock  was  issued  for  merchandise,  fixtures 
and  book  accounts  of  the  firms,  while  the  common  stock  was  issued 
for  the  supposed  good  will  of  those  firms.  While  the  money  was  not 
paid  on  an  original  subscription  of  stock,  but  the  stock  was  bought 
from  a  holder,  still  it  was  during  the  very  first  days  of  the  existence 
of  the  company  and  before  experience  had  shown  that  it  could  achieve 
any  success  or  stability.  After  doing  business  for  a  short  time  the 
corporation  failed  and  two-thirds  of  the  investment  of  twenty-five 
thousand  dollars  was  lost.  One  of  the  firms  from  the  consolidation 
of  which  the  corporation  sprang  was  that  of  the  appellant  Hall,  in 
which  firm  the  testator  at  the  time  of  his  decease  was  a  partner.  As 
pointed  out  in  the  opinion  delivered  by  Justice  Bartlett  in  the  Appel- 
late Division  the  testator  certainly  never  intended  that  the  money  he 
had  directed  to  be  w'ithdrawn  from  the  business  should  be  invested  in 
the  same  business. 

We  concede  that  under  the  terms  of  the  will  the  trustees  were  given 
a  discretion  as  to  the  character  of  the  investments  they  might  make. 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF   TRUST  ESTATE.  447 

and  that  they  were  not  limited  to  the  investments  required  by  a  court 
of  equity  in  the  absence  of  any  directions  from  a  testator.  The  trusts 
of  this  will  are  to  provide  the  testator's  children  with  incomes  during 
their  lives,  and  on  their  deaths  the  principal  is  to  go  to  their  issue. 
The  very  object  of  the  creation  of  the  trust,  was,  therefore,  the 
security  of  the  principal,  otherwise  the  testator  might  better  have  giv- 
en the  property  outright  to  his  children  who  were  the  primary  ob- 
jects of  his  bounty.  The  range  of  so-called  "legal  securities"  for  the 
investment  of  trust  funds  is  so  narrow  in  this  state  that  a  testator  may 
well  be  disposed  to  grant  to  his  executors  or  trustees  greater  liberty 
in  placing  the  funds  of  the  estate.  But  such  a  discretion  in  the  absence 
of  words  in  the  will  giving  greater  authority  should  not  be  held  to 
authorize  investment  of  the  fund  in  new,  speculative  or  hazardous 
ventures.  If  the  trustees  had  invested  in  the  stock  of  a  railroad, 
manufacturing,  banking,  or  even  business  corporation,  which,  by  its 
successful  conduct  for  a  long  period  of  time,  had  achieved  a  standing 
in  commercial  circles  and  acquired  the  confidence  of  investors,  their 
conduct  would  have  been  justified,  although  the  investment  proved 
unfortunate.  But  the  distinction  between  such  an  investment  and 
the  one  before  us  is  very  marked.  Surely  there  is  a  mean  between 
a  government  bond  and  the  stock  of  an  Alaska  gold  mine,  and  the  fact 
that  the  trustee  is  not  limited  to  the  one  does  not  authorize  him  to 
invent  in  the  other. 

In  our  judgment  the  authority  given  to  the  appellants  by  this  will 
is  quite  similar  to  that  vested  in  trustees  in  the  New  England  states, 
where  the  strict  English  rule  as  to  the  investment  of  trust  securities 
which  prevails  in  this  state  does  not  obtain.  In  Mattocks  v.  Moulton, 
84  Me.  545,  24  Atl.  1004,  it  was  held  that  in  the  investment  of  trust 
funds  the  trustee  must  exercise  sound  discretion  as  well  as  good  faith 
and  honest  judgment.  The  court  said:  "It  will  be  generally  conced- 
ed that  a  mere  business  chance  or  prospect,  however  promising,  is  not 
a  proper  place  for  trust  funds.  While,  of  course,  all  investments  how- 
ever carefully  made,  are  more  or  less  liable  to  depreciate  and  become 
worthless,  experience  has  shown  that  certain  classes  of  investments 
are  peculiarly  liable  to  such  depreciation  and  loss.  These,  of  course, 
would  be  avoided  by  every  prudent  man  who  is  investing  his  own 
money  with  a  view  to  permanency  and  security  rather  than  chance  of 
profit.  A  trustee  should,  therefore,  avoid  them,  even  though  he  sin- 
cerely believes  a  particular  investment  of  that  class  to  be  safe  as  well 
as  profitable."  In  Dickinson,  Appellant,  152  Mass.  184,  25  N.  E. 
99,  9  L.  R.  A.  279,  a  trustee  was  held  liable  for  an  investment  in 
Union  Pacific  railroad  stock.  It  was  there  said :  "Our  cases,  how- 
ever, show  that  trustees  in  this  commonwealth  are  permitted  to  in- 
vest portions  of  trust  funds  in  dividend-paying  stocks  and  interest- 
bearing  bonds  of  private  business  corporations,  when  the  corporations 
have  acquired,  by  reason  of  the  amount  of  their  property,  and  the  pru- 
dent vianagcjiient  of  tlieir  affairs^  such  a  reputation  that  cautious  and 


448  THE   DUTIES   OF  A  TRUSTEE.  (Cll.  5 

intelligent  persons,  comuwnly  invest  their  ozi'ii  money  in  such  stocks 
and  bonds  as  permanent  invcstmoits." 

Several  of  the  equitable  life  tenants  consented  to  the  investment 
made  by  the  trustees  and  are  estopped  from  questioning  its  propriety. 
The  courts  below  have  so  held  and  have  authorized  the  trustees  to  re- 
tain the  shares  of  such  life  tenants  in  the  income  produced  by  the 
sum  which  the  aj^pellants  have  been  directed  to  pay  into  the  fund 
on  account  of  the  loss  on  the  securities.  The  decree,  however,  does 
not  go  far  enough  in  this  respect,  for  in  certain  contingencies  these 
life  tenants  may  be  entitled  to  share  in  the  principal  of  the  fund.  The 
decree  should  be  modified  so  as  to  provide  that  in  case  any  bene- 
ficiary who  has  assented  to  the  investment  in  the  umbrella  stock 
should  become  entitled  to  any  part  of  the  principal  of  the  fund  paid 
by  the  trustees,  then  the  trustees  may  retain  such  part,  and  as  so  mod- 
ified affirmed,  without  costs  of  this  appeal  to  any  party. 

Judgment  accordingly. 


WARD  V.  KITCHEN. 

(Coin-t  of  Chnncory  of  New  Jersey,  1S7S.     30  N.  J.  Eq.  31.) 

Bill  for  construction  of  will  and  for  directions. 

The  Chancellor  [Theodore:  Runyon].  The  complainant  asks 
the  direction  of  this  Court  in  the  discharge  of  his  duty  as  trustee  un- 
der the  will  of  Closes  Ward,  deceased,  and  asks,  also,  for  a  construc- 
tion of  part  of  that  instrument,  and  of  part  of  the  codicil  thereto. 
By  the  will  the  testator,  after  sundry  gifts  and  provisions,  gave  one- 
half  of  all  the  residue  of  his  estate,  real  and  personal,  to  his  son,  the 
complainant,  and  of  the  remaining  half  he  gave  to  his  daughter  Maria 
the  "sum  or  value  of  $6,000  to  be  at  her  own  disposal,"  and  provided 
as  follows  as  to  the  residue  of  that  half : 

"Whatever  remains  of  the  said  last-mentioned  half,  I  direct  my  ex- 
ecutor to  invest  in  productive  funds,  upon  good  securities,  and  to  col- 
lect and  pay  over  to  my  said  daughter  the  interest  and  income  there- 
of, half-yearly,   during  her   natural  life." 

He  provided,  also,  for  the  division  of  the  residue  between  his  son 
and  daughter  by  their  mutual  agreement,  declaring  it  to  be  his  will 
that  they  might,  by  their  own  agreement  and  without  sale,  by  releas- 
ing to  each  other,  make  division  of  any  and  all  of  the  residue  of  his 
estate  between  themselves,  so  far  as  they  could  mutually  agree  upon 
the  terms  of  division  and  the  valuation  of  the  property. 

By  the  will  he  gave  to  his  executor  the  sum  of  $10,000  in  trust,  to 
be  applied  towards  defraying  the  expense  of  erecting  a  wing  to  the 
asylum  building  of  the  Newark  Orphan  Asylum  Association,  provided 
the  association  should  procure  the  necessary  additional  funds  to  build 
and  finish  the  wing,  and  actually  build  and  finish  it  within  ten  years 
from  the  time  of  his  death.    He  further  declared  it  to  be  his  will,  that 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF   TRUST   ESTATE.  449 

until  such  additional  funds  were  procured,  the  $10,000  should  be  in- 
vested in  productive  funds,  upon  good  and  sufficient  securities,  and 
the  interest  and  income  thereof  reinvested  in  like  manner  and  added 
to  the  original  sum,  and  that  the  whole  should,  if  necessary,  be  ap- 
plied to  the  before-mentioned  purpose  as  soon  as  the  additional  fund 
to  be  provided  by  the  association  should  be  obtained  and  the  work 
finished,  provided  it  should  be  within  the  ten  years.  He  further  de- 
clared it  to  be  his  will  that  if  funds  from  other  sources  should  be  pro- 
cured for  the  purpose  of  such  amount  that,  they  being  first  api)lied 
thereto,  any  part  of  his  bequest  should  remain  unexpended,  then  that 
the  residue  of  his  bequest  which  should  so  remain  unexpended  should 
be  invested  or  put  out  at  interest  on  good  and  sufficient  securities,  and 
the  yearly  interest  thereof  be  applied  to  the  general  uses  and  support 
of  the  institution.  By  the  codicil,  he  revoked  that  bequest,  and,  in 
lieu  thereof  gave  to  his  executor,  in  trust,  for  the  same  purposes  and 
on  the  same  conditions,  and  subject  to  the  same  limitations,  one  hun- 
dred shares  of  the  capital  stock  of  the  Newark  Gas  Light  Company, 
fifty  shares  of  the  capital  stock  of  the  Newark  Banking  Company, 
and  fifty  shares  of  the  capital  stock  of  the  State  Bank  at  Newark ; 
the  dividends  or  profits  arising  from  those  stocks  to  be  collected,  ap- 
plied and  disposed  of  in  the  same  manner  as,  in  his  will,  the  interest 
of  the  $10,000  was  directed  to  be  applied  and  disposed  of. 

The  division  of  the  residuary  estate,  which  consisted,  in  part,  of 
real  estate  and  stock  of  the  Newark  Lime  Cement  Manufacturing  Com- 
pany, the  Newark  Gas  Light  Company,  the  Mechanics  National  Bank 
of  Newark,  and  the  Newark  City  National  Bank,  was  made  by  the 
complainant  anfl  his  sister,  her  husband  consenting  thereto ;  and  there 
were  therein  set  off  to  the  complainant,  to  be  held  by  him,  under  the 
trust  declared  in  the  will,  in  respect  to  his  sister's  share  of  the  residu- 
ary estate,  certain  shares  of  those  stocks.  All  of  those  stocks  are 
valuable,  are  above  par  in  the  market  (the  Lime  and  Cement  Manu- 
facturing Company's  stock  very  exceptionally  so),  and  all  of  them 
are  regarded,  by  many  very  prudent  business  men,  as  excellent  invest- 
ments for  their  own  money.  These  shares  of  stock  were,  in  the  division, 
taken  at  their  market  value,  and  they  are  still  held  by  the  complain- 
ant, as  trustee  for  his  sister  at  her  request,  because  she,  as  well  as  he, 
regards  them  as  entirely  safe,  as  well  as  profitable,  investments. 

The  condition  on  which  the  gift  of  stock  to  the  complainant,  for 
the  benefit  of  the  Newark  Orphan  Asylum  Association,  was  made,  has 
been  complied  with,  the  wing  has  been  built,  and  there  still  remains,  in 
the  hands  of  the  complainant,  of  that  bequest,  stock  of  the  value  of 
more  than  $16,000. 

The  complainant  asks  whether  the  provision  of  the  will  as  to  the 

division  of  the  residue  by  him  and  his  sister,  is  valid,  and  whether 

the  division  so  made  will  be  binding,  not  only  as  against  those  who 

made  it,  during  the  lifetime  of  his  sister,  but  afterwards,  as  against 

Kex.Tr.— 29 


450  THE   DUTIES   OF   A   TRUSTEE.  (Ch.  5 

all  persons  claiming  as  heirs  at  law  of  the  testator  or  otherwise.  Also, 
whether  he  may,  without  his  sister's  consent,  dispose  of  the  shares  of 
stock  which,  in  that  division,  w^ere  assigned  to  him  to  be  held  in 
trust  as  part  of  her  share  of  the  residue,  and  invest  the  proceeds  in 
other  securities,  and  whether  it  is  his  duty  to  make  such  conversion 
and  investment,  and  whether  he  will  be  liable  to  be  held  responsible, 
l)ccuniarily,  for  any  depreciation  in  the  value  of  those  stocks  should 
he  fail  to  do  so.  Also,  whether  he  may  lawfully  continue  to  hold,  in 
the  stock  in  which  it  was  invested  when  the  testator  died  and  in 
which  it  came  to  the  complainant's  hands,  the  unexpended  residue  of 
the  Orphan  Asylum  legacy,  or  whether  it  is  his  duty  to  convert  that 
stock  into  cash  and  reinvest  the  amount  in  approved  securities. 

The  power  given  by  the  testator,  to  the  complainant  and  his  sister, 
to  divide  between  them,  by  mutual  agreement,  his  residuary  estate,  is 
valid,  and  a  division  bona  fide,  made  under  it,  is  binding  on  all  who 
are  affected  by  or  interested  in  it. 

The  trust,  in  respect  to  all  of  the  daughter's  share  of  the  residuary 
estate,  except  the  $6,000  which  were  to  be  at  her  own  disposal,  is  to 
invest  it  in  productive  funds,  upon  good  securities,  and  to  collect  and 
pay  over  to  her  the  interest  and  income  thereof,  half-yearly,  during 
her  natural  life.  Under  this  direction,  the  trustee  would  not  be  at 
liberty  to  invest  the  money  in  the  stocks  of  banks  and  manufacturing 
companies,  however  exceptionally  good,  without  incurring  the  respon- 
sibility of  answering  for  any  loss  which  might  occur  to  the  funds,  ei- 
ther in  interest  or  principal,  by  reason  of  such  investment.  If  no 
directions  are  given  in  the  will  as  to  the  conversion  and  investment 
of  the  trust  property,  the  trustee,  to  be  safe,  must  take  care  to  invest 
the  proj^erty  in  the  securities  pointed  out  by  the  law.  Perry  on 
Trusts,  §  465 ;  King  v.  Talbot,  40  N.  Y.  7^.  Nor  will  the  fact  that 
the  testator  himself  made  and  approved  of  the  investment,  in  the 
absence  of  express  or  implied  directions  in  the  will,  relieve  the  trustee 
from  responsibility  in  continuing,  permanently,  an  investment  made  by 
the  testator  which  the  trustee  himself  would  not  be  justified  in  mak- 
ing. Id.  But  the  will  itself  furnishes  evidence  that  the  testator,  in 
this  case,  intended  that  the  investment  should  not  be  in  stocks.  As 
appears,  by  the  provisions  of  the  codicil  changing  the  bequest  to  the 
( )rphan  Asylum,  he  thoroughly  understood  the  difference  between  a 
direction  to  invest  in  "productive  funds  upon  good  and  sufficient  se- 
curities" and  apply  the  interest,  and  the  gift  of  stocks  with  direction 
to  apply  the  dividends.  In  the  legacy  to  Mrs.  Brown,  and  in  the  gift 
to  the  Orphan  Asylum,  in  the  will,  the  same  language  is  used  in  the 
direction  for  investment  which  is  employed  in  the  residuary  clause 
in  regard  to  that  part  of  the  residuum  which  is  to  be  held  in  trust  for 
his  daughter.  The  direction  in  the  residuary  clause  is  "to  invest  in 
productive  funds  upon  good  securities,  and  to  collect  and  pay  over 
to  his  daughter  the  interest  and  income  thereof,  half-yearly  during  her 
natural  life."     In  the  provision  in  the  codicil  for  the  Orohan  Asylum, 


Sec.  4)  DUTIES   OF  MANAGEMENT  OF  TRUST   ESTATE.  451 

the  gift  is  of  specific  stocks,  the  dividends  or  profits  arising  from 
them  to  be  collected,  applied  and  disposed  of  as  in  the  will  the  in- 
terest of  the  $10,000  was  directed  to  be  ap])lied  and  disposed  of. 
The  direction  to  pay  the  interest  or  income  to  his  daughter,  half-year- 
ly, is  indicative  of  the  character  of  investment  which  the  testator  had 
in  contemplation.  The  direction  to  invest  on  good  securities  will  be 
construed  to  mean  investment  on  such  securities,  and  on  such  securi- 
ties only,  as  are  regarded  by  the  court  as  proper  for  the  investment 
of  trust  funds.  If  the  complainant  shall  fail  so  to  invest  the  funds 
now  held  by  him,  in  stocks,  in  trust  for  his  sister,  he  will  be  liable  to 
be  required  to  make  compensation,  at  least,  for  any  loss  of  principal 
which  may  occur  through  depreciation  of  the  stocks. 

The  gift  to  the  Orphan  Asylum  stands  on  a  different  footing.  It 
is  a  bequest  to  the  complainant  of  specific  shares  of  the  capital  stock 
of  a  gas  light  company  and  two  banks,  in  trust  for  the  same  purposes 
to  which,  in  his  will,  the  testator  had  directed  the  $10,000  to  be  ap- 
plied, "the  dividends  or  profits  from  the  said  stocks  to  be  collected, 
applied  and  disposed  of  in  the  same  manner"  as  in  his  will  the  interest 
of  the  $10,000  was  directed  to  be  applied  and  disposed  of.  The  com- 
plainant is  not  at  liberty  to  convert  this  stock  into  money  (Neville  v. 
Fortescue,  16  Sim.  333;  Boys  v.  Boys,  28  Beav.  436),  unless  the  de- 
preciation, or  threatened  depreciation,  of  it  should  render  it  prudent 
for  him  to  do  so  in  order  to  protect  the  trust  fund,  in  which  case  he 
must  act  wisely  in  the  emergency.  ^° 


MORRIS  V.  WALLACE. 
(Supreme  Court  of  Pennsylvania,  1846.    3  Pa.  319,  45  Am.  Dec.  642.) 

Appeal  from  the  Court  of  Common  Pleas  of  Tioga  County. 

Wallace  as  "legal  representative"  of  Henrietta,  wife  of  S.  Clement, 
and  others,  together  with  the  said  Henrietta  and  her  husband,  the 
other  cestui  que  trusts,  filed  a  petition  in  the  Common  Pleas,  praying  a 
citation  to  appellant,  trustee  of  the  widow  of  W.  Patton,  to  settle  his 
account,  exhibiting  the  true  condition  of  the  estate  and  the  manner 
in  which  it  was  disposed  of.  The  account  having  been  filed,  was  re- 
ferred to  auditors.    The  question  in  the  cause  was,  the  allowance  of  a 

6  0  lu  Matter  of  Stewart,  30  App.  Div.  368,  371,  51  N.  Y.  Supp.  1050  (1898), 
Hatch,  J.,  says:  "It  may  be  observed,  at  the  outset,  that  he  who  creates  a 
trust  requiring  the  investment  of  money  may  direct  how  the  investment  shall 
be  made  and  what  securities  shall  be  taken,  or  he  can  dispense  with  any  se- 
curity.    Denike  v.  Harris,  84  N.  Y.  89." 

See.  also,  Forbes  v.  Ross,  2  Bro.  C.  C.  430,  2  Cox,  Eq.  113  (1788) ;  Robinson 
V.  Robinson,  1  DeG.,  M.  &  G.  247,  2G1-2G3  (1851);  Paddou  v.  Richardson,  7 
De  G.,  M.  &  G.  563  (1S55)  ;  Consterdiue  v.  Consterdine,  31  Beav.  330  (1862) ; 
Pickard  v.  Anderson,  L.  R.  13  Eq.  608  (1872) ;  Arnould  v.  Grinstead,  W.  N. 
216  (1872) ;  In  re  Earl.  39  W.  R.  107  (1890) :  Matter  of  Stewart,  30  App.  Div. 
368,  51  N.  Y.  Supp.  1050  (1898),  affirmed  163  N.  Y.  593,  57  N.  E.  1125  (1900) ; 
Barker's  Estate,  159  Pa.  518,  28  Atl.  365,  368  (1894). 


452  THE  Dl'TIKS  OF  A  TursTi:B.  (Cli.  5 

credit  claimed  for  an  investment  in  bank  stock  of  the  funds  bek:)ni;ing 
to  tile  trust. 

it  appeared  from  the  report  tliat  Morris  was  the  trustee  of  certain 
land,  in  trust  for  Henrietta  for  Hfe,  for  tlie  support  of  herself  and  her 
minor  children,  (appellees.)  remainder  to  the  children;  with  power 
to  tlie  trustee  to  sell  at  any  time,  and  "invest  the  proceeds  in  some 
productive  fund,  ujion  the  special  trust  as  aforesaid." 

In  1831.  the  trustee  made  a  conveyance  of  the  huul.  and  took  a  bond 
and  mortgage,  payable  in  four  annual  instalments,  for  a  part  of  the 
purchase  money.  Tn  1840,  the  amount  remaining  due  was  $659.50. 
This  was  assigned,  and  a  draft  for  the  same  amount  was  received  for 
the  price.  This  draft  was  enclosed  by  the  trustee  to  the  cashier  of  the 
Towanda  Bank,  in  a  letter,  on  the  7th  December,  directing  it  to  be 
placed  to  his  credit,  saying,  "I  am  disposed  to  invest  the  amount,  say 
$650.,  in  your  stock,  if  it  can  be  had  at  par."  On  the  13th,  thirteen 
shares  were  transferred  to  Morris,  for  which  he  was  charged  $654.66. 
In  these  transactions  no  reference  to  his  character  of  trustee  appears. 
The  stock  was  selling  at  par,  and  the  dividends  from  November,  1835, 
to  November,  1840,  were  usually  5  per  cent,  semi-annually.  The 
cashier  testified  to  various  conversations  with  Morris,  in  which  the 
value  and  security  was  discussed ;  and  that  he  had  given  Morris  his 
opinion  it  was  a  safe  investment ;  and  the  prospect  was  fair  of  its 
continuing  to  pay  as  it  had  done.  Morris  had  also  stated,  he  was  the 
agent  for  a  lady  who  was  anxious  to  dispose  of  her  property  and  in- 
vest in  this  stock.  On  cross  examination,  he  stated,  the  bank  had  sus- 
pended specie  payments  at  the  time  of  the  transfer;  that  it  resumed 
at  the  same  time  with  others  in  the  State,  and  again  suspended.  That 
in  1843,  at  a  public  sale,  the  shares  brought  $2.00. 

The  auditor  disallowed  the  credit  for  the  amount  invested,  charged 
interest  on  the  amount  received  on  the  assignment  of  the  mortgage, 
and  also  struck  out  an  item  of  charge  for  a  dividend  received  in  May 
and  November,  1841,  and  allowed  a  commission  of  5  per  cent,  on  the 
amount  received  by  the  trustee.     *     *     * 

The  court  confirmed  the  report  of  the  auditor  and  the  rejection  of 
the  credit  was  alleged  as  error.  ^^ 

Rogers,  J.  In  addition  to  the  views  of  Judge  Conyngham,  wdiich 
we  adopt,  we  think  the  cause  is  against  the  appellant  on  another 
ground.  The  trustee,  Mr.  Morris,  has  thought  proper  to  take  the 
transfer  of  the  stock,  purchased  with  the  funds  of  the  cestui  que  trust, 
in  his  own  name.  The  nature  of  the  transaction,  as  he  now  represents 
it,  nowhere  appears  on  the  books  of  the  bank,  nor  is  there  any  written 
memorandum;  but  the  case  rests  on  the  intention  of  the  trustee,  de- 
duced only  from  his  acts  and  declarations  at  the  time  of  the  invest- 
ment. Granting  that  Mr.  Morris  acted  bona  fide,  which  I  am  not  dis- 
posed to  deny,  yet  this  is  a  practice  which  we  unequivocally  condemn, 
and  have  always  done  so;    and  if  persisted  in,  it  must  be  at  the  peril 

ci  The  statement  of  facts  is  al)rid^'fd. 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF   TRUST   ESTATE.  453 

of  the  trustee.  The  rule  whicli  makes  them  personally  liable,  is 
intended  to  prevent  fraiul,  avoidinn;-  the  temptation  to  put  the  profits 
of  the  investment  in  their  own  pockets,  and  throw  the  loss,  if  any, 
on  others ;  a  temptation,  to  which  those  who  act  in  a  fiduciary  char- 
acter are  exposed,  and  producing  an  injustice  which  may  be  perpe- 
trated, if  allowed,  almost  without  the  possibility  of  detection.  It  is 
said,  that  guardians  frequently  purchase  stock  in  their  own  names, 
with  the  money  of  their  wards,  intending  it,  at  the  time,  for  the  ex- 
clusive benefit  of  the  latter.  If  so,  the  sooner  there  is  an  end  put  to 
the  practice,  the  better,  as  it  may  lead  to  fraud,  and  can  answer  no 
good  purpose  whatever.  It  does  not  deserve  the  countenance  of  a 
court  of  justice,  for  another  reason.  When  the  funds  of  the  cestui 
que  trust  are  invested  in  the  name  of  the  trustee,  there  is  always  a 
difficulty,  sometimes  insurmountable,  in  tracing  the  money  to  the  bene- 
fit of  the  cestui  que  trust ;  the  consequence  of  which  is,  that  the  funds 
of  the  cestui  que  trust  are  taken  to  pay  the  debt  of  an  insolvent  trus- 
tee. As  this  is  contrary  to  every  principle  of  equity,  it  should  be 
avoided,  if  possible ;  we  therefore  wish  it  to  be  distinctly  understood, 
that  we  regard  such  an  investment  as  a  legal  fraud,  liable  to  all  the 
consequences  as  such,  without  regard  to  the  intention,  or  integrity 
of  the  trustee,  or  the  honesty  and  good  faith  of  the  particular  trans- 
action. It  is  of  the  first  importance  to  the  cestui  que  trust,  and  we 
think  for  the  benefit  of  the  trustee  himself,  that  their  funds  should 
not  be  intermixed,  but  should  be  kept  separate  and  distinct.  For  un- 
less this  rule  is  observed,  it  puts  the  trustee  in  the  power  of  the  cestui 
que  trust,  who  may,  at  his  option,  either  insist  on  the  transfer  of  the 
stock  or  other  investment,  or,  if  he  chooses,  charge  the  trustee  with  the 
price  and  legal  interest.  The  same  principle,  be  it  observed,  applies  to 
all  persons,  whether  guardians,  executors,  or  others  who  act  in  a 
fiduciary  character.  Nor  does  the  obiter  opinion  of  Mr.  Justice  Ken- 
nedy, in  Lukens'  Appeal,  7  Watts  &  S.  48,  interfere  with  the  broad 
principle  there  laid  down,  but  the  case  affirms  it ;  for  he  merely  says, 
"that  taking  a  transfer  in  the  name  of  a  guardian  will  not  itself  be 
sufficient  to  set  aside  a  settlement  made  by  the  ward  with  the  guardian, 
without  other  circumstances  being  shown,  from  which  it  may  be  in- 
ferred that  the  ward  had  not  been  fairly  dealt  with."  He,  however, 
nowhere  intimates  (but  the  contrary  is  decided)  that  it  is  not  such  a 
fraud  in  law,  as  the  minor  can  take  advantage  of  at  his  w411  and 
pleasure.  And  the  same  thing,  in  effect,  and  for  the  same  reason, 
is  ruled  in  Myers  v.  Entriken,  6  Watts  &  S.  44.  40  Am.  Dec.  538, 
where  it  is  decided,  that  a  factor  who  sells  the  goods  of  his  principal, 
consigned  to  him  for  that  purpose,  and  takes  the  notes  of  the  vendee, 
which  he  has  discounted  for  his  own  accommodation,  thereby  becomes 
responsible  for  the  amount  of  sales,  in  the  event  of  the  insolvency  of 
the  purchaser.  It  is  ruled,  on  the  ground  that  the  temptation  to  abuse, 
afforded  by  a  usage  to  use  the  money  of  the  principal,  is  too  strong  to 
be  tolerated.    So  in  Wren  v.  Thirston,  11  Vesey,  382,  it  is  said,  that  an 


454  THE   DUTIES   OF   A   TUUSTEE.  (Ch.  ■'5 

ag-ent  who  places  his  principal's  niDtiey  to  his  own  account  with  his 
S:eneral  hanker,  takes  the  risk  of  the  hanker's  failure ;  and  the  rea- 
son given,  is,  that  he  cannot  so  deal  with  it  as  to  be  able  to  treat  it  as 
the  money  of  his  princi])al,  or  his  own,  according-  to  the  event.  Nor 
can  it  be  permitted  that  the  trustee,  Mr.  M(jrris,  may  treat  the  stock  as 
his  own,  or  as  the  cestui  c^ue  trust's,  as  it  may  fall  or  rise  in  value.  The 
decree  is  affirmed.  ^^ 


IV.  Consequences  oe  Failure  oe  the  Trustee  Properly  to  Invest 

THE  Trust  Estate. 

ROlilNSON  V.  ROBINSON. 

(In  tho  Court  of  Appeal  in  Chancery.  IS-ll.     1  De  Gex,  Macnai^hten  &  Gordon. 

247.) 

Matthew  Robinson,  by  his  will  dated  the  10th  of  January,  1835, 
g"ave  all  the  residue  of  his  personal  estate  to  his  executors,  upon  trust 
that  they  should,  with  all  convenient  speed,  collect  and  convert  the 
same  into  money,  and  should  place  out  and  invest  the  net  amount 
thereof,  or  continue  the  same  in  or  upon  any  of  the  parliamentary 
stocks  or  funds,  or  of  real  securities,  at  interest,  and  should  pay  the 
interest  and  dividends  of  the  said  stocks,  funds,  and  securities  to  his 
son  Augustin  Robinson,  for  his  life ;  and  after  his  decease  then  upon 
trust  to  pay  and  transfer  the  said  stocks,  funds,  and  securities  to, 
between,  and  among  the  children  of  the  said  Augustin  Robinson. 

The  testator  died  on  the  20th  of  July,  1837,  and  in  the  following- 
month  of  August  the  will  was  proved  by  the  executors. 

The  present  bill  was  filed  by  the  three  infant  children  of  Augustin 
Robinson  against  the  executors,  and  against  their  father,  for  the  pur- 
pose of  having  their  grandfather's  estate  administered. 

The  testator  at  his  death  had  £5,468.  bank  stock,  £5,182.  London 
Dock  stock,  and  £6,000.  Turnpike  bonds.  The  executors  paid  the  in- 
terest and  dividends  to  Augustin  Robinson  until  July,  1845.  They 
sold  in  July,  1845,  the  bank  stock  for  £11,511.  and  the  London  Dock 
stock  for  £6,063.  and  in  August  the  l)onds  for  £5,000.,  and  invested  all 
the  proceeds  in  3  per  cents.  Lord  Langdale  on  March  13th,  1849,  made 
a  decree  charging  the  executors  with  the  amount  of  3  per  cents  which 
might  have  been  purchased  with  the  proceeds  of  the  securities  had  they 
been  sold  at  the  end  of  one  year  from  the  testator's  death  and  de- 
claring that  Augustin  Robinson  was  entitled  to  so  much  as  the  div- 
idends on  such  3  per  cents,  had  they  been  purchased,  would  have 
amounted  to. 

62  Walker  v.  Svniomls.  .3  Sw.  1,  00  (1818)  ;  Glenn  v.  Glenn.  41  Ala.  571 
(1808);  Matter  of  Uano,  120  Cal.  53.3,  52  Pac.  852,  05  Am.  St.  Rop.  197  (1808); 
NVliite  V.  Sherman.  lOS  ill.  5S<),  48  N.  E.  128.  01  Am.  St.  no\).  1.".2  (1897);    Gil- 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF   TRUST   ESTATE.  455 

From  this  decree  Augustin  Robinson  and  the  executors  appeal. 

Lord  Cranwortii,  L.  J.  "^  *  *  *  In  the  present  case  it  will  be 
observed  the  executors  had  the  option  of  investing  the  trust  money  at 
their  discretion  on  real  or  government  securities,  and  in  such  a  case 
Sir  J.  Leach  held,  in  the  case  of  Marsh  v.  Hunter  [6  Madd.  295],  that 
trustees,  by  whose  default  the  money  is  lost,  are  chargeable,  not  with 
the  amount  of  stock  which  might  have  been  purchased,  but  only  with 
the  principal  money  lost,  and  of  course,  though  the  report  is  not  so 
expressed,  with  interest  thereon. 

That  decision  occurred  in  1822.  Four  years  later,  namely,  in  1826, 
occurred  the  case  of  Hockley  v.  Bantock  [1  Russ.  141],  before  Lord 
Gifford.  There  the  executors  had  a  similar  discretion  of  investing  ei- 
ther on  real  or  government  securities ;  and,  on  a  bill  seeking  to  charge 
them  with  balances  improperly  retained  in  their  hands,  Lord  Gifford 
directed  an  inquiry  as  to  the  price  of  £3.  per  cents,  at  the  several  times 
when  the  balances  ought  to  have  been  invested.  Such  an  inquiry  would 
have  been  improper  if  the  executors  could  not  have  been  charged 
with  the  value  of  the  stock;  and  the  case,  therefore,  is  an  authority 
that,  in  the  opinion  of  Lord  Gifford,  they  might  be  so  charged.  Not- 
withstanding this  last  case,  however.  Sir  J.  Leach  adhered  to  his  own 
view  of  the  law,  and  acted  on  it  in  a  non-reported  case  of  Gale  v. 
Pitt  at  the  Rolls  on  the  10th  of  May,  1830. 

Lord  Gifford's  authority  has  been  followed  by  Lord  Langdale  in 
several  reported  cases,  to  which  we  were  referred  in  the  argument, 
namely.  Watts  v.  Girdlestone  [6  Beav.  188],  Ames  v.  Parkinson  [7 
Beav.  379],  and  Ouseley  v.  Anstruther  [10  Beav.  456]. 

On  the  other  hand.  Sir  James  Wigram,  in  Shepherd  v.  Mouls  [4 
Hare,  500],  and  my  learned  brother,  in  Rees  v.  Williams  [1  De  G.  & 
S.  314],  have  refused  to  follow^  the  authority  of  Hockley  v.  Bantock, 
and  have  acted  on  the  earlier  case  of  Marsh  v.  Hunter.  In  this  ir- 
reconcilable conflict  of  authority,  it  is  absolutely  necessary  for  us  to 
look  to  the  principles  on  which  the  doctrine  rests. 

There  can  be  no  doubt  but  that,  where  trustees  improperly  retain 
balances  in  their  hands,  or,  by  want  of  due  care,  cause  or  permit 
trust  money  to  be  lost,  they  are  chargeable  with  the  sums  so  retained 
or  lost,  and  with  interest  on  them  at  £4.  per  cent.  ^* 

bert  V.  Welsch,  75  Ind.  557  (1881) ;  State  v.  Greensdale,  106  Ind.  364,  6  N.  E. 
926.  55  Am.  Rep.  753  (1885)  ;  State  v.  Hooper.  82  Mo.  57  (1884) ;  Kuowlton  v. 
Bradley,  17  N.  H.  458,  43  Am.  Dec.  009  (1845) :  Stanley's  Appeal.  8  Pa.  431, 
49  Am.  Dee.  530  (1848) ;  Royer's  Appeal.  11  Fa.  36  (1849)  ;  Noble's  Estate, 
178  Pa.  460,  35  Atl.  859  (1896) ;    Carrs  Estate,  24  Pa.  Super.  Ct.  369  (1904). 

6  3  The  statement  of  facts  is  abi'idged,  and  only  a  part  of  the  opinion  is 
given . 

64  Negligence. — Rocke  v.  Hart,  11  Yes.  58  (1805)  ;  Tebbs  v.  Carpenter,  1 
Madd.  290  (1816) ;  Johnson  v.  Prenderjjast,  28  Beav.  480  (1860) ;  In  re  Evans' 
Estate,  W.  N.  205  (1876)  ;  Gilbert  v.  Price,  W.  N.  117  (1878) ;  Gilroy  v.  Ste- 
phens, 51  L.  J.  Ch.  834  (1882) ;    Clapp  v.  Woodall,  38  Sol.  J.  487  (1894). 

Active  Misconduct.— In  England  a  distinction  is  generally  drawn  between 
negligence  and  active  misconduct  on  the  part  of  a  trustee.  In  the  ease  of 
negligence  he  is  charged  with  4  per  cent,  interest,  and  in  the  case  of  active 


456  THF,  itrriKS  of  a  trustee.  (Ch.  5 

It  may  also  be  true  that,  where  trustees  have  in  their  hands,  money 
which  tiiey  are  bound  to  secure  permanently  for  the  benefit  of  their 
cestuis  que  trustent,  then  in  the  absence  of  express  authority  or  direc- 
tion to  the  contrary,  they  are  generally  bound  to  invest  the  money  in 
the  £3.  per  cents.  This  obhgation  is  not  the  resuU  of  any  positive  law, 
but  has  been  imposed  on  trustees  by  the  court  as  a  convenient  rule, 
affording  security  to  the  cestuis  que  trustent  and  presenting  no  possible 
difficulty  to  the  trustees. 

Suppose  then  that  trustees  have  improperly  retained  in  their  hands 
balances  which  they  ought  to  have  invested  in  £3.  per  cents.,  either  by 
reason  of  this  general  rule  of  the  court,  or  because  such  a  duty  was 
expressly  imposed  upon  them  by  the  terms  of  the  trust,  or  have  by 

miscoiuhict  with  5  per  cent,  interest.  Tiety  v.  Stace,  4  Ves.  Jr.  G20  (1790) : 
rococ-U  V.  Reddinston.  5  Vos.  .Tr.  704  (ISOl)  ;  Ileathcote  v.  Ilulnie,  1  J.  &  W. 
l"-'  (IsiO)-  Crackelt  v.  lU-tlmno.  1  J.  i^  W.  rjS(5  (1S20) ;  Kick  v.  Motly.  2 
Mvl.  &  K.  :n:i  asiio) ;  Munch  v.  Cockerell,  5  Myl.  &  Cr.  178.  220,  222  (18;^0) ; 
I'enny  v.  Avisou,  3  Jur.  N.  S.  02  (1850) ;  Mayor,  etc.,  v.  Murray,  7  De  G..  M.  & 
G.  407,  515,  510  (1850);  Burdick  v.  Garrick.  5  Ch.  App.  Cas.  233,  241,  243 
(1800);  Ex  parte  Oyle,  8  Ch.  App.  Cas.  711  (1873);  Hooper  v.  Hooper,  W.  N. 
174  (1874);  Price  v.  Price.  42  L.  T.  K.  02G  (18,S0)  ;  Ue  Jones,  40  L.  T.  li.  91 
(1883)  ;    Vyse  v.  Foster.  8  Ch.  App.  Cas.  300.  ;i37  (1872). 

In  the  following  cases,  however,  of  active  misconduct,  only  4  per  cent,  in- 
terest was  given:  Perkins  v.  Baynton,  1  Bro.  C.  C.  375  (1784);  In  re  Hil- 
liard,  1  Ves.  Jr.  80  (1700);  Brov^ne  v.  Southouse.  3  Bro.  C.  C.  107  (1700); 
Younge  v.  Conilie.  4  Ves.  .Fr.  101  (1708)  ;  Attorney  (Jeneral  v.  Alford.  4  De  G.. 
M.  &  (i.  843  (185.5)  ;  Fletcher  v.  Green,  33  Bear.  42G  (1804) ;  In  re  Kniniet's 
Estate,  17  Ch.  Div.  142  (1881). 

Originallv  a  trustee  iisiii^  trust  funds  for  his  own  benefit  was  charged  no 
interest.  Grosvenor  v.  Cartwright.  2  Ch.  Cases.  21  (1070» :  Linch  v.  Cappy.  2 
Chy.  Cas.  35  (1080);  Broinfiold  v.  Wytherley.  Prec.  in  Chy.  505  (1718);  liatcliffe 
V.  Graves.  1  Vern.  196  (l(i8.3):  Ratcliff  v.  Graves.  2  Chy.  Cas.  152;  (^orsellis  v. 
Lake.  1  Vern.  107.  note  1  (1750).  See.  also.  Adams  v.  (Jalo,  2  Atk.  100  (1740)  ; 
Child"  V.  Gilison.  2  Atk.  003  (174:;). 

In  the  United  States  the  distinction  between  negligence  and  active  miscon- 
duct is  in  general  disreganlcd.  and  shnple  interest  at  the  legal  rate  charged. 
In  re  Thorp.  4  N.  Y.  Leg.  Olis.  377.  Fed.  Cas.  No.  14.002  (1840);  Bourne  v. 
Mavbin.  3  Wood.s,  724.  Fed.  Cas.  No.  1.700  (1877) :  Bryant  v.  Craig,  12  Ala.  354 
(1847) ;  Nunn  v.  Nunn.  00  Ala.  35  (1880)  ;  Eppinger  v.  Canepa.  Exr.,  20  Fla. 
202  (1883);  Hough  v.  Ilarvev,  71  111.  72  (1873);  Lehnnmn  v.  Ilothbarth,  111 
111.  185  (1884)  ;  White  v.  Sherman.  I(i8  111.  580,  48  N.  E.  128.  01  Am.  St.  Rep. 
132  (1807);  Rochester  v.  Levering.  104  Ind.  .502.  4  N.  E.  203  (1885);  Hughes 
V.  Smith.  2  Dana  (Ky.)  251  (18.34);  Ring-old  v.  Ringgold.  1  liar.  &  G.  (Md.) 
11.  18  Am.  Dec.  250  (1820);  Comeiivs  v.  State.  10  (Jill  &  J.  (Md.)  175  (18.38); 
Glenn's    Ex'rs  v.   Cocker.   10   Md.   440   (1800);     Smith    v.    Darby.   3,0   Md.   208 


(1883)  ;  Crosby  v.  Merriam.  31  :Minn.  342,  17  N.  W.  0.50  (1883)  ;  St.  Paul 
Trust  Co.  V.  Kittson.  02  Minn.  408,  05  N.  W.  74  (180.5);  Davis  v.  Swedish 
American  National  Bank.  7S  Minn.  408,  80  N.  W.  0.53,  81  N.  W.  210,  70  Am. 
St.  Rep.  400  (1800)  ;  St.  Paul  Trust  Co.  v.  Stong.  85  Minn.  1.  88  N.  W.  250 
(1001);  Ames  v.  Scudder.  11  Mo.  App.  108  (18S1).  afilrmed  83  Mo.  180  (1884); 
Knowlton  v.  Bradley,  17  N.  II.  458,  43  Am.  Dec.  000  (1845)  ;  Stark  v.  Gamble, 
43  N.  II.  4(J5  (180>2);  French  v.  C^urrier.  47  N.  II.  88  (1,S(;0) ;  I'ickering  v.  De 
Rochemont.  00  N.  II.  170  (1880) ;  Aldridge  v.  McClelland.  30  N.  J.  Eq.  288 
(1882);  athrmed  38  N.  J.  Eq.  270  (18N4)  ;  Dunscomb  v.  Dunscomb.  1  Johns. 
Ch.  (X.  Y.)  508,  7  Am.  Dec.  504  (1815)  ;    Manning  v.  Manning,  1  Johns.  Ch. 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF   TRUST   ESTATE.  457 

neglect  allowed  such  balances  to  be  lost,  what,  in  such  a  case,  is  the 
right  of  the  cestuis  que  trustent? 

In  all  such  cases,  or  at  all  events,  in  all  such  cases  where  there  has 
been  an  express  trust  to  invest  in  £3.  per  cents.,  the  cestuis  que  trustent 
have  the  option  of  charging  the  trustee  either  with  the  principal  sum 
retained  and  interest,  or  with  the  amount  of  £3.  per  cents,  which 
would  have  arisen  from  the  investment  if  properly  made.  '''  The 
doctrine  of  the  court  where  it  applies  this  rule  is  that  the  trustee  shall 
not  profit  by  his  own  wrong.  If  he  had  done  what  he  was  bound  to 
do,  a  certain  amount  of  £3.  per  cents,  would  have  been  forthcoming 
for  the  cestuis  que  trustent.  And  therefore  if  called  on  to  have  such 
£3.  per  cents,  forthcoming,  he  is  bound  to  do  so;  just  as,  in  ordinary 
cases,  every  wrongdoer  is  bound  to  put  the  party  injured,  so  far  as  the 


(N.  Y.)  527  (181.5) ;  Brown  v.  Rickets.  4  Johns.  Cb.  (N.  Y.)  303,  8  Am.  Dec. 
567  (1820)  ;  De  Peyster  v.  Clarkson,  2  Wend.  (N.  Y.)  77  (1828)  ;  Garniss  v. 
Gardiner.  1  Edw.  Ch.  (N.  Y.)  128  (1831)  ;  Utica  Ins.  Co.  v.  Lynch,  11  Paige 
(N.  Y.)  520  (1845) ;  Duffv  v.  Duncan,  32  Barb.  (N.  Y.)  587  (1860) ;  affirmed  35 
N.  Y.  187  (1S66);  Rundle  v.  Allison,  34  N.  Y.  180  (1866);  King  v.  Talliot,  40 
N.  Y.  76  (1860)  ;  Lent  v.  Howard,  89  N.  Y.  169  (1882)  ;  Cook  v.  Lowry,  95 
N.  Y.  103  (1884)  ;  Thorn  v.  Garner,  42  Hun  (N.  Y.)  507  (1886) ;  Morgan  v. 
Morgan,  4  Dem.  Sur.  (N.  Y.)  353  (1886) ;  In  re  Neweonib  (D.  C.)  32  Fed.  826 
(1887),  New  York  law;  Butler  v.  Jarvis,  51  Hun.  248,  4  N.  Y.  Supp.  137 
(1889) ;  jNIatter  of  Mvers,  131  N.  Y.  409,  30  N.  E.  135  (1892)  ;  In  re  Barnes, 
4  Misc.  Rep.  1.36,  23  N.  Y.  Supp.  600  (1893);  Jilatter  of  Reed.  45  App.  Div. 
196,  61  N.  Y.  Supp.  50  (ISOO) ;  Armstrong  v.  Miller.  6  Ohio,  119  (183.3)  ;  Es- 
tate of  McCall.  1  Ashm.  (Pa.)  357  (1831)  :  Fox  v.  Wilcocks,  1  Bin.  (Pa.)  194, 
2  Am.  Dec.  4.33  (1806)  ;  Say's  Ex'rs  v.  Barnes.  4  Serg.  &  R.  (Pa.)  112.  8  Am. 
Dec.  679  (1818) :  Estate  of  Dyott.  2.  Watts  &  S.  (Pa.)  557  (1841)  ;  Lane's  Ap- 
peal, 24  Pa.  487  (18.55) ;  Breneman  v.  Frank.  28  Pa.  475  (1857) ;  Landis  v. 
Scott.  .32  Pa.  495  (1859)  ;  Pennypacker's  Appeal.  41  Pa.  494  (1862) ;  Ihmsen's 
Appeal,  43  Pa.  431  (18(52) ;  Hess's  Estate,  68  Pa.  454  (1871) ;  Conrad's  Ap- 
peal, 11  Wklv.  Notes  Cas.  (Pa.)  521  (1882);  Whitecar's  Estate,  147  Pa.  368, 
23  Atl.  575  (1892)  ;  Black  v.  Blakely,  2  McCord,  Eq.  (S.  C)  1  (1827) ;  Wright 
V.  Wright,  2  McOord,  Eq.  (S.  C.)  185  (1827) ;  Turney  v.  Williams,  7  Yerg. 
(Tenn.)  172  (1834) ;  Cannon  v.  Apperson,  14  Lea  (Tenn.)  553  (1885)  ;  Mur- 
chison  V.  Pavne,  37  Tex.  305  (1872-1873);  Reed  v.  Tinunins.  52  Tex.  84 
(1879)  :  McCioskey  v.  Gleason,  56  Vt.  2(M.  48  Am.  Rep.  770  (1883) ;  Miller 
V.  Beverleys,  4  Hen.  &  M.  (Va.)  415  (1809);  Cavendish  v.  Fleming.  3  :Munf. 
(Ya.)  198  (1812)  ;  Ker's  Ad'm  v.  Snead.  11  Monthly  L.  R.  217  (1847)  ;  Cogbill 
V.  Boyd,  79  Va.  1  (1884);  Guardianship  of  Thurston.  57  Wis.  104,  15  N.  W. 
126  (1883)  ;  Olsen  v.  Thompson.  77  Wis.  666,  47  N.  W.  20  (1890)  ;  Taylor  v. 
Hill.  87  Wis.  669,  58  N.  W.  1055  (1891). 

In  Wilmerding  v.  McKesson,  103  N.  Y.  329.  8  N.  E.  605  (1886).  and  also  in 
Bruen  v.  Gillet.  115  N.  Y.  10,  21  N.  E.  676,  4  L.  R.  A.  529,  12  Am.  St.  Rep. 
764  (1889).  equitable  interest,  so  called,  5  per  cent,  was  charged,  instead  of 
6  per  cent.,  the  legal  rate. 

In  the  following  cases,  where  the  trustee  had  misapplied  trust  funds  under 
a  mistake  as  to  his  rights,  but  without  profit  to  himself,  no  interest  was 
charged:  Saltmarsh  v.'  Bnrrett,  31  Beav.  .349  (1862);  Clauser's  Estate.  84 
Pa.  51,  54  (1877) :  Piilliam  v.  Pulliam  (C.  C.)  10  Fed.  53.  60-69  (1881).  This 
doctrine,  however,  is  not  generally  adopted.  See  Mousley  v.  Carr,  4  Beav. 
49  (1841)  :  Attorney  General  v.  Kr.hler,  9  H.  L.  C.  6.54  (1861):  Inglis  v.  Beaty. 
2  Ont.  App.  4.53  (1878) ;  In  re  Ilulkes,  L.  R.  33  Ch.  Div.  552  (1886) :  Moody. 
Adm'r.  v.  Hemphill.  71  Ala.  169  (1881)  ;  Crowder  v.  Shackelford.  .35  Miss. 
321  (1858);    Jones  v.  Ward,  10  Yerg.  (Tenn.)  160  (18.36). 

65  Bate  v.  Hooper,  5  De  (}.,  M.  &  G.  .338,  345  (185-5)  ;  Pride  v.  Fooks,  2 
Beav.  430  (1840)  ;    Re  Lasak's  Estate  (Sur.)  20  N.  Y.  Supp.  74  (1890). 


458  THE  DUTIES   OF  A  TRUSTEE.  (Ch.  O 

nature  of  the  case  allows,  in  the  same  situation  in  which  he  would  have 
stood  if  the  wrongs  had  not  been  done.    All  this  is  very  intelligible. 

Again,  suppose  the  trustee  has  not  only  improperly  retained  balances, 
but  has  lost  or  used  them  in  trade.  There  the  cestui  que  trust  has 
the  right,  if  it  is  for  his  interest  to  do  so,  to  charge  the  trustee  not 
with  the  sum  retained  and  interest,  but  with  all  the  profits  made  in  the 
trade.  «« 

The  ground  on  which  this  right  rests  is  this.  The  employment  in 
trade  is  unwarrantable;  but  if  it  turns  out  to  have  been  profitable,  the 
cestui  que  trust  has  a  right  to  follow  the  money,  as  it  is  said,  into 
the  trade.  In  such  a  case,  the  trade  profits  have  in  fact  been  produced 
by  the  employment  of  the  money  of  the  cestui  que  trust;  and  it 
would  be  manifestly  unjust  to  permit  the  trustee  to  rely  on  his  own 
misconduct  in  having  exposed  the  funds  to  the  risks  of  trade,  as  a  rea- 
son for  retaining  the  extra  profit  beyond  interest  for  his  own  benefit. 
Even  where  no  such  extra  profits  have  been  made,  the  cestui  que 
trust  is  in  general  at  liberty  to  charge  his  trustee,  who  has  allowed 
the  trust  money  to  be  employed  in  trade,  with  interest  at  £5.  per 
cent.,  that  being  the  ordinary  rate  of  interest  paid  on  capital  in  trade. 

66  Anonymous,  2  Yes.  Sr.  020  (1755)  ;  Talmer  v.  :Mitchell,  2  Myl.  &  K.  672, 
note  (180!))  :  Burden  v.  Burden,  1  J.  &  W.  134  (cited)  (1818) ;  Kx  parte  Wat- 
son. 2  V.  &  B.  414  (1814) :  Heatbcote  v.  Hulme.  1  J.  &  W.  122  (1811))  ;  Docker 
V.  Somes.  2  Mvl.  &  K.  <i55  (1834) ;  Willett  v.  Blandford,  1  Hare,  253  (1841) ; 
Wedderliurn  v.  Weddorburn,  22  Beav.  84  (1855)  ;  Townend  v.  Townend,  1 
Giff.  201  (1859) ;  Floekton  v.  Bunning,  8  Ch.  App.  Cas.  323,  note  (1868) ;  Bar- 
ney V.  Saunders,  16  How.  535.  543,  14  L.  Ed.  1047  (18.53) ;  Whitney  v.  Ped- 
dicord,  03  111.  249  (1872);  Binjisold  v.  Rinscold,  1  H.  &  G.  11,  80  (1826); 
Heath  v.  Waters,  40  .Mich.  457  (1879);  McKni^ht's  Ex'rs  v.  Walsh,  23  N.  J. 
Eq.  136  (1872) ;  affirmed  24  N.  J.  Eq.  498  (187.3) ;  Schieffelin  v.  Stewart,  1 
John.  Ch.  (N.  Y.)  620,  7  Am.  Dec.  507  (1815) ;  llobinett's  Appeal,  36  Fa.  174 
(1860)  ;  Norris's  Appeal.  71  Pa.  106  (1872) ;  Baker's  Appeal,  120  Pa.  33,  13 
Atl.  487  (1888)  ;    Hazard  v.  Durant,  14  R.  I.  25  (1882). 

CoMPOLXD  INTERKST. — Formerly  compound  interest  was  not  allowed  against 
a  trustee  simply  because  he  invested  trust  funds  in  trade.  Treves  v.  Town- 
sbend,  1  Bro.  C.  C.  384,  1  Cox,  Eq.  50  (1784)  ;  Itocke  v.  Hart,  11  Yes.  Jr.  58 
(1805) ;  Heatbcote  v.  Hulme,  1  J.  &  W.  122,  134  (1819)  ;  Brown  v.  Sansome, 
McClel.  &  Y.  427  (1825) ;  Sutton  v.  Sharp,  1  Kuss.  14()  (1826)  ;  Moons  v.  De 
Bernales,  1  Buss.  .301  (1826);  Attorney  General  v.  Solly,  2  Sim.  518  (1829); 
Docker  v.  Somes,  2  Myl.  &  K.  655  (1834) ;  Mousley  v.  Carr,  4  Beav.  49,  53 
(1841) ;  Westover  v.  Chapman,  1  Coll.  177  (1844).  But  now  the  cestui  que 
trust  has  the  oi)tion  of  charsiing  the  trustee  with  the  fund  invested  and  the 
profits  made,  or  with  compound  interest  instead  of  profits;  it  being  presumed 
that  the  protits  are  ecpial  to  conqiound  interest.  The  burden  of  showing  to 
the  contrary  is  on  the  trustee.  Walker  v.  Woodward,  1  Kuss.  107  (1826) ; 
Ileighington  v.  Grant,  1  Phillips,  600  (1844) ;  Jones  v.  Foxall,  15  Beav.  388 
(1852)  ;  Williams  v.  Powell,  15  Beav.  461  (1852) ;  Penny  v.  Avison,  3  Jur.  N. 
S.  62  (1856);  Saltmarsh  v.  Barrett,  31  Beav.  349,  350  (1862);  Burdick  v. 
Garrick,  5  Ch.  App.  Cas.  2.33,  241  (1870);  Inglis  v.  P.eaty,  2  Ont.  App.  453 
(1878) ;  Barney  v.  Saunders,  16  How.  535,  542,  14  L.  Ed.  1047  (1853) ;  Hook 
v.  Payne,  14  Wall.  252,  20  L.  Ed.  887  (1871);  Estate  of  Stott,  52  Cal.  403 
(1877)  ;  Estate  of  Clark,  53  Cal.  355  (1879) ;  Merrifield  v.  Tx>ngmire,  66  Cal. 
ISO,  4  Pac.  1176  (1884) ;  In  re  P]schrich,  85  Cal.  98,  24  Pac.  634  (1890)  ;  In 
re  Thompson,  101  Cal.  349,  35  Pac.  991,  36  Pac.  98,  508  (1894)  ;  Estate  of 
Cousins.  Ill  Cal.  441,  44  Pac.  182  (1896)  ;  In  re  Clary,  112  Cal.  292,  44  Pac. 
569  (1896) ;    Guardianship  of  Dow,  133  Cal.  446,  65  Pac.  890  (1901) ;    Gassell 


Sec.  4)  DUTIES   OF   MANAGEMENT   OF   TRL'ST   ESTATE.  459 

This  right  depends  on  principles  the  same,  or  nearly  the  same,  as  those 
which  enable  the  cestui  que  trust  to  adopt  the  investment,  and  take  the 
profits  actually  made. 

But  the  grounds  on  which,  in  all  these  cases,  the  right  of  election  in 
the  cestui  que  trust  rests,  wholly  fail  in  a  case  where  a  trustee,  having 
an  option  to  invest  either  in  £3.  per  cents.,  or  on  real  security,  neglects 
his  cluty  and  carelessly  leaves  the  trust  funds  in  some  other  state  of 
investment.  In  such  a  case,  the  cestui  que  trust  cannot  say  to  the 
trustee,  If  you  had  done  your  duty  I  should  now  have  had  a  certain 
sum  of  £3.  per  gents.,  or  the  trust  fund  would  now  consist  of  a  cer- 
tain amount  of  £3.  per  cents.  It  is  obvious  that  the  trustee  might 
have  duly  discharged  his  duty,  and  yet  no  such  result  need  have 
ensued. 

Where  a  man  is  bound  by  covenants  to  do  one  of  two  things,  and 
does  neither,  there  in  an  action  by  the  covenantee,  the  measure  of 
damages  is  in  general  the  loss  arising  by  reason  of  the  covenantor 
having  failed  to  do  that  which  is  least,  not  that  which  it  most,  bene- 
ficial to  the  covenantee;    and  the  same  principle  may  be  applied  by 

V.  Gassell,  147  Cal.  510,  S2  Pac.  42  (190.5) ;  Fall  v.  Simmons,  G  Ga.  2G5  (1S49) ; 
Jolmson's  Adm'rs  v.  Hedrlck.  .1.3  Ind.  129,  5  Am.  Rep.  191  (1870)  ;  Clark  v. 
Anderson,  10  Bush  (Kv.)  99  (1873)  ;  Tase's  Ex'r  v.  Holman.  82  Ky.  573  (1885)  ; 
Rinsgold  V.  Rins.iiold,  1  Har.  &  G.  (Md.)  11,  80.  18  Am.  Dec.  250  (1S2G)  ;  Dif- 
fenderfter  v.  Winder,  3  Gill  &  J.  (Md.)  311  (1831)  ;  I'erriu  v.  Lepper,  72  Mich. 
454,  555,  550,  40  N.  W.  8-59  (1888)  ;  In  re  Davis.  Ex'r,  G2  Mo.  450  (1876)  ;  Wil- 
liams, Adm'r,  v.  Heirs  of  Petticrew,  G2  Mo.  4G0.  472  (187G) ;  Estate  of  Camp, 
6  Mo.  App.  5G3  (1879) ;  Scott  v.  C^rews.  72  Mo.  2G1  (1880) ;  Bobb  v.  Bobb,  89 
Mo.  411,  421,  4  S.  W.  511  (1886)  ;  Assii^ment  of  Murdoch  &  Dickson,  129  Mo. 
488,  31  S.  W^  942  (1895)  ;  Crowder  v.  Shackelford,  35  Miss.  321,  3.59-3G1 
(1S58)  ;  Tronp  v.  Rice,  55  Miss.  278  (1877) ;  McKnishts  Ex'rs  v.  Walsh,  23 
N.  J.  Eq.  13G,  146-148  (1872)  ;  afflrmed  24  N.  J.  Eq.  498  (1873)  ;  Schieffelin 
V.  Stewart,  1  .John.  Ch.  (N.  Y.)  620,  7  Am.  Dec.  507  (1815) ;  Garniss  v.  Gardi- 
ner. 1  Edw.  Ch.  (X.  Y.)  128  (1831) ;  Utica  Ins.  Co.  v.  Lynch,  11  Paige  (N.  Y.) 
520  (1845) ;  Hannahs'  Ex'r  v.  Hannahs,  GS  N.  Y.  610  (1877)  ;  Berwick  v.  Hal- 
sey,  4  Redf.  Sur.  (N.  Y.)  18  (1878)  ;  Cook  v.  Dowry,  95  N.  Y.  103  (1884)  ;  Mat- 
ter of  Reed,  45  App.  Div.  19G,  203,  61  N.  Y.  Supp.  50  (1899) ;  Farwell  v. 
Steeu.  46  Vt.  678  (1874) ;  McCloskey  v.  Gleason,  56  Vt.  264,  282,  283,  48  Am. 
Rep.  770  (1883)  ;  Re  Hodge's  Estate,  66  Vt.  70,  28  Atl.  663,  44  Am.  St.  Rep. 
820  (1893). 

In  some  jurisdictions  compound  interest  is  allowed  for  mere  misconduct. 
Price,  Guardian,  v.  Peterson,  38  Avk.  494  (1882) ;  Hough  v.  Harvey,  71  111. 
72  (1873);  Jenuison  v.  Hapgood,  10  Pick.  (Mass.)  77,  104  (1830);  Miller  v. 
Congdon,  14  Gray  (Mass.)  114  (18.59);  Eliott  v.  Sparrell,  114  Mass.  404  (1874); 
Salisbury  v.  Colt,  27  N.  J.  Eq.  492  (1875) ;  Roberts'  Appeal,  92  Pa.  407  (1880) ; 
Frost  V.  Winston,  32  Mo.  489  (1862). 

Trust  for  Accumulation. — Compound  interest  is  charged  against  the  trus- 
tee failing  to  accumulate  income,  where  such  accumulation  is  directed. 
Raphael  v.  Boehm,  11  Yes.  .Jr.  92  (1805) ;  13  Ves.  Jr.  407  (1807) ;  13  Yes.  Jr. 
590  (1807)  :  Knott  v.  C-ottee,  16  Beav.  77  (1852) ;  Townend  v.  Townend,  1 
Giff.  201  (1S59);  In  re  Enunet's  Estate,  L.  R.  17  Ch.  Div.  142  (1881);  Rowan 
V.  Kirkpatrick,  14  111.  1  (1S52)  ;  Bond  v.  Lockwood,  33  111.  212  (1864)  ;  In  re 
Steele  et  al..  Guardians.  (55  111.  322  (1872)  ;  Hughes  v.  I'eople,  111  111.  457 
(1885) ;  Clemens  v.  Caldwell,  7  B.  Mon.  (Ky.)  171  (1846) ;  Voorhees  v.  Stoot- 
hoff,  11  N.  J.  Law,  145  (1829) ;  Perrine  v.  Petty,  34  N.  J.  Eq.  193  (1881) ;  Eng- 
lish V.  Harvey,  2  Rawie  (Pa.)  305  (18.30)  :  Bowles  v.  Executors  of  Drayton, 
1  Desaus.  (S.  C.)  4X9,  1  Am.  Dec.  689  (1796);  Edmonds  v.  Crenshaw^  Harp. 
Eq.  (S.  C.)  224  (1824). 


400  THE   DUTIES   OF   A   TRUSTEE.  (Ch.  5 

analogy  to  the  case  of  a  trustee  failing  to  invest  in   cither  of   two 
modes  equally  lawful  hy  the  terms  of  the  trust. 

It  was  contended  at  the  har  that,  in  such  a  case,  the  trustee  has  hy 
his  neglect  lost  his  right  of  election  hetwecn  the  two  modes  of  in- 
vestment ;  that  he  was  always  hound  hy  the  trust  to  exercise  his  dis- 
cretion in  the  mode  most  beneficial  for  the  objects  of  the  trust;  and 
that  having  omitted  to  do  so  at  the  time  when  the  option  was  open  to 
him,  he  can  no  longer  do  it  when  he  is  called  to  account  for  his  neglect, 
and  when  he  can  no  longer  exercise  an  unbiased  and  impartial  option. 
The  fallacy  of  this  argument  consists  in  assuming  that,  in  the  case 
supposed,  the  trustee  is  called  on  to  exercise  any  option  at  all.  He 
is  not  called  on  to  exercise  an  option  retrospectively ;  but  is  made  re- 
sponsible for  not  having  exercised  it  at  the  proper  time,  for  not  hav- 
ing made  one  of  two  several  kinds  of  investment.  And  a  reason  for 
his  being  in  such  case  chargeable  only  with  the  money  which  should 
have  been  invested,  and  not  with  the  £3.  per  cents,  which  might  have 
been  purchased,  is.  that  there  never  was  any  right  in  the  cestui  que 
trust  to  compel  the  purchase  of  £3.  per  cents.  The  trustee  is  answer- 
able for  not  having  done  what  he  was  bound  to  do,  and  the  measure  of 
his  responsibility  should  be  what  the  cestui  que  trust  must  have  been 
entitled  to.  in  whatever  mode  that  duty  was  performed. 

The  ground  on  which  Lord  Langdale  proceeded  in  the  several  cases 
before  him  appears  to  have  been  that  when  the  trustee  has  failed  to 
perform  his  duty  in  either  of  the  ways  which  were  open  to  him,  tlie 
cestuis  que  trustent  may  then  exercise  an  option  which  certainly  did 
not  belong  to  them  by  the  terms  of  the  trust;  i.  e.  that  if  the  trustee 
has  failed  to  exercise  his  option,  then  the  right  of  election  passes  to 
the  cestuis  que  trustent,  although  not  given  to  them  by  the  instrument 
creating  the  trust.  But  on  what  foundation  does  this  supposed  right  of 
the  cestuis  que  trustent  to  exercise  such  an  option  rest?  No  such 
right  can  be  derived  from  the  principle  that  the  cestuis  que  trustent  are 
entitled  to  compel  the  trustee  to  do  what  he  was  bound  to  do,  for  he 
was  not  bound  to  purchase  £3.  per  cents.  Nor  from  the  principle  that 
they  may  follow  the  trust  funds  into  their  actual  state  of  investment, 
or  charge  a  higher  rate  of  interest  in  consequence  of  such  invest- 
ment, for  the  foundation  of  the  complaint  is,  that  the  funds  have  not 
been  invested  at  all.  The  only  plausible  foundation  for  the  doctrine 
which  occurs  to  us  is  this:  The  trustee  w^as  bound  to  exercise  his 
option  not  capriciously,  but  in  the  mode  likely  to  be  most  beneficial  to 
the  cestuis  que  trustent.  And  their  interests  appear  in  the  result  to  be 
best  served  by  requiring  an  investment  in  i3.  per  cents.  But  this  rea- 
soning seems  founded  on  a  fallacy.  The  selection  of  the  £3.  per  cents, 
is  thus  made  to  depend  not  on  any  option  in  their  favor  which  the 
trustee  was  originally  bound  to  exercise ;  but  on  the  accident  of  their 
subsequent  rise  in  value,  a  principle  of  decision  from  which,  with  all 
deference,  we  differ.  If  such  a  principle  were  to  be  applied,  then,  as 
it  was  well  put  at  the  bar,  if  in  the  present  case  there  had  been  a  discre- 


Sec.  4)  DUTIES   OF  MANAGEMENT   OF   TRL'ST   ESTATE.  401 

tion  to  invest  in  railway  shares,  the  cestuis  que  trustent  mis^ht  perhaps 
now  fix  on  the  shares  of  some  particular  railway  which  has  risen  very 
highly  in  value,  and  say  the  investment  might  have  hcen,  and  so  ought 
to  have  heen,  on  that  particular  security. 

On  the  whole,  therefore,  we  cannot  discover  any  such  right  of  option 
as  is  contended  for  in  the  cestuis  que  trustent,  not  on  the  ground  of 
their  being  entitled  by  the  terms  of  the  trust  to  compel  the  trustee  to 
make  an  investment  in  £3.  per  cents.,  for  no  such  obligation  was  im- 
posed on  him — not  on  the  ground  of  their  being  entitled  to  adopt  or 
insist  on  any  actual  investment,  for  no  investment  was  made — not 
on  the  ground  of  any  obligation  on  the  part  of  the  trustees  to  select  the 
iZ.  per  cents,  as  the  most  beneficial  mode  of  investment,  for  the  ad- 
vantage of  the  £3.  per  cents,  arises  from  their  accidental  and  subse- 
quent increase  in  value,  and  not  from  any  necessary  superiority  at  the 
time  when  the  investment  ought  to  have  been  made. 

The  consequence  is,  that  the  decree  should,  we  think,  be  varied  by 
striking  out  so  much  of  it  as  declares  that  the  produce  arising  from 
the  sale  of  the  bank  stock,  London  Dock  stock  and  sewers  bonds  ought 
to  have  been  invested  in  £3.  per  cents.,  and  that  the  defendant  Augus- 
tin  Robinson  was  entitled  to  so  much  only  of  the  income  arising  from 
those  funds  from  the  end  of  one  year  after  the  testator's  decease,  as 
should  not  exceed  the  amount  of  the  dividends  which  would  have  ac- 
crued due  on  the  £3.  per  cents,  if  purchased;  and  it  must  be  declared 
that  he  is  entitled  from  the  end  of  the  first  year  after  the  testator's 
decease  up  to  the  time  of  the  sales  and  investments  in  £3.  per  cents. 
in  July  and  August,  1845,  to  interest  at  £4.  per  cent,  on  the  amount 
which  the  Master  has  found  that  those  funds  would  have  produced  at 
the  end  of  the  year,  not  exceeding  the  amount  of  interest  and  divi- 
dends actually  produced.     *     *     *  e? 


BAKER  V.  DISBROW. 

(Supreme  Court  of  New  York,  General  Term,  Second  Department.  1S79. 

IS  Hun,  29.) 

Appeal  from  a  decree  by  the  Surrogate  of  the  County  of  West- 
chester, entered  upon  the  final  settlement  of  the  accounts  of  the  re- 
spondents, as  executors  of  Philena  Disbrow,  deceased. 

Philena  Disbrow  died  testate  in  New  Rochelle,  in  March,  1865, 
seized  of  a  house  and  lot  there  and  possessed  of  personal  estate 
amounting  to  $503.87.  After  directing  payment  of  her  debts  and 
funeral  expenses,  she  devised  and  bequeathed  the  use  of  her  real  and 
personal  estate  to  the  children  of  Cassandra  Baker,  wife  of  Edward  T. 
Baker,  during  the  life  of  Cassandra  Baker  and  at  her  death,  to  her 
children  equally.     The  executors  were  empowered  to  sell  the  real  es- 

6  7  Knott  V.  Cottee,  16  Beav.  77  (1852)  ;  Andrew  v.  Scbniitt,  64  Wis.  664,  26 
N.  W.  190  (18S5). 


462  THE   DUTIES   OF  A   TRUSTEE.  (Ch.  5 

tate  and  "invest  the  proceeds  of  such  sale  on  good  bond  and  mortgage, 
or  in  or  upon  other  good  and  sufficient  security." 

After  payment  of  funeral  charges  and  debts,  $106.10  of  personal  es- 
tate remained.  In  April,  1866,  the  house  and  lot  in  Xew  Rochelle  were 
sold  and  $4,236.08,  after  payment  of  expenses,  remained  in  the  hands 
of  the  executors.  On  April  1,  1869,  the  executors  bought  a  farm  in 
East  Chester  paying  for  it  all  of  the  trust  funds,  namely,  $4,307.58, 
and  $1,500  contributed  by  the  brothers  of  Airs.  Baker.  In  a  few 
weeks  this  farm  was  exchanged  for  a  house  and  lot  in  New  York 
City,  the  executors  receiving  on  the  exchange  about  $2,000.  In  June, 
1870,  this  property  was  sold  and  the  executors  had  $9,449.86,  of  which 
$6,000  was  on  bond  and  mortgage.  Of  this  $3,000  was  invested  in  a 
mortgage  on  property  in  Fordham.  Subsequently  $1,000  more  was  ad- 
vanced and  a  deed  of  the  property  taken  and  $500  spent  for  furniture 
and  improvements.  In  1871  a  part  of  the  Fordham  land  was  ex- 
changed for  a  farm  in  New  Jersey  on  which  were  two  mortgages, 
one  of  $4,000  and  one  of  $6,000.  The  executors  paid  $2,600  and  as- 
sumed both  mortgages.  In  October,  1873,  the  balance  of  the  Fordham 
property  was  sold  for  $2,500.  The  executors  paid  on  the  New  Jersey 
farm  $2,600  in  interest  on  the  mortgages  and  in  1874  $2,000  on  ac- 
count of  the  second  mortgage  and  $550  in  satisfaction  of  a  judgment 
against  Mr.  and  Mrs.  Baker.  Subsequently  the  second  mortgage  was 
foreclosed  and  the  property  sold  for  less  than  the  two  mortgages  to 
the  plaintiff.  Up  to  the  time  of  the  exchange  for  the  New  Jersey  farm 
the  trust  fund  had  reached  to  $13,450.  The  result  of  all  these  specu- 
lations w-as  to  diminish  the  fund  to  $1,394.04. 

GiLBKRT,  J.  ^'^  A  breach  of  trust  having  been  shown,  the  only 
question  before  us  is  in  what  way  the  trustees  and  executors  are  to 
be  charged.  It  appears  that  up  to  October,  1871,  the  unauthorized 
dealings  with  the  trust  funds  had  produced  large  profits,  but  that  in 
consequence  of  similar  dealings,  after  that  date,  all  of  those  profits 
and  some  of  the  principal  of  the  fund  had  been  lost.  The  trust  was 
"to  invest  on  good  bond  and  mortgage,  or  in  or  upon  other  good  and 
sufficient  security."  No  particular  mode  of  investment,  except  upon 
bond  and  mortgage,  was  prescribed.  The  trustees  invested  in  the  pur- 
chase of  real  estate.  In  such  a  case  the  rule  seems  to  be  that  the 
cestui  que  trust  has  his  election  to  take  the  fund  and  legal  interest 
thereon,  or  the  fund  and  all  the  profits  that  have  been  made  upon  the 
fund.  If  the  cestui  que  trust  elects  to  take  the  profits  he  must  take 
them  during  the  whole  period,  subject  to  all  the  losses  of  the  business; 
he  cannot  take  profit  for  one  period  and  interest  for  another.  Hill  on 
Trusts  (2d  Am.  Ed.)  534;  Perry  on  Trusts,  §§  470-472,  and  cases 
cited;  Heathcote  v.  Hulme,  1  J.  &  W.,  122.  The  trustee  cannot  be 
charged  with  a  greater  amount  of  profits  than  he  has  actually  received. 
Jones  v.  Foxall,    15   Beav.   388-395;    Utica   Ins.    Co.   v.   Lynch,    11 

68  The  .statoment  of  facts  is  abbreviated  from  3  Kedf.  Sur.  (N.  Y.)  348 
(187S). 


Sec.  5)   DUTY  AS  TO  THE  CUSTODY  OF  THE  TRUST  ESTATE.      463 

Paige  523,  et  seq.  The  principle  is  that,  in  the  management  of  a 
trust,  the  trustee  may  lose  but  cannot  gain.  If  by  any  improper  use 
of  the  fund  profits  have  been  realized,  they  must  be  accounted  for, 
and  if  no  profits  have  been  made,  he  is  to  be  charged  with  the  fund  and 
interest  thereon.  The  profits  which  may  have  accrued  at  any  particu- 
lar time  are  a  mere  accretion  to  the  fund,  and  the  trustee  can  be 
charged  with  them  only  upon  the  ground  that  he  has  appropriated 
them  to  his  own  use.  If  upon  an  accounting,  in  respect  to  the  fund 
during  the  entire  period  of  the  trust,  it  appears  that  no  profits  have 
been  made,  the  trustee  is  chargeable  with  interest  only.  The  improper 
investment  is  considered  as  against  the  trustee  himself,  as  equivalent 
to  no  investment.  But  in  favor  of  the  cestui  que  trust  it  gives  an 
option  to  claim  either  the  investment  made,  or  the  replacement  of  the 
original  fund,  with  interest,  according  as  the  one  or  the  other  may 
be  most  for  his  benefit.  Lane  v.  Dighton,  Amb.  409 ;  Marsh  v.  Hunter, 
6  Mad.  295 ;  Robinson  v.  Robinson,  1  De  G.,  M.  &  G.  256;  Docker  v. 
Somes,  2  M.  &  K.  655 ;   supra,  cases  cited. 

The  Surrogate  appears  to  have  been  governed  by  the  rule  stated,  and 
his  decree  should  be  affirmed,  with  costs  to  be  paid  out  of  the  estate. 

Barnard,  P.  J.,  and  Dykman,  J.,  concurred. 

Decree  of  Surrogate  affirmed,  with  costs.  ®^ 


SECTION  5.— THE  TRUSTEE'S  DUTY  AS  TO  THE  CUSTODY 
OF  THE  TRUST  ESTATE. 


MORLEY  V.  MORLEY. 
(In  Chancery,  before  Finch,  Lord  Chancellor,  167S.    2  Chancery  Cases,  2.) 

The  defendant  was  trustee  for  the  plaintiflf,  an  infant,  and  received 
for  him  £40.  in  gold ;  a  servant  of  the  defendant  living  in  the  house 
with  him  robbed  his  master  of  £200.  and  the  £40.  out  of  his  house. 
The  robbery,  viz.  that  the  defendant  was  robbed  of  money,  was  proved  ; 
the  sum  of  i40.  was  proved  by  only  the  defendant's  oath. 

Lord  Chancellor.  He  was  to  keep  it  but  as  his  own.  and  allowed 
it  on  account ;  so  in  case  of  a  factor ;  so  in  case  of  a  person  robbed, 
for  he  cannot  possibly  have  other  proof.  ""^ 

60  See  Heathcote  v.  Ilulme,  1  J.  &  W.  122  (ISIO). 

7  0  Johson  V.  Palmer,  L.  R.  (1S93)  1  Ch.  71  (1S92|  ;  United  States  v.  Thomas, 
15  Wall  o."^,?  ;u.3  21  L.  Ed.  S9  (1872)  ;  Newsom  v.  Thornton.  66  Ala.  311 
(ISSO):  Lehiiian  v.  Robertson,  84  Ala.  489.  4  South.  728  (1887);  State  v. 
Meagher,  44  Mo.  356,  100  Am.  Dec.  298  (1869) ;  Fudge  v.  Durn,  51  Mo.  264 
(1873) ;  Stevens  v.  Gage,  55  N.  H.  175,  20  Am.  Rep.  191  (1875) ;  Furman  v. 
Coe,  1  Caines  Cas.  (N.  Y.)  96  (1804) ;  Carpenter  v.  Carpenter.  12  R.  I.  544.  34 
Am.  Rep.  716  (1880)  ;  Mikell  v.  Mikell,  5  Rich.  Di.  (S.  C.)  220  (1853)  ;  Mc- 
Kuight  V.  McKnight,  10  Rich.  Eq.  (S.  C.)  157  (1858). 


464  THE   DUTIKS   OF   A  TRUSTEE.  (Ch. 


CORXWKT<L  V.   DKCK. 

(Supreme  Court  of  Nrw  York,  (ieneral  Toriu.  Fourth  Department,  1S7G. 

8  Ilun,  122.) 

Appeal  from  a  decree  of  the  Surrogate  of  the  County  of  Steuhen, 
on  a  final  accounting,  refusing  to  allow  the  aclniini.stratrix  credit  for 
moneys  of  the  estate  stolen,  on  account  of  negligence.  The  defend- 
ants were  creditors  of  the  estate,  which  was  insolvent. 

The  appellant  is  the  widow  of  one  A.  Cornwell  and  was  appointed 
the  administratrix  of  his  e.state,  April  16,  1872.  Deceased  was  a  mer- 
chant at  Woodhull.  The  estate  consisted  of  a  stock  of  goods  in  the 
store  there,  besides  accounts  and  notes.  The  administratrix,  who  was 
an  old  lady,  em])loyed  her  son  to  sell  the  goods  at  retail  and  collect 
the  accounts.  She,  with  her  family,  occupied  rooms  adjoining  the 
store,  and  kept  the  money  collected,  in  a  trunk  in  a  bed-room  occu- 
pied by  her  cri]>i)lcd  son.  On  the  20th  of  Alarch,  1873,  the  sum  of 
about  $1,660  belonging  to  the  estate,  was  stolen  from  said  trunk  and 
never  recovered. 

The  nearest  bank  was  twelve  miles  from  where  she  lived,  at  which 
her  husband  had  had  a  bank  book,  and  where  he  used  to  deposit  mon- 
ey, and  draw  checks.  The  place  of  deposit  of  the  money  was  known 
to  several  persons,  and  the  money,  or  a  portion  of  it,  had  been  kept 
there  for  nearly  a  year. 

E.  Darwin  Smith,  J.  Whether  the  appellant  is  liable  for  the  loss 
of  the  $1,660,  money  belonging  to  the  estate  and  stolen  from  a  trunk 
in  her  possession,  is  the  question  presented  upon  this  appeal. 

In  Chambersburg  Savings  Fund  Ass'n's  Appeal,  76  Pa.  203,  the  rule 
is  stated  by  Mercur,  J.,  in  respect  to  the  liability  of  trustees,  as  fol- 
lows: "It  is  well  settled  that  a  trustee  shall  not  be  surcharged  by 
a  court  of  equity  for  a  loss  which  has  occurred  in  case  he  has  exer- 
cised common  skill,  common  prudence  and  common  caution,  but  for 
supine  negligence  or  wilful  default,  he  shall  be  held  responsible." 

What  is  supine  negligence  must  depend  upon  the  nature  of  the  prop- 
erty to  a  great  extent.  While  it  might  not  be  negligent  to  leave  fur- 
niture and  ordinary  personal  property  in  any  room  in  an  occupied 
dwelling  house,  it  would  certainly  be  very  improper  to  leave  money 
or  jewels  in  such  a  place,  unless  they  were  secured  in  an  iron  safe. 

In  1  Caines'  Cases  in  Error  (Furman  v.  Coe,  page  96,  decided  in 
1804),  it  was  held,  that  the  executor  was  not  liable  where  a  body  of 
men  broke  into  his  house,  and  by  force  carried  away  funds  of  the 
estate.  The  fund  was  acquired  during  the  Revolutionary  War  when 
the  country  was  distracted  and  armed  bodies  of  men  were  roaming 
about.  It  does  not  appear  that  there  was  any  bank  or  safe  place  of 
deposit  near.  The  money  was  kept  in  a  strong  chest  in  an  upper 
chamber,  and  no  question  was  raised  that  the  executor  was  negli- 
gent.   The  court  held  that  under  the  circumstances  he  was  not  liable. 


Sec.  5)       DUTY    AS   TO    THE    CUSTODY  OF   THE    TRUST   ESTATE.  465 

The  trustee  at  the  present  time,  when  banks  and  places  of  safe  de- 
posit so  largely  abound,  would,  probably,  under  the  same  circum- 
stances, be  held  liable  for  negligence,  because  a  man  of  common  pru- 
dence and  acting  with  common  caution  would  not  retain  the  custody 
of  money  and  valuables  liable  to  be  stolen  in  such  a  place,  when  he 
could  easily  deposit  them  in  a  place  of  safety.  It  is  repeatedly  held 
that  if  a  trustee,  in  the  exercise  of  his  best  judgment,  deposits  mon- 
ey in  a  bank  of  good  repute,  that  he  is  not  liable  in  the  event  of 
the  failure  of  the  bank.  In  Wharton  on  Negligence,  §  519,  and 
cases  there  cited,  it  is  held  that  a  guardian  having  funds  of  his 
ward  should  not  keep  it  in  his  house,  but  deposit  it  in  bank.  An  ex- 
ecutor or  administrator  is  entitled  to  compensation  for  his  services  in 
taking  care  of  the  estate,  and  "held  to  a  stricter  accountability  than 
a  trustee  without  compensation." 

In  Litchfield  v.  White,  7  N.  Y.  438.  57  Am.  Dec.  534,  it  is  held  that 
an  assignee,  under  a  voluntary  assignment  for  the  benefit  of  credi- 
tors, being  entitled  to  a  compensation,  is  chargeable  with  the  care  of  a 
provident  owner  and  liable  for  a  loss  occasioned  by  ordinary  negli- 
gence. See,  also,  9  Alb.  Law  J.  423,  and  cases  cited.  The  adminis- 
tratrix in  this  case  is  an  old  lady  unaccustomed  to  business,  which 
facts  go  to  palliate  what  would  in  an  ordinary  business  man  be  gross 
negligence,  yet  I  cannot  see  v,diy  having  assumed  this  trust  for  which 
she  is  compensated,  and  having  gone  on  and  sold  the  property  and 
collected  the  debts  due  the  estate,  she  should  not  be  held  to  the  exer- 
cise of  at  least  common  prudence.  It  appears  that  this  money  was 
kept  in  a  place  known  to  several  persons.  The  place,  to  be  sure,  was 
a  bed-room  occupied  by  her  sick  son,  but  it  was,  nevertheless,  a  very 
insecure  depository  for  such  a  sum  of  money,  and  presented  a  con- 
stant temptation  to  take  it  even  to  the  members  of  her  own  family. 
Her  husband  had  kept  a  bank  account,  of  which  she  was  aware.  Al- 
though the  bank  was  some  twelve  miles  off,  he  had  deemed  it  proper 
to  deposit  in  it  there,  and  she  could  and  should  have  done  the  same. 
Had  this  money  been  only  a  portion  of  the  estate  lately  collected,  and 
had  the  rest  been  deposited  in  bank,  she  might  be  held  authorized 
to  keep  the  same  where  she  did,  until  a  proper  opportunity  to  deposit 
in  bank  occurred,  but  the  whole,  or  nearly  all  this  fund  had  been  al- 
lowed to  remain  in  this  insecure  place  for  nearly  a  year,  until  it  was 
finally  stolen. 

If  executors  and  administrators  are  permitted  to  violate  the  most 
ordinary  laws  of  prudence  in  such  a  manner,  it  will  open  the  door 
for  innumerable  frauds,  and  place  creditors  and  other  persons  inter- 
ested in  trust  funds  at  the  mercy  of  careless  and  reckless  trustees. 

I  think  the  decree  or  order  should  be  affirmed. 

Present— MuLLiN,  P.  J.,  and  Smith  and  Talcott,  JJ. 

Decree  of  Surrogate  affirmed  with  costs.  ''^ 

71  See  Lehman  v.  Robertson,  S4  Ala.  4S9,  492,  4  South.  728  (1SS7). 
Ken.Tk.— 50 


466  THE   DUTIES   OF   A   TUUSTEB.  (Ch.  5 

McKXIGHT  V.  McKXIGIIT. 
(Court  of  Appeals  of  South  Carolina,  1S5S.     10  Rich.  Eq.  157.) 

On  the  18th  Dec,  1853,  Isaac  AlcKni<,^ht,  being  indebted  to  the 
vahie  of  his  estate,  entered  into  a  postnuptial  settlement.  lie  execut- 
ed a  deed  bearing  that  date,  to  his  mother,  Jane  J.  McKnight,  and  his 
brother,  Joseph  E.  McKnight,  by  which  he  conveyed  to  them  all  his 
negroes  for  the  sole  and  separate  use  of  his  wife,  and  for  the  sup- 
port and  maintenance  of  his  children,  with  various  concHtions  and 
limitations.  The  deed  was  not  frauchilent  and  void,  for  it  recognized 
the  rights  of  creditors.  It  declared  that  after  the  ])ayment  of  his 
debts,  the  property  was  to  be  held  for  the  uses  of  the  trust.  During 
the  interval,  after  the  execution  of  the  deed,  and  the  time  of  his  leav- 
ing the  state,  Isaac  AIcKnight  continued  in  the  possession  of  the  ne- 
groes. In  Oct.,  1855,  he  absconded,  and  left  the  state,  taking  with 
him  all  the  negroes  conveyed  in  the  said  deed  of  trust,  except  such  of 
them  as  the  Sheriff  had  previously  sold. 

This  is  a  bill  by  the  cestui  que  trusts,  namely  Mrs.  Cecelia  ^Ic- 
Knight,  the  wife  of  Isaac  McKnight  and  his  three  infant  children, 
against  Isaac  McKnight,  who  has  been  made  a  party  defendant  by 
publication,  and  against  Jane  J.  McKnight  and  Joseph  E.  McKnight, 
the  trustees,  for  an  account  of  the  trust  property,  because  of  their  al- 
leged breach  of  trust  and  fraudulent  complicity  with  Isaac  McKnight, 
in  the  removal  of  the  property  beyond  the  limits  of  the  state. 

The  bill  was  dismissed  and  complainants  appealed. 

The  opinion  of  the  court  was  delivered  by 

Dargan,  Ch.  '^-  The  only  breach  of  trust  charged  in  the  bill,  is 
that  the  defendants  accepted  the  trust,  and  took  possession  of  the 
negroes  and  combining  and  confederating  with  A.  Isaac  McKnight, 
did  aid,  advise,  assist  and  procure  the  removal  of  thirteen  of  the  ne- 
groes, conveyed  to  them  by  the  deed  of  trust.     *     *     ^' 

To  these  charges,  the  defendants  answered,  and  the  cause  proceed- 
ed to  trial  on  the  issue  thus  made.  No  sufficient  evidence  was  adduc- 
ed to  sustain  the  allegations  of  the  bill.  A  decree  was  rendered  in 
behalf  of  the  defendants,  dismissing  the  bill.  An  appeal  is  now 
brought  before  this  court,  and  for  the  purpose  of  setting  aside  the 
decree,  on  an  issue  not  presented  in  the  pleadings,  which  the  defend- 
ants were  not  called  upon  to  answer,  which  the  Circuit  Court  did  not, 
and  was  not  asked  to  consider,  and  about  which,  not  one  word  was 
said  on  the  Circuit  trial.     *     *     * 

This  suit  was  first  conceived  with  a  view  of  making  the  trustees  lia- 
ble for  conniving  at,  aiding,  abetting  and  procuring  the  fraudulent 
abduction  of  the  trust  negroes  by  McKnight.  Failing  to  make  out  by 
the  evidence  a  case,  that  can  excite  even  a  suspicion  of  the  infidelity 

72  Stutemc'ut  of  facts  abridged,  and  part  of  opinion  omitted. 


Sec.  5)   DUTY  AS  TO  THE  CUSTODY  OF  THE  TRUST  ESTATE.      467 

of  the  trustees  in  that  regard,  and  clianging  their  ground,  they  now 
contend,  that  without  any  connivance  on  their  part  in  the  escape  of 
McKnight,  and  his  abduction  of  the  negroes  the  bare  fact  of  their 
permitting  the  trust  property  to  remain  in  the  possession  of  Mc- 
Knight, together  with  the  loss  of  the  negroes,  is  such  a  breach  of  the 
trust  as  to  render  them  responsible  to  the  plaintitifs  for  the  value  of 
the  slaves.  This  Court  is  of  opinion,  that  the  simple  fact  relied  on, 
is  not  sufficient  to  subject  them  to  liability.  The  deed  of  trust  did 
not  inhibit  such  a  course  of  management  on  the  part  of  the  trustees. 
Mrs.  McKnight,  the  plaintiff,  kept  house.  She  had  three  little  chil- 
dren. Surely  the  trustees  could  not  have  done  better,  than  to  allow 
her  the  use  of  her  own  domestic  servants,  instead  of  hiring  them  out 
to  strangers,  and  with  the  proceeds  of  their  hire,  procuring  other 
servants  for  Mrs.  McKnight  and  her  children.  And  if  Mrs.  Mc- 
Knight, for  her  convenience  and  her  comfort,  could  have,  and  was  en- 
titled to  have  the  use  of  the  domestic  servants,  so  of  the  field  hands, 
who  were  employed  on  a  plantation  whence  the  family's  supplies  were 
derived.  What  is  the  difference,  so  far  as  a  faithful  execution  of  the 
trust  is  concerned?  Whether  the  trustees  hired  out  these  field  ne- 
groes and  from  their  wages  procured  Mrs.  McKnight  her  necessary 
provisions,  or  suffered  them  to  be  employed  directly  in  making  these 
provisions,  they  (the  trustees),  having  no  complicity  whatever  with 
McKnight  in  carrying  the  negroes  off.     *     *     * 

McKnight  was  living  in  harmonious  domestic  relations  with  his 
wife  and  family.  There  was  no  suspicion  that  he  was  about  to  ab- 
scond and  carry  off  the  trust  negroes.     *     *     * 

To  the  court  it  does  not  appear  that  there  was  any  devastavit  or 
breach  of  trust  on  the  part  of  the  trustees. 

It  is  ordered  and  decreed  that  the  decree  be  affirmed  and  the  ap- 
peal be  dismissed. 

Dun  KIN  and  Wardlaw,  CC,  concurred. 

Appeal  dismissed. 


CARPENTER  v.  CARPENTER. 

(Supreme  Court  of  Rhode  Island,  ISSO.     12  R.  I.  544,  34  Am.  Rep.  716.) 

Bill  in  equity  for  an  account  and  to  obtain  payment  of  a  trust  fund. 
The  facts  involved  are  stated  in  the  opinion  of  the  court. 

DuRFEE,  C.  J.  This  is  a  suit  in  equity  brought  by  Harris  I.  Car- 
penter, as  legatee  or  cestui  que  trust  under  the  will  of  his  grand- 
father, the  late  Earl  Carpenter,  against  Charles  E.  Carpenter,  surviv- 
ing executor  of  the  will,  for  an  account.  The  clause  of  the  will  un- 
der which  the  complainant  makes  his  claim,  directs  the  executors, 
within  two  years  after  the  death  of  the  testator,  to  invest  the  sum  of 


468  THE   DUTIES   OF   A   TRUSTEE.  (Cll.  5 

$5,000  "in  such  stocks  or  other  productive  property  as  they  may  deem 
advisable,  in  their  names  as  executors,"  and  in  the  same  manner  to 
invest  the  income  and  profits,  not  required  for  the  maintenance  and 
education  of  the  complainant,  and  the  fund  so  created  to  pay  over 
to  the  complainant  on  his  attaining  the  age  of  twenty-five  years.  The 
will  named  the  defendant  and  one  David  C.  Anthony,  executors. 
The  testator  died  February  10,  1863.  His  will  w^as  admitted  to  pro- 
bate, and  the  defendant  and  Anthony  accepted  the  appointment  as  ex- 
ecutors and  qualified.  The  complainant  attained  the  age  of  twenty- 
five  years  November  6,  1878.  The  bill  alleges  that  the  defendant 
refuses  to  account  or  to  pay  over  the  fimd  unless  the  complainant 
will  accept  in  full  satisfaction  of  his  claim  the  sum  of  about  $3,000 
deposited  in  a  savings  bank,  which  he  declines  to  do.  The  bill  also 
alleges  that  the  defendant  pretends  that  he  invested  $5,000  as  direct- 
ed by  the  will  in  bonds  whch  were  stolen,  and  that  he  now  has  what 
he  recovered,  on  deposit  in  said  savings  bank,  and  that  he  is  only  ac- 
countable for  said  deposit;  whereas  the  bill  alleges  that  the  invest- 
ment was  not  made  in  the  names  of  the  executors  and  did  not  con- 
stitute a  trust  fund  under  the  will.  The  bill  prays  that  the  defendant 
may  account  for  all  moneys  held  in  trust  for  the  complainant,  pursu- 
ant to  the  will,  and  for  an  account  thereof,  and  that  the  defendant 
may  be  decreed  to  pay  the  complainant  said  sum  of  $5,000  and  such 
income  as  ought  to  have  been  received  had  the  same  been  duly  in- 
vested, and  all  sums  which  may  be  found  to  be  justly  due  to  him. 

The  facts  in  regard  to  said  sum  of  $5,000  are  these.  Within  two 
years  after  the  testator's  death,  to  wit,  January  23,  1865,  the  defend- 
ant and  David  C.  Anthony  opened  an  account  on  their  book  with 
the  complainant,  in  which  they  charged  themselves  as  trustees  under 
the  will,  to  his  credit  with  $5,000,  v/hich  on  the  same  day  appears  by 
the  account  to  have  been  invested  by  them  in  three  one  thousand  dol- 
lar United  States  coupon  bonds,  bearing  interest  at  the  rate  of  7 .Z 
per  cent.,  being  numbered  41,181,  41,587,  41,588  and  two  one  thousand 
dollar  coupon  bonds  of  the  State  of  Rhode  Island,  bearing  six  per 
cent,  interest  and  being  numbered  692  and  734.  Having  purchased 
these  bonds  for  the  trust,  the  executors  sealed  them  up  in  an  envelope 
superscribed:  "Investment  of  five  thousand  dollars  for  Harris  Irving 
Carpenter,  January  Twenty-third,  1865,"  and  locked  them,  so  scaled, 
in  a  tin  box,  which  they  deposited  in  the  vault  of  the  Traders'  Bank  in 
the  City  of  Providence.  Between  Saturday,  February  11,  and  Monday, 
February  13,  1865,  the  vault  of  this  bank  was  entered  by  burglars  and 
robbed  of  a  large  amount  of  property,  among  which  were  the  bonds 
aforesaid.  Efforts  were  made  to  recover  the  bonds,  but  without  suc- 
cess. Eleven  months  after  the  robbery,  no  clue  having  been  obtained, 
the  executors  closed  the  account  on  their  book.  Subsequently  the  ex- 
ecutors, by  giving  heavy  indemnity  bonds,  procured  an  issue  of  other 
United  States  bonds  in  place  of  the  United  States  bonds  which  had 


Sec.  5)        DUTY   AS   TO    THE    CUSTODY  OF   THE    TRUST    ESTATE.  4G0 

been  stolen;  but  unfortunately  the  agent  whom  they  employed  in  pro- 
curing them,  and  whom  they  believed  to  be  trustworthy,  he  being  an 
employee  in  the  United  States  Treasury  Department,  was  dishonest 
and  converted  them  to  his  own  use,  and  they  were  able  to  recover  of 
him  only  a  portion  of  the  proceeds,  being  the  moneys  which,  with 
the  interest  accruing,  constitute  the  deposit  in  the  savings  bank. 

The  complainant  contends  that  the  trust  was  never  duly  constitut- 
ed, and  that  he  is  therefore  entitled  to  $5,000,  with  interest,  or  such 
profit  as  it  would  have  earned  if  duly  invested.  He  contends  that 
the  trust  was  not  constituted  because  the  executors  did  not  invest 
the  moneys  "in  their  names,"  as  directed  by  the  will. 

[The  Court  decided  that  the  executors  had  invested  the  $5,000  "in 
their  names"  when  they  bought  the  bonds  and  designated  them  for  the 
trust  in  an  account  which  they  opened  in  their  names  as  trustees  for 
the  complainant  and  that,  therefore,  the  trust  had  been  duly  consti- 
tuted.] 

The  complainant  contends  that  if  the  trust  was  constituted,  the  de- 
fendant is  nevertheless  liable  for  his  subsequent  mismanagement  of 
it.  He  contends  that  the  trustees  did  not  use  due  care  in  making  the 
deposit;  that  they  ought  to  have  adopted  some  means  of  identifying 
the  bonds  and  rendering  them  useless  to  the  thief,  and  that  they  were 
acting  beyond  the  scope  of  their  power  when  they  authorized  an  agent 
to  receive  the  new  bonds  in  a  form  that  permitted  and  invited  a  sec- 
ond theft.  He  contends  that  for  these  reasons  the  loss  ought  to  be 
made  good  by  the  defendant.  We  think,  however,  that  the  trustees 
used  as  much  care  as  prudent  men  ordinarily  use  in  their  own  con- 
cerns, and  that  is  all  that  was  required  of  them.  It  is  easy  for  the 
complainant  to  be  wiser  than  the  trustees  after  the  event;  but  it  is 
doubtful  if,  before  it,  he  would  have  been  either  wiser  or  more  care- 
ful. "In  regard  to  the  preservation  and  care  of  trust  property,"  says 
Story  in  his  Commentaries  on  Equity  Jurisprudence,  "it  has  been  said, 
that  a  trustee  is  to  keep  it  as  he  keeps  his  own.  And  therefore  if  he 
is  robbed  of  money  belonging  to  his  cestui  que  trust,  without  his  own 
default  or  negligence,  he  will  not  be  chargeable.  *  *  *  The  rule 
in  all  cases  of  this  sort  is,  that  when  a  trustee  acts  by  other  hands, 
either  from  necessity  or  conformably  to  the  common  usage  of  man- 
kind, he  is  not  to  be  made  answerable  for  losses."  2  Story,  Eq.  Juris. 
§  1269.;  Perry  on  Trusts,  §§  404.  441 ;  Lewin  on  Trusts,  224,  260 
(6th  Ed.  London);  Litchfield  v.  White,  7  N.  Y.  438,  S7  Am.  Dec. 
534. 

The  comj^lainant  also  contends  that  investment  in  a  savings  bank 
was  not  authorized  by  the  will.  We  are,  however,  of  the  opinion  that 
a  deposit  in  a  dividend  paying  savings  bank  may  be  regarded  as  "pro- 
ductive property." 

A  decree  may  be  entered  referring  the  cause  to  a  master  to  take  the 
account,  the  trust  to  be  treated  as  duly  established.    Other  matters  in 


470  THE   DUTIES   OF   A   TKUSTEE.  (Cll.  5 

regard  to  the  management  of  the  trust  which  have  been  alhided  to 
will  come  up  more  properly  in  taking  the  account  or  on  the  master's 
report. 

Decree  accordingly.  ^* 


FI1{L1)  V.  FIELD. 

(In  Chancery  before  Kekewich,   .Tnstice,   1893.     Law  Reports   [1894] 
1  Chancery,  425.) 

The  plaintiff,  Joshua  Field,  tenant  for  life  under  his  mother's  will, 
of  a  trust  fund  invested  in  the  names  of  the  defendants,  the  trustees. 
on  a  mortgage  on  a  building  estate  moved  for  an  injunction  to  restrain 
the  defendants  as  trustees  of  the  will,  from  permitting  the  deeds  to 
remain  in  the  hands  or  custody  of  their  solicitors,  or,  unless  the  deeds 
were  deposited  by  the  defendants  at  a  bank  in  their  joint  names,  from 
permitting  the  same  to  remain  in  the  possession  or  custody  of  any 
person  or  persons  other  than  the  defendants  or  one  of  them.  ''^ 

KekEwicii,  J.  This  motion  raises  a  question  of  practical  im- 
portance, and  one  of  extreme  interest  to  solicitors,  and  still  more  to 
those  numerous  clients  of  theirs  who  are  trustees.  My  first  inclination 
was  to  say  that  a  question  of  such  a  vast  importance  must  be  care- 
fully considered,  and  that  it  would  not  be  right  to  express  an  opinion 
upon  it  until  after  consideration,  and  in  language  carefully  weighed; 
but  further  discussion  has  convinced  me  that  I  ought  to  dispose  of  this 
motion,  not  as  dealing  with  an  abstract  question,  but  rather  with  refer- 
ence to  the  circumstances  of  this  particular  case,  instead  of  laying 
down  any  general  rule.  I  have  before  me  an  affidavit  of  four  gentle- 
men with  regard  to  the  convenience  of  the  deposit  of  trust  deeds  with 
solicitors  and  the  practice  of  the  profession.  These  four  gentlemen 
stand  high  in  the  profession,  and  it  would  be  difficult  to  find  four 
others  better  qualified  to  depose  as  to  the  practice  and  convenience  of 
business ;  but  they  and  the  notice  of  motion  alike  seem  to  me  to  evade 
what,  to  my  mind,  is  the  real  point.  A  comparison  has  been  made 
between  the  deposit  of  deeds  in  a  solicitor's  office  and  the  deposit  of 
them  in  a  bank.  The  question  is  not  whether  the  trust  deeds  may  be 
conveniently  deposited  in  a  solicitor's  office,  or  in  a  bank,  or  anywhere 
else,  but  whether  the  deeds  ought  to  be  under  the  personal  control  of 
the  trustees.  If  solicitors  are  prepared  to  make  in  their  own  office,  or 
elsewhere,  arrangements  for  depositing  trust  deeds,  so  that  they  may 
be  under  the  control  of  trustees,  I  cannot  myself  see  that  this  is  open 
to  any  ol)jection,  and  the  suggestion  as  to  keeping  the  deeds  at  a  bank 
has  not  much  to  do  with  the  case,  and  only  introduces  confusion. 

73  Jones  V.  Lewis,  2  Ves.  Sr.  240  (1750)  ;  Raw  v.  Cutten,  9  I'.ing.  96  (1832) ; 
Job  V.  Job,  L.  II.  G  Ch.  Div.  502  (1877);  McCabe  v.  Fowler,  84  N.  Y.  314 
(1881). 

74  The  statement  of  facts  is  abridged.  » 


Sec.  5)   DUTY  AS  TO  THE  CUSTODY  OF  THE  TRUST  ESTATE.      471 

The  general  principle,  in  my  opinion,  is  that  trustees  must  have  their 
muniments  of  title,  as  well  as  their  securities,  under  their  own  control. 
I  have  held  in  one  case  some  time  ago,  Webb  v.  Jonas  [39  Ch.  D.  660], 
that  this  was  enough  to  prevent  trustees  investing  on  a  contributory 
first  mortgage,  because  trustees  investing  on  any  particular  mortgage 
security  are  bound  to  have  the  trust  money  and  the  security  in  their 
own  names,  and  if  the  money  and  the  security  are  in  the  names  of 
others  they  are  not  fulfilling  that  obligation.  The  same  thing  applies 
to  documents  and  deeds  in  their  possession.  They  are  intrusted 
with  the  custody  of  them,  and  they  are  bound  within  reasonable  limits 
to  see  that  the  deeds  are  kept  in  a  safe  place,  and  that  no  one  else  can 
take  them  away.  But  to  that  obligation  there  must  be  reasonable  limits, 
In  order  to  realize  the  trust  estate,  the  deeds  must  be  in  the  custody 
of  the  solicitor  to  the  trustees.  He  has  to  make  abstracts  of  them, 
to  make  an  examination  of  the  deeds  abstracted,  and,  if  the  property 
is  sold  in  lots,  the  purchasers  must  have  the  opportunity  of  examin- 
ing the  deeds  with  the  abstracts,  if  they  wish,  and  even  a  second  and  a 
third  examination  may  be  necessary  before  completion.  It  would  be 
a  monstrous  thing  to  say  that  the  trustees  have  to  keep  the  deeds  all 
that  time  in  a  box  with  perhaps  three  or  four  keys,  so  that  if  any  pur- 
chaser wishes  to  consult  the  deeds  all  the  trustees  would  have  to  attend 
in  person.  That  strikes  one  immediately  as  showing  that  reasonable 
limits  to  the  trustees'  obligation  should  be  applied. 

In  the  present  case  I  have  the  trustees  of  a  will,  having  their  trust 
fund  invested  on  mortgage.  It  happens  that  the  tenant  for  life  under 
the  settlement  is  the  mortgagor,  but  that  is  immaterial  for  the  present 
purpose.  The  mortgaged  property  is  a  building  estate  in  course  of 
development;  we  all  know  what  that  is.  From  time  to  time  building 
agreements  have  to  be  prepared  and  leases  granted,  and  the  deeds  have 
to  be  consulted  in  order  to  see,  for  instance,  that  the  parcels  are  all 
right,  or  that  the  powers  have  been  properly  observed,  or  that  the 
boundaries  of  a  plot  in  a  second  intended  lease  do  not  overlap  the 
boundaries  in  the  first,  and  so  forth.  It  is  practically  impossible  to  deal 
with  such  questions  unless  the  solicitor  to  the  trustees  has  the  deeds. 
On  the  other  hand,  there  is  possible  danger  in  that  course.  Rules  are 
made  not  only  for  the  guidance  of  solicitors  who  are  honest,  as  in  the 
overwhelming  majority  of  instances  they  are,  but  also  with  reference 
to  dishonest  solicitors,  of  whom,  unfortunately,  there  are  some.  It 
is  extremely  difficult  to  lay  down  any  general  rule,  and  to  say  where 
any  general  rule  may  be  departed  from.  In  my  opinion  it  comes  to 
this — that  the  solicitor  may  do  what  is  reasonable  and  may  advise  the 
trustees  as  to  what  is  reasonable.  If  there  is  a  trust  shut  up  for 
years,  as  often  happens,  and  there  is  nothing  in  it  to  be  done,  I  do  not 
see  why  the  deeds  should  not  be  locked  up  in  a  box  in  a  bank  or  a 
safe  deposit,  and  the  trustees  keep  the  keys,  and  that  is  the  proper 
course  to  pursue.  If,  on  the  other  hand,  they  are  wanted  from  time 
to  time,  I  do  not  think  the  trustees  are  acting  unreasonably  in  giving 


472  THE   DUTIES   OF  A   TRUSTEE.  -  (Ch.  5 

their  solicitor  the  power  to  do  what  it  ri.^ht  and  necessary  for  the 
despatch  of  business.  If  the  particular  business  comes  to  an  end  and 
there  is  no  further  occasion  to  refer  to  the  deeds,  then  they  can  be  put 
into  a  safe  place.  I  am  now  referring  to  title-deeds  only.  With  re- 
gard to  bonds  and  certificates  payable  to  bearer,  I  have  not  the  slight- 
est doubt  that  they  ought  not  be  under  the  control  of  a  solicitor,  or  any 
other  agent.  ''•'  The  trustees  are  responsible  for  them,  and  they  must 
keep  them,  not  necessarily  in  their  own  custody,  but  in  some  ])lace 
where  they  cannot  be  got  at  without  the  consent  of  the  whole  body. 

I  am  not  prepared  to  make  any  order  on  the  motion  ;  but  the  matter 
has  been  fairly  argued,  and  therefore  I  make  no  order,  except  that 
the  costs  of  the  motion  arc  to  be  costs  in  the  action. 


SECTION  6.— WHO  MAY  EXECUTE  A  TRUST. 


ADAPTS  V.  TAUNTON. 
(In  Chancory,  before  Sir  .Tolin  Leueh,  Vice  Cluuicellor,  1820.     5  Maddock,  4.''.5.) 

Henrv  Byne  by  his  will,  1st  September,  1815,  devised  all  his  estates 
to  the  plaintiff,  George  Adams,  and  to  Ralph  Carr.  their  heirs,  ex- 
ecutors, administrators  and  assigns,  in  trust  to  sell  the  same  by  public 
auction  or  private  contract,  either  together  or  in  parcels,  and  to  apply 
the  produce  amongst  his  children,  equally,  and  appointed  the  said 
George  Adams  and  Ralph  Carr  executors  of  his  will,  and  declared 
that  the  receipts  of  Adams  and  Carr  should  be  a  sufficient  discharge  to 
the  purchasers.  The  testator  died  on  the  20th  June,  1816.  Carr  by 
deed-poll  renounced. 

The  plaintiff  Adams  alone  proved  the  will,  and  on  the  21st  October, 
1819,  he  put  up  parts  of  the  testator's  real  estates  to  sale  by  public 
auction,  and  the  defendant  became  the  purchaser  of  four  lots  for  the 
sum  of  i2,670. 

The  defendant  refused  to  complete  his  purchase,  because  Ralph  Carr 
refused  to  join  with  the  plaintiff'  in  the  conveyance  to  the  defendant, 
and  to  join  in  the  receipt  for  the  purchase  money,  and  in  consequence 
the  present  suit  was  instituted  for  a  s]:)ccific  performance  of  the  pur- 
chase agreement.  ''^ 

Mr.  Bell  and  Mr.  Girdleston,  for  the  plaintiff,  insisted,  that  in  con- 
sequence of  the  deed-poll  of  the  1st  July,  1816,  the  plaintiff'  alone  was 
enabled  to  convey  and  give  a  sufficient  receipt  for  the  purchase  money, 
and  they  cited  Bonifant  v.  Greenfield,  Cro.  Eliz.  80,  Leon.  60,  and 
Hawkins  v.  Keni]-),  3  East,  410. 

75  See  Mattliews  v.  Brisf.  G  Eeav.  2.39  (1843). 
7  6  The  statement  is  ubridired. 


Sec.  6)  WHO   MAY   EXECUTE   A   TRUST.  473 

Mr.  Wyatt,  for  the  defendant: 

The  defendant  is  desirous  of  completing  his  contract,  but  as  it  has 
been  a  doubt  in  the  profession,  whether  the  co-trustee  ought  not  to 
join  in  the  conveyance  and  receipt,  the  defendant  is  justifiable  in  his 
objection,  and  is  not  compellable  to  take  a  title  subject  to  doubt. 

The  Vice  Chancellor  expressed  himself  in  favor  of  the  plaintiff,  but 
said  he  would  look  into  the  authorities. 

On  this  day  [6th  Dec.  1820]  the  Vice  Chancellor  said,  it  being  now 
settled  that  a  devise  to  A,  B  and  C  upon  trust,  is  a  good  devise  to  such 
of  the  three  as  accept  the  trust,  it  follows  by  necessary  construction, 
that  by  the  receipt  of  the  trustees  is  to  be  intended  the  receipt  of  those 
who  accept  the  trust. 

A  specific  performance  was  decreed,  but  without  costs. '''' 


DOILY  v.  SHERRATT. 

(In  Chancery,  before  Hon.  John  Verney,  Master  of  the  Rolls,  1735.     2  Equity 

Cases  Abridged,  742.) 

A  by  will  appoints  two  trustees,  to  whom  and  their  heirs,  executors 
and  assigns,  he  devises  his  real  and  personal  estate  on  several  trusts; 
and  in  case  one  die,  then  the  other  to  execute  the  same.  During  their 
joint  lives  if  one  refuse  to  act,  the  other  cannot  act  without  him;  but 
the  trust  devolves  upon  the  Court. 


In  re  WADSWORTH. 

(Court  of  Chancery  of  New  York,   1847.     2  Barb.  Ch.,  381.) 

This  case  came  before  the  Chancellor  upon  the  petition  of  James 
S.  Wadsworth  and  Elizabeth  Wadsworth  to  remove  W.  W.  Wads- 
worth  as  one  of  the  executors  and  trustees  under  the  will  of  his  father, 
and  to  appoint  another  trustee  in  his  place,  so  far  as  related  to  the 

7  7  Bonifaut  v.  Greenfield,  Cro.  Eliz.  80  (1587);  Smith  v.  Wheeler,  1  Ventris, 
128  (1672) :  s.  c.  2  Keble,  772 :  Hawkins  v.  Kemp,  3  East,  410  (1803) ;  Small 
V.  Marwood,  9  B.  &  C.  300  (1829) ;  Eaton  v.  Smith,  2  Beav.  236  (1839) ;  Cooke 
Y.  Crawford,  13  Sim.  91  (1842);  Browell  v.  Reed,  1  Hare,  434  (1842);  Cape 
V.  Bent,  9  Jur.  653  (1845);  Watson  v.  Pearson,  2  Ex.  581  (1848);  Peppercorn 
V.  Wayman.  5  De  G.  &  Sm.  230  (1852)  ;  White  v.  McDermott,  7  Ir.  R.  C.  L.  1 
(1872) ;  Nicoll  v.  Miller,  37  111.  387,  411  (1865) ;  Putnam  Free  School  v.  Fisher, 
30  Me.  523  (1849)  ;  Ratcliffe  v.  San.sston,  18  Md.  383  (1862)  :  Long  v.  Long, 
62  Md.  33,  57  (1884)  ;  Ellis  v.  Boston,  etc.  Co.,  107  Mass.  1,  13  (1871)  ;  Scull 
V.  Reeves,  3  N.  J.  Eq.  84,  29  Am.  Dec.  ()94  (18;>4)  ;  Jackson  v.  Ferris.  15  Johns 
(N.  Y.)  346  (1818) ;  Matter  of  Stevenson,  3  Paige  (N.  Y.)  420  (1832) ;  King 
V.  Donnelly,  5  Paige  (N.  Y.)  46  (1835) ;  Matter  of  Van  Schoonhoven,  5  Paige 
(N.  Y.)  559  (1836):  Niles  v.  Stevens,  4  Denio  (X.  Y.)  399  (1847);  Leggett  v. 
Hunter,  19  N.  Y.  445  (1859);  Clemens  v.  Clemens,  60  Barb.  (X.  Y.)  366  (18(i7)  ; 
Lessee  of  Zebach  v.  Smith,  3  Bin.  (Pa.)  69.  5  .\m.  Dec.  352  (1810) :  Bailey,  Jr.. 
Petitioner,  15  R.  I.  60,  1  Atl.  131  (iss.j)  ;  De  Saussure  v.  Lyons,  9  S.  C.  492 
(1878). 


474  Tnr:  dt'tiks  of  a  tki'stke.  (Ch.  5 

trust  created  for  the  benefit  of  the  petitioner,  E.  Wadsworth.  The 
testator  devised  one-fourth  of  his  residuary  real  estate  to  his  two  sons, 
J.  S.  Wadsworth  and  W.  W.  Wadsworth  and  to  his  son-in-law  M. 
Brimmer,  and  to  their  successors,  as  trustees  of  his  daughter  Eliza 
beth ;  in  trust  to  receive  the  rents,  profits  and  income  thereof  for  her 
separate  use,  with  remainder  to  her  issue,  if  she  should  have  any  at 
death;  and  if  she  should  die  without  issue,  then  to  the  other  heirs 
at  law  of  the  testator  in  fee.  And  the  trustees  were  authorized  to 
lease  the  real  estate  embraced  in  the  trust,  for  terms  not  exceeding 
twenty-one  years,  or  to  sell  the  lands  and  re-invest  the  proceeds  in 
other  lands,'  or  in  public  stocks,  or  bonds  and  mortgages  upon  the 
same  trusts;  the  cestui  que  trust  assenting  to  such  sales  by  joining 
in  the  conveyances  of  the  lands.  He  also  bequeathed  one  fourth  of  his 
residuarv  personal  estate  to  the  same  trustees ;  in  trust  to  receive  and 
pay  over  the  income  thereof  to  his  daughter  Elizabeth  for  life,  with 
power  to  her  to  dispose  of  the  principal  thereof  by  will  at  her  death, 
and  with  power  to  the  trustees  to  convert  it  into  real  estate,  during  her 
lifetime ;   to  be  held  by  them  upon  the  same  trusts. 

He  also  appointed  his  two  sons  and  his  son-in-law  the  executors  of 

his  will. 

The  testator  died  in  1844,  and  all  the  executors  proved  the  will. 

M.  Brimmer  refused  to  accept  said  trust,  and  it  therefore  devolved 
upon  the  two  sons.  In  1846,  W.  W.  Wadsworth  became  of  unsound 
mind,  and  was  found  to  be  a  lunatic  upon  a  commission  issued  to  in- 
quire into  the  fact. 

The  Chancellor  [Reuben  H.  Walworth]. '«  The  common  law 
has  made  no  provision  for  the  execution  of  a  joint  trust  by  one  of 
the  trustees,  where  the  co-trustee,  by  reason  of  lunacy  or  other  in- 
ability, becomes  incompetent  to  execute  the  trust.  This,  therefore, 
appears  to  be  a  proper  case  for  the  interposition  of  the  Court  to  re- 
move the  lunatic  trustee,  under  the  provisions  of  the  revised  statutes ; 
so  that  the  trusts  both  as  to  the  residuary  estate  given  to  the  daughter, 
and  as  to  that  given  to  the  grandson  of  the  testator,  may  be  executed, 
either  by  the  remaining  trustee,  or  by  him  and  such  other  person  as 
may  be  substituted  in  place  of  the  lunatic. 


SWALE  V.  SWALE. 

(In  Chancery  before  Sir  John  Roinilly.  Master  of  the  Rolls.  1S.'6.     22  Beavan, 

584.) 

The  Master  oe  the  Rolls.'' »  I  think  the  plaintiff  is  entitled  to 
a  receiver.  What  has  taken  place  is  thus  described  in  the  answer: 
Joseph   Swale  and  Henry  Anderson  ask  Mr.  Holden  to  concur  with 

7  8  The  statement  is  abridged  and  only  a  part  of  the  opinion  is  given. 
7  9  The  statement  of  facts  is  omitted. 


Sec.  G)  WHO  may  execute  a  trust.  475 

them  in  making  certain  investments  of  the  trust  property.  Mr.  Holden, 
(lisai^reeing-  with  them,  refused  to  concur.  Thereupon,  they  continued 
to  act  in  the  trusts,  without  conferring-  with  or  consuUing  him.  It 
appears  also,  that  they  have  actually  advanced!  money  on  certain 
securities,  omitting  the  name  of  Mr.  Ifolden,  and  that  in  one  case, 
they  have  taken  a  security  in  the  name  of  one  only.  This  Court  can- 
not approve  of  one  trustee  investing  trust  money  in  his  own  name 
exclusively  of  the  others. 

It  is  suggested,  that  one  executor  may  act  without  the  concurrence 
of  the  others ;  but  it  is  impossible  that  this  can  be  treated  as  an  ex- 
ecutorship account.  The  testator  died  four  years  and  a  half  ago,  and 
this  transaction  seems  to  have  taken  place,  not  in  their  character  of 
executors,  but  in  their  character  of  trustees.  I  think  that  the  plain- 
tiff, who  is  interested  in  the  property,  is  not  to  be  excluded  in  this 
manner. 

The  answer  of  the  two  trustees  is  this :  they  say,  that  if  Mr.  Holden 
will  concur  with  them  they  will  be  exceedingly  happy  to  go  on  and  act 
together,  but  that  if  he  differ  from  them,  then  that  they  must  act  for 
themselves.  Considering  the  maimer  in  which  this  Court  deals  with 
trustees,  whenever  a  breach  of  trust  is  committed,  and  the  way  in 
which  Holden  might  be  involved  in  one,  it  seems  not  unreasonable  that 
he  should  insist  on  his  view  of  the  case  being  adopted,  or,  at  least, 
that  the  view  of  the  other  two  trustees  should  not  control  his.  The 
testator  intended  to  have  the  assistance  and  discretion  of  three  trus- 
tees, but  here,  as  it  sometimes  happens,  they  do  not  act  amicably  to- 
gether, their  united  assistance  and  discretion  cannot  be  obtained,  and 
the  majority  act  alone  in  the  administration  of  the  trust.  In  that  state 
of  things,  the  plaintiff'  is  entitled  to  have  the  receiver  appointed. 

A  necessity  is  shown  for  some  interposition  to  protect  this  property, 
not  merely  for  the  sake  of  the  two  tenants  for  life,  but  for  the  inter- 
est of  the  persons  who  may  hereafter  become  entitled,  who  are  not 
sui  juris,  and  are  a  class  at  present  unascertained.^" 

8  0  In  the  e.xeeution  of  a  private  trust  all  the  trustees  must  join.  Sloo  v. 
Lraw,  3  Blatchf.  459,  471,  472,  Fed.  Cas.  No.  12.9.57  (iSoGl ;  Loud  v.  Winchester, 
52  Mich.  174,  185,  17  N.  W.  7S4  (1S83) ;  Greeu  v.  Miller,  6  John.  (N.  Y.)  39, 
5  Am.  Dec.  184  (1810);  Sinclair  v.  Jackson,  8  Cow.  (N.  Y.)  543,  584  (1820). 
Unless  authority  to  act  is  given  to  less  than  all  by  the  creator  of  the  trust, 
as  in  Attorney  General  v.  Cuming,  2  Y.  &  C.  Ch.  R.  139  (1S43),  or  is  to  be 
inferred  from  the  nature  of  the  trust  as  in  Sloo  v.  Law,  3  Blatchf.  459,  Fed. 
Cas.  No.  12,957  (1856). 

Public  trusts  may  be  executed  by  a  majority  of  the  trustees.  Wilkinson  v. 
Malin,  2  Tyrwhitt,  545  (1832) ;  Perry  v.  Shipway,  1  Giff.  1  (1859),  affirmed  4 
De  G.  &  J.  353  (1859)  ;  Cooper  v.  Gordon,  L.  K.  8  Eq.  249  (1869) ;  Scott  v. 
Detroit  Young  Men's  Society's  Lessee,  1  Doug.  (Mich.)  119  (1843) ;  Hill  v. 
Josselyu,  21  Miss.  597  (1850). 


476  THE  DUTIES   OF  A  TRUSTEE.  (Ch.  5 

GUTMAX  V.  BUCKLER. 

(Court  of  Appeals  of  .Marylaiul,  ISSS.    (JO  Md.  7,  13  Atl.  G35.) 

Appeal  from  the  Circuit  Court  of  Baltimore  City. 
This  appeal  was  taken  from  a  decree  of  the  Court  below  requiring 
of  the  defendant  a  specific  performance  of  his  contract  to  purchase  of 
the  plaintiflf  a  certain  piece  of  property  in  Baltimore  City. 
Robinson,  J.,  delivered  the  opinion  of  the  Court. 
The  only  point  in  this  case,  is  whether  the  power  to  sell  and  in- 
vest the  proceeds  of  sale  given  to  two  trustees,  can  upon  the  death  of 
one  of  them,  be  exercised  by  the  survivor?  And  this  question  depends 
upon  the  construction  of  the  deed  made  by  Mrs.  White  in  contempla- 
tion of  her  marriage,  and  in  the  execution  of  which,  Doctor  Buckler 
her  intended  husband  united.  By  this  deed,  she  conveyed  to  Henry 
White  and  Doctor  Buckler,  their  heirs,  executors,  administrators  and 
assigns,  as  joint  tenants,  all  her  property  real  and  personal,  to  have 
and  to  hold  the  same  to  the  use  of  the  said  Henry  White  andJ  Doctor 
Buckler  as  joint  tenants,  their  heirs,  executors,  administrators  and  as- 
signs in  trust. 

1st.  To  permit  the  grantor  to  possess,  enjoy  and  dispose  of  the 
same  as  she  shall  see  fit  and  proper  up  to  the  time  of  her  marriage. 

2nd.  After  her  marriage  to  receive  and  collect  the  rents,  profits  and 
income  of  said  property,  and  pay  the  same  to  the  grantor  for  her  sole 
and  separate  use. 

3rd.  In  trust  for  such  persons  as  the  grantor  may  appoint  by  last  will 
and  testament,  and  in  default  of  such  appointment,  in  trust  to  pay  to 
Doctor  Buckler  the  sum  of  five  thousand  dollars  per  annum  during  his 
life,  and  then  in  trust,  etc. 

The  deed  further  provides  "that  whenever  it  may  become  necessary 
to  invest  any  part  of  the  principal  of  the  trust  estate,  the  same  may  be 
invested  at  the  discretion  of  the  trustees,  who  are  further  authorized, 
as  they  shall  see  fit,  to  change  any  existing  investment,  and  for  that 
purpose  may  sell  and  convey  any  part  of  the  trust  estate,  without  any 
obligation  on  the  part  of  the  purchaser  to  see  to  the  application  of 
the  purchase  money." 

Since  the  marriage  of  the  parties,  Henry  White,  one  of  the  trustees 
has  died,  and  Doctor  Buckler,  surviving  trustee,  has  agreed  to  sell  to 
the  appellant  a  leasehold  interest  belonging  to  the  trust  estate,  and  the 
question  is  whether  he  can  convey  a  valid  title  to  the  purchaser?  Now 
a  bare  power  or  authority  given  to  two  persons  cannot,  in  the  absence 
of  "words  of  survivorship,"  or  language  of  like  import,  be  exercised 
by  the  survivor.  Having  thus  named  the  persons  by  whom  the  power 
is  to  be  exercised,  the  law  presumes,  in  the  absence  of  language  show- 
ing a  contrary  intention,  that  the  donor  meant  a  joint  execution  of  the 
power,  and  if  one  of  them  dies  it  cannot  be  exercised  by  the  survivor. 
The  power  in  such  case  does  not  survive.    Coke,  Littleton,  113a;   Pey- 


Sec.  G)  WHO   MAY    EXECUTE   A   TRUST.  477 

ton  V.  Bury,  2  P.  W'ms.  626;  Attorney  General  v.  Gleg,  1  Atk.  356; 
Dyer  177a;   vSugcl.  on  Powers,  143. 

But  the  power  given  to  the  trustees  in  the  deed  before  us,  is  not  a 
bare  power.  On  the  contrary,  the  entire  legal  estate  is  vested  in  them, 
and  to  be  held  by  them  as  joint  tenants  upon  certain  trusts  declared  in 
the  deed.  And  to  this  estate  is  annexed  a  power  to  be  exercised  by 
them  as  trustees  over  and  in  regard  to  the  property.  Such  a  power, 
according  to  all  the  authorities,  is  a  power  coupledl  with  an  interest 
and  as  such  may  be  exercised  by  the  surviving  trustee.  Co.  Lit.  113a, 
181b;  Hawkins  v.  Kemp,  3  East,  410;  Eaton  v.  Smith,  2  Beavan,  23; 
Flanders  v.  Clark,  1  Ves.  Sr.  9;  Clarke  v.  Parker,  19  Ves.  19. 

In  Watson  v.  Pearson,  2  Exch.,  594,  the  testator  devised  all  his 
property  to  his  wife  and  two  other  persons,  in  trust  to  collect  and  re- 
ceive the  rents  and  income  and  to  pay  the  same  to  his  wife  during 
her  life,  with  power  to  sell  and  mortgage  or  otherwise  manage  liis 
estate.  One  of  the  trustees  died  and  another  disclaimed  the  trust,  and 
the  power,  the  Court  said,  survived  to  the  wife  as  sole  trustee;  and 
one  of  the  powers  it  will  be  observed  was  to  sell  the  estate  if  the  trus- 
tees should  deem  it  expedient. 

And  again  in  Lane  v.  Debenham,  11  Hare,  188,  where  the  testator 
devised  his  estate  to  two  trustees  in  fee,  upon  trust,  as  soon  as  con- 
venient, to  raise  the  sum  of  £2,000.,  for  the  benefit  of  the  testator's 
daughter,  by  sale  or  otherwise,  at  the  discretion  of  the  trustees,  and 
one  of  the  trustees  died,  the  Vice  Chancellor  held,  the  power  survived, 
and  that  the  surviving  trustee  could  sell  and  convey  a  good  title. 

So  in  Gray  et  al.  v.  Lynch  and  McDonald,  8  Gill,  403,  where  the 
testator  devised  all  his  property  to  three  persons  in  trust  to  sell  the 
same  and  to  invest  the  proceeds  in  some  profitable  stock,  to  be  held  by 
them  in  trust  foi  the  sole  and  separate  use  of  the  testator's  two  daugh- 
ters, the  Court,  after  a  full  review  of  all  the  authorities,  decided  that 
the  power  thus  given  to  the  trustees  to  sell  was  a  power  coupled  with 
an  interest,  and  as  such  could  be  exercised  by  the  surviving  trustees. 
And  although  the  property  was  not  in  terms  devised  to  the  trustees 
as  joint  tenants,  yet  the  Court  said,  looking  to  the  nature,  objects  and 
provisions  of  the  will,  it  was  clearly  the  intention  of  the  testator  that 
the  power  given  to  the  trustees  should,  upon  the  death  of  one  of  them, 
be  exercised  by  the  survivor. 

In  this  case  the  estate  is  conveyed  to  the  trustees  as  joint  tenants, 
and  the  power  is  given  to  them  as  trustees  to  be  exercised  by  them  in 
regard  to  the  trust  estate,  and  such  a  power  is  according  to  all  the 
cases  a  power  coupled  with  an  interest,  and  survives  to  the  surviving 
trustees,®^ 

Decree  afHrmed. 

81  Attorney  General  v.  Glegg.  Ambler,  584  (1738) ;  Watson  v.  Pearson,  2 
Ex.  5M  (184S)  ;  Lane  v.  Debenham,  n  Hare.  188  (185.3);  Peter  v.  Reverly,  10 
Pet.  5.32,  9  L.  Ed.  522  (lS3Gt  :  Loriiii;  v.  Marsh,  G  Wall.  337.  18  L.  Ed.  802 
(1867) ;    Parsons   v.   Boyd,   20  Ala.   112   (1852) ;    Saunders   v.    Schmaelzle,    49 


478  TUE   DUTIES   OF  A   TRUSTEE.  (Ch.  5 

MORTTMF.R  v.  IRELAND. 

(In  Chancery,  before  Lord  Cotteubam,  Cbancellor,  1847.     11  Jurist,  721.) 

This  was  an  appeal  from  the  decision  of  Wigram  V.  C,  and  the 
point  in  question  was,  whether  under  the  following  circumstances,  the 
defendant  R.  Ireland  was,  or  was  not,  a  trustee  of  the  will  of  Thomas 
Bythesea   Mortimer.     The  testator  by  his  will,  dated  the   16th  July, 
1835,  after  giving  certain  pecuniary  legacies,  added:    "I  give  to  Mr. 
Thomas  Griffiths,  solicitor,  of  Cheltenham,  the  sum  of  i300.,  and  to 
Mr.  Pruen,  jun.,  his  partner,  £100.,  and  I  constitute  and  appoint  these 
two  gentlemen  my  executors  and  trustees."    T.  Griffiths  and  E.  Pruen, 
the  executors  thus  named,   both   survived  the  testator.     The   former 
died  on  17th  July,  1836,  without  having  proved  the  will,  or  in  any  way 
acted  in  the  trusts;    E.  Pruen  alone  proved  the  will,  and  acted.     On 
the  31st  March,  1846,  E.  Pruen  died,  having  by  his  will,  dated  the  11th 
December,   1841,  appointed  H.   Pruen  and  R.  Ireland  his  executors, 
and  having  by  a  codicil,  dated  the  13th  December,   1841,  given  and 
bequeathed  toR.  Ireland  all  messuages,  lands,  tenements  and  heredita- 
ments,  and   all  moneys   and   securities   for   money   vested  in   him   as 
trustee  or  surviving  trustee   for  any  person  or  persons  whomsoever, 
to  hold  to  him.  his  heirs,  executors,  administrators,  and  assigns,  upon 
and  subject  to  the  several  trusts  and  equities  affecting  the  same  her- 
editaments respectively,  on  which  the  same  were  vested  in  him.     Both 
executors  proved  the  will.    On  the  1st  September,  1846,  a  bill  was  filed 
by  the  parties  interested  under  the  will  of  T.  B.  Mortimer,  praying  that 
it  might  be  declared  by  the  Court,  whether  R.  Ireland,  under  and  by 
virtue  of  the  codicil  of  E.  Pruen,  had  or  had  not  been  duly  appointed 
a  trustee  of  the  trust  moneys  and  premises  of  T.  B.  Mortimer;    and 
that  it  might  be  referred  to  the  Master  to  appoint  a  new  trustee  or 
trustees  of  the  said  trust  moneys  and  premises,  to  act  with  or  in  the 
place  or  stead  of  R.  Ireland;   and  that  R.  Ireland  and  H.  Pruen  might 
be  ordered  to  pay,  transfer,  and  deliver  the  trust  moneys  and  premises, 
and  the  interest  received  thereon  and  the  securities  for  the  same,  to 
such  new  trustee  or  new  trustees ;    and  that,  if  necessary,  R.  Ireland 
and  II.  Pruen,  and  all  other  necessary  parties,  might  be  directed  to 
join  in  such  instrument  or  instruments  as  might  be  necessary  for  as- 
signing and  releasing  the  trust  moneys  and  premises,  and  the  securities 
for  the  same,  to  such  new  trustee  or  trustees,  upon  the  trusts  of  the 
will  of  the  testator,  Thomas  Bythesea  Mortimer.     On  the  27th  May, 
1847,  the  cause  came  on  before  the  Vice  Chancellor,  when  His  Honor, 
without  prejudice  to  any   questions  in  the  cause,  referred  it  to  the 
Master  to  approve  of  two  new  trustees,  with  liberty  to  R.  Ireland  to 
propose  himself,  reserving  further  directions   and  costs,   and   giving 

Cal.  59  (1874);  Gray  v.  Lynch,  8  Gill  (M(L)  403  (1840);  Franklin  v.  Osgood, 
2  Johns.  Ch.  (N.  Y.)  1,  7  Am.  Dee.  513  (ISKJ),  athrmed  14  John.  (N.  Y.)  527 
(ISlTj;    Belmont  v.  Ol'.rien,  12  N.  Y.  394  (1855). 


Sec.  G)  WHO   MAY   EXECUTE   A  TRUST.  479 

liberty  to  the  parties  to  apply.     6  Hare,  196.     From  this  decision  the 
defendant  R.  Ireland  now  appealed  to  the  Lord  Chancellor. 

Lord  ChanceIvLOR.  The  argument  amounts  to  this,  that  the  ex- 
ecutor of  a  trustee  is  of  right  a  trustee.  Whether  the  property  is  real 
or  personal  estate  is  no  matter,  for  suppose  a  man  appoints  a  trustee 
of  real  and  personal  estate  simpliciter,  addling  nothing  more,  this  can- 
not make  his  representative  a  trustee.  The  case  before  the  Master 
of  the  Rolls  (Titley  v.  Wolstenholme,  7  Beav.  425)  was  quite  different, 
for  there  the  Court  proceeded  on  the  intention  manifested,  that  the 
trust  should  be  performed  by  the  assigns  of  the  survivor.  The  property 
may  vest  in  the  representative,  but  that  is  quite  another  question  from 
his  being  trustee.  The  testator  may  select  the  heir  to  succeed  to  the 
trust,  but  he  only  can  do  so.  Here  there  are  two  persons  appointed 
trustees ;  both  die ;  thus  there  is  no  trustee,  and  it  is  for  the  Court  to 
appoint  new  ones.  The  testator  having  given  no  indication  of  inten- 
tion, the  Court  must  refer  it  to  the  Master.  The  decree  of  the  Vice 
Chancellor  is  right  in  its  form.  The  appeal  must  be  dismissed  with 
costs. ®^ 


COOKE  V.  CRAWFORD. 

(In    Chancery,    before    Sir    Lancelot    Shadwell,    Vice    Chancellor,    1S42.      13 

Simons,  91.) 

Bill  by  the  devisee  of  William  Hall,  the  younger,  for  specific  per- 
formance of  a  contract  for  purchase.*^ 

The  Vice  Chancellor.  I  am  of  opinion  that  the  demurrer  in  this 
case,  must  be  allowed ;  for  it  is  plain  that  the  persons  whom  the  sur- 
viving trustee  has  thought  proper  to  appoint  to  execute  the  trusts  of 
the  testator's  will,  are  persons  to  whom  no  authority  w'as  given,  for 
that  purpose,  by  the  testator,  and  there  is  no  case  in  which  a  person 
not  mentioned  by  the  party  creating  the  trust,  has  been  held  entitled 
to  execute  it. 

I  have  always  understood,  ever  since  the  point  was  decided  in 
Hawkins  v.  Kemp,  3  East,  410  (or  rather  was,  as  the  judges  said  in 
that  case,  properly  abandoned  by  the  defendant's  counsel,  as  not  cap- 
able of  being  contended!  for),  that,  where  two  or  more  persons  are 
appointed  trustees,  and  all  of  them,  except  one,  renounce,  the  trust 
may  be  executed  by  that  one.  That  decision,  if  it  may  be  so  called, 
has  been  approved  of  by  Lord  Eldon  and  other  judges. 

Now,  in  the  present  case,  the  testator  devised  his  estate  in  the 
County  of  Lincoln,  to  his  son,  William  Hall,  and  his  friends,  James 
Burkitt  and  William  Woolley,  upon  trust  that  they  and  the  survivors 

82  See  In  re  Ingleby,  L.  R.  13  Ir.  32G  (1883);  In  re  Crunden  and  Meux's 
Contract,  L.  R.  1  Cb.  (J70  (11XJ9). 

83  The  statement  of  facts  is  omitted. 


480  Tiiio  nrriKS  of  a  tuustel:.  (Ch.  5 

or  survivor  of  them  or  the  lieirs  of  said  survivor,  should,  as  soon  as 
conveniently  might  be  after  his  decease,  but  at  their  discretion,  sell 
his  estates  either  by  public  auction  or  by  private  contract,  and  either 
altogether  or  in  parcels,  for  such  price  or  prices  as  they  should  con- 
sider the  value  thereof  ;  and,  for  the  purpose  of  effecting  any  and 
every  such  sale,  he  has  empowered  his  trustees  and  their  heirs  to 
enter  into  and  execute  all  necessary  contracts,  conveyances  and  other 
assurances  to  or  in  favor  of  the  purchaser  or  purchasers  of  his  estates. 
Then  he  proceeds  to  declare  that  the  written  receipt  or  receipts  of 
the  trustees,  or  of  the  survivors  or  survivor  of  them,  or  the  heirs, 
executors,  or  administrators  of  such  survivor,  shall  be  good  dis- 
charges to  the  i)urchasers. 

It  is  observable  that  the  testator  has  not  used  the  word  "assigns" 
either  in  the  clause  in  which  he  has  created  the  trust  for  sale,  or  in 
either  of  the  two  clauses  that  follow  it,  in  which  he  points  out  the 
machinery  by  which  the  sale  is  to  be  effected,  lie  does  not  introduce 
that  word  until  he  begins  to  speak  of  something  that  is  to  be  done 
after  the  sale  has  taken  place,  that  is,  until  he  declares  the  trusts 
upon  which  the  proceeds  of  the  sale  are  to  be  held.  Therefore,  it  is 
plain  that,  when  William  Hall,  who,  by  the  disclaimer  of  Burkitt  and 
Woolley,  became  the  sole  trustee,  thought  fit  to  devise  the  legal 
estate  that  was  vested  in  him,  he  did  an  act  which  he  was  not  author- 
ized to  do. 

And  here  I  must  enter  my  protest  against  the  proposition  which 
was  stated  in  the  course  of  the  argument,  that  it  is  a  beneficial  thing 
for  a  trustee  to  devise  an  estate  which  is  vested  in  him  in  that 
character.  My  opinion  is  that  it  is  not  beneficial  to  the  testator's 
estate  that  he  should  be  allowed  to  dispose  of  it  to  whomsoever  he 
may  think  proper;  nor  is  it  lawful  for  him  to  make  any  disposition 
of  it.  He  ought  to  permit  it  to  descend  ;  for,  in  so  doing,  he  acts  in 
accordance  with  the  devise  made  to  him.  If  he  devises  the  estate,  I 
am  inclined  to  think  that  the  court,  if  it  were  urged  so  to  do,  would 
order  the  costs  of  getting  the  legal  title  out  of  the  devisee,  to  be  borne 
by  the  assets  of  the  trustee.  I  see  no  substantial  distinction  between 
a  conveyance  by  act  inter  vivos,  and  a  devise ;  for  the  latter  is  nothing 
but  a  post  mortem  conveyance;  and,  if  the  one  is  unlawful,  the  other 
must  be  unlawful. 

It  appears  to  me  that,  as  my  decision  in  Bradford  v.  Jjelfield,  2  Sim. 
264,  has  been  acquiesced  in,  the  question  raised  by  the  demurrer  in 
this  case,  is  concluded  by  that  decision :  but,  if  it  is  not,  then  the 
authority  of  Townsend  v.  Wilson,  1  B.  &  Ad.  608,  and  3  Madd.  261, 
is  binding  on  the  point.  And  my  opinion  is  that  the  plaintiffs,  who 
may  be  properly  called  the  assigns  of  William  Hall,  the  sole  acting 
trustee  of  the  testator's  will,  are  not  the  persons  to  execute  the  trusts 
of  that  will;    consequently  I  shall  allow  the  demurrer.^'* 

84  Contra:   Osborne  to  Rowlott,  L.  R.  13  Ch.  Div.  774  (ISSO). 


Sec.  6)  WHO   MAY   EXECUTE   A   TRUST.  481 

TITLEY  V.  WOLSTEXHOLME. 

(In  Chancery  before  Lord  Langdale,  Master  of  the  Rolls,  1844.    7  Beavan,  42.').) 

Tnu  Master  of  the  Rolls.® ^  Robert  Tebbutt  was  surviving  trus- 
tee and  executor  under  the  will  of  Richard  Titley.  By  his  will  dated 
the  30th  of  July,  1838,  Robert  Tebbutt  gave,  devised,  and  bequeathed 
unto  the  use  of  Edward  Titley,  David  Waddington,  and  Charles  Wol- 
stenholme,  their  heirs,  executors,  administrators  and  assigns,  all  the 
trust  estates,  moneys,  and  premises  vested  in  him  as  surviving  devisee 
in  trust  and  executor,  named  and  appointed  in  and  by  the  last  will 
of  Richard  Titley,  to  hold  the  same,  to  the  use  of  the  said  Edward 
Titley,  David  Waddington,  and  Charles  Wolstenholme,  their  heirs, 
executors,  administrators,  and  assigns,  according  to  the  nature  and 
quality  of  the  same  premises  respectively,  upon  the  same  trusts,  and 
to  and  for  the  same  ends,  intents,  and  purposes,  and  under  and  sub- 
ject to  the  same  powers^  provisos,  and  declarations  as  are  limited, 
expressed,  declared,  and  contained  of  and  concerning  the  said  estates, 
moneys,  and  premises,  in  and  by  the  said  will  of  the  said  Richard  Tit- 
ley, or  as  near  thereto  as  circumstances  would  admit. 

The  question  in  this  cause  is,  whether  the  devisees  in  trust,  under 
the  will  of  Robert  Tebbutt  have,  by  virtue  of  the  devise,  lawfully  be- 
come trustees  of  the  estates  devised  by  the  will  of  Richard  Titley.  It 
is  admitted  that  the  legal  estates  and  interests  which  were  vested  in 
Robert  Tebbutt,  as  surviving  trustee  and  executor,  have,  by  virtue  of 
his  will,  become  vested  in  his  devisees  and  legatees ;  that  they,  as 
such  devisees  and  legatees,  are  under  an  obligation  so  to  dispose  of 
such  legal  estates  and  interests,  that  the  cestuis  que  trust  under  the 
will  of  Richard  Titley  may  have  the  benefit  of  them ;  but  it  is  alleged, 
that  they  have  not,  themselves,  any  legal  authority  to  execute  the 
trusts,  and  consequently,  that  new  trustees  ought  to  be  appointed  for 
the  purpose  by  this  court. 

Richard  Titley,  the  testator,  by  his  will,  dated  the  16th  of  January, 
1828,  gave,  devised,  and  bequeathed  to  his  wife,  his  son  Richard,  and 
Robert  Tebbutt,  their  heirs,  executors,  administrators,  and  assigns, 
all  his  real  estate  and  all  his  personal  estate;  to  hold  the  same  real 
and  personal  estate,  to  the  use  of  his  wife,  his  son  Richard,  and 
Robert  Tebbutt,  their  heirs,  executors,  administrators,  and  assigns, 
according  to  the  nature  thereof,  to,  for,  and  upon  the  several  uses, 
trusts,  ends,  intents,  and  purposes  in  his  will  after  mentioned  and  de- 
clared.    *     *     * 

The  testator  has  not,  by  his  will,  given  any  power  to  appoint  new 
trustees,  and  it  is  thereupon  argued,  justly,  that  the  trustees,  or  the 
survivors  or  survivor  of  them,  could  not,  by  any  assignment  or  act 

8  5  The  statement  of  facts  is  abridged  and  part  of  the  opinion  is  omitted. 
Ken.Tr.— 31 


482  THE   DUTIKS   OF   A   TUI'STRE.  (Ch.  5 

inter  vivos,  relieve  themselves  from  the  resjioiisibililies  and  duties  of 
the  trust;  but  it  is  further  contended,  that  the  same  disability  attends 
any  assignment  by  way  of  devise  or  be(iuest,  and  that  although  the 
estate  and  property  may  be  vested  in  the  devisees  or  legatees  of  the 
surviving  trustee,  the  duties  and  the  responsibilities  attending  the  ex- 
ecution of  the  trusts  remain  in  the  legal  representatives,  real  and  pen 
sonal.  of  the  surviving  trustee.     *     *     * 

When  a  trust  estate  is  limited  to  several  trustees,  and  the  survivors 
and  survivor  of  them,  and  the  heirs  of  the  survivor  of  them,  and  no 
power  of  appointing  new  trustees  is  given,  we  observe  a  personal 
confidence  given,  or  at  least  probably  given,  to  every  one  of  the  several 
trustees.  As  any  one  may  be  the  survivor,  the  whole  power  will  event- 
ually come  to  that  one.  and  he  is  entrusted  with  it,  and  being  so,  he  is 
not,  without  a  special  power,  to  assign  it  to  any  other ;  he  cannot, 
of  his  own  authority,  during  his  own  life,  relieve  himself  from  the 
duties  and  responsibilities  which  he  has  undertaken.     *     *     * 

We  have,  in  this  will,  expressions  which  clearly  show  that  the  testa- 
tor intended  the  trust  to  be  performed  by  the  "assigns"  of  the  sur- 
viving trustee;  and  in  construing  the  will,  we  must,  if  practicable, 
ascribe  a  rational  and  legal  effect  to  every  word  which  it  contains. 
We  cannot,  consistently  with  the  rules  of  this  court,  consider  the  word 
"assigns"  as  meaning  the  person  who  may  be  made  such  by  the  spon- 
taneous act  of  the  surviving  trustee  to  take  effect  during  his  life ;  but 
there  seems  nothing  to  prevent  our  considering  it  as  meaning  the  per- 
sons who  may  be  made  such  by  devise  and  bequest ;  and  if  we  do  not 
consider  the  word  "assigns"  as  meaning  such  persons,  it  would,  in 
this  will,  have  no  meaning  or  effect  whatever. 

For  these  reasons,  and  under  the  circumstances  of  this  case,  I  am 
of  opinion,  that  the  devise  and  becjuest  made  by  Robert  Tebbutt  of 
the  trust  estates  held  by  him  under  the  will  of  Richard  Titley,  was  a 
good  and  valid  devise  and  bequest ;  and  that  the  estates  thereby  given 
to  Edward  Titley,  David  Waddington,  and  Charles  Wolstenholme 
are  vested  in  them,  on  such  of  the  trusts  thereof  declared  by  the  will 
of  Richard  Titley,  as  now  remain  to  be  performed.^" 


In  re  MORTON  and  IIALLETT. 

(In  the  (\iurt  of  Apix'ul,   ISSO,  Law  Reports,  15  Cliaiu-ery  Division,   143.) 

John  Cole,  by  will,  dated  the  28th  of  May,  1852,  devised  to  H.  N. 
Wixley  and  George  Morton,  and  their  heirs  all  his  freehold  and  copy- 
hold estates  upon  trust  for  Margaret  May  during  her  life,  and  then 
to  sell  the  same  and  stand  possessed  of  the  proceeds  upon  trust  to  ])ay 
and  divide  the  same,  among  the  children  of  certain  persons  named. 

80  See  Hall  v.  May,  3  K.  &  J.  585  (1857). 


Sec.  6)  WHO   MAY    EXECUTE   A   TUIST.  483 

The  testator  died  in  September,  1852,  and  his  will  was  proved  by  the 
two  executors.  The  surviving  trustee  died  intestate  in  1859.  The 
tenant  for  life  having  died,  the  customary  heir  of  the  surviving  trus- 
tee was  admitted  to  the  copyholds,  and  entered  into  a  contract  for  the 
sale  of  a  part  of  them.  The  question  whether  he  could  make  a  good 
title  came  before  the  Master  of  the  Rolls  (Sir  George  Jessel)  on  an 
adjourned  summons,  under  the  Vendor  and  Purchaser  Act,  1874,  on 
the  10th  of  February,  1880.  He  decided  that  the  customary  heir  could 
make  good  title,  and  dismissed  the  summons  without  costs.  The 
purchaser  appealed. 

James  L.  J.^^  I  am  of  opinion  that  the  appeal  must  be  dismissed. 
I  agree  with  the  Master  of  the  Rolls  that  if  an  estate  is  given  to  A  and 
B  and  their  heirs  on  trust  to  sell,  the  heir  of  the  survivor  of  A  and 
B  is  a  trustee  under  the  will,  takes  the  estate  on  trust  for  sale,  and 
can  sell  it.     *     *     * 

Baggallay,  L.  J.  I  am  of  the  same  opinion,  and  have  only  to  add 
that  if  it  had  been  necessary  to  give  any  opinion  on  the  point  arising 
in  Osborne  to  Rowlett,  13  Ch.  D.  774,  I  should  have  taken  time  to 
consider  whether  that  decision  ought  to  be  followed.  As  at  present 
advised,  I  am  not  prepared  to  dissent  from  Cooke  v.  Crawford  [13 
Sim.  91]. 

Bramwell,  L.  J.,  concurred. 

James,  L.  J.  I  also  wish  to  add  that  I  am  not  prepared!  to  say  that 
Cooke  v.  Crawford  is  to  be  considered  as  overruled.®'* 


BAYLEY  V.  MANSELL. 

(In  Chancery,  before  Sir  John  Leach,  Vice  Chancellor,  1819.    4  Maddock,  22G.) 

On  a  bill  filed  for  the  substitution  of  new  trustees,  a  decree  was 
made  accordingly,  and  for  a  conveyance  to  them.  Mr.  Shadwell  sug- 
gested, that  it  would  be  convenient,  by  a  clause  in  the  conveyance,  to 
enable  the  new  trustees  to  appoint  others  in  their  stead,  if  it  should 
become  necessary ;  but  the  Vice  Chancellor  refused  to  direct  the  in- 
sertion of  such  a  clause,  there  being  no  provision  to  that  effect  in  the 
trust  deed. 

8  7  A  part  of  the  opinion  of  James,  L.  J.,  is  omitted. 

S8  See.  also,  In  re  Cunningham,  L.  R.  (1891)  2  Ch.  567. 

The  trust  in  such  a  ca.se  cannot  be  executed  by  an  assignee  of  the  trustee 
by  a  conveyance  inter  vivos.  Y.  B.  15  H.  vii :  Bradford  v.  Belfield,  2  Sim.  204 
(1828);  Titley  v.  Wolstenholme,  7  Beav.  425,  434,  435,  43(i  (1844);  Hall  v. 
Mav.  3  K.  &  J.  585  (1857) ;  Whittelsey  v.  Hughes.  39  Mo.  13  (1866)  ;  Suarez 
V.  Pumpelly,  2  Sandf.  Ch.  (N.  Y.»  336  (1845);  Seely  v.  Hills,  49  Wis.  473,  5 
N.  W.  940  (1880).  Nor  bv  a  testamentary  assignee  of  the  surviving  trustee. 
Coolve  V.  Crawford,  13  Sim.  91  (1842) ;  Wilson  v.  Bennett,  5  De  G.  &  Sm.  475 
(1852) ;  Hall  v.  May.  3  K.  &  J.  585,  587  (1857)  ;  Stevens  v.  Austen,  3  E.  & 
E.  685  (1861);    Druid  Park  Heights  Co.  v.  Oettinger,  53  Md.  46,  59  (1880). 


4Si  Tin:  DL'TiK.s  of  a  tuustee.  (Ch.  5 

WITTTK  V.  WHITE. 

(Tn  rimnoorv,  before  Lord  Laimdah'.   Masicr  of  the  Rolls,  1842.     5  Beavan, 

This  was  a  bill  for  the  appointment  of  two  new  trustees,  in  the 
jilace  of  trustees  appointed  In-  the  testator's  will,  but  who  had  died 
in  his  lifetime.  The  will  contained  a  power  for  the  surviving  or  con- 
tinuin^tr  trustees  or  trustee,  or  the  executors  or  administrators  of  the 
last  surviving^  or  continuing-  trustee,  to  appoint  new  trustees  in  the 
place  of  trustees  dying,  desiring  to  be  discharged,  etc. 

Mr.  R.  W.  E.  Forster  asked  that  the  Master  might  insert  a  power 
authorizing  the  trustees  now  to  be  appointed,  to  appoint  future  new 
trustees ;    he  referred  to  Joyce  v.  Joyce,  2  Moll.  276,  as  an  authority. 

Thk  Master  of  the  Rolls  said,  he  would  look  at  the  case  cited, 
but  he  saw  no  objection  to  what  was  proposed  to  be  done. 

Mis  Lordship  ordered  that  the  Master,  in  settling  the  conveyance, 
should  be  at  liberty,  if  he  should  think  fit,  to  insert  the  power  to  ap- 
point new  trustees. 


ANONYMOUS. 

(Cited  from  Bradwell  v.  Catchpole,  .3  Swanston,  78,  note  [a],  pn.iie  79.) 

Sir  J.  Jekyll  cited  a  late  case  at  the  Rolls,  where  one  who  was  a 
trustee  for  a  woman  and  her  children  did  with  the  woman's  consent, 
assign  his  trust  to  another  who  was  guilty  of  a  breach  of  trust,  and 
the  first  trustee  decreed  to  make  satisfaction,  because  trustees  can- 
not divest  themselves  of  their  trust  at  their  pleasure.^ ^ 


HULME  v.  IIULME. 

(In  Chancery,  before  Sir  John  Leach,  Master  of  the  Rolls,  1833.     2  Mylne  & 

Keen,   682.) 

On  the  26th  of  July,  1810,  articles  of  settlement,  in  contemplation 
of  an  intended  marriage  between  James  Hulme  and  Ellen  Docksey, 
were  executed  for  conveying  and  assigning  in  trust  to  Thomas  Stafiford 
and  John  Braithwaite  certain  real  estates,  as  soon  as  Ellen  Docksey 
should  attain  the  age  of  twenty-one,  together  with  a  sum  of  £500. 
in  money,  to  the  use  of  the  intended  wife  for  life,  remainder  to  the 
intended  husband  for  life,  remainder  to  the  children  of  the  marriage, 
with  an  ultimate  limitation  to  the  intended  wife  in  fee.  The  mar- 
riage was  shortly  after  solemnized.  The  wife  attained  her  age  of 
twenty-one  in  November,  1813,  when  the  articles  were  carried  into 
execution   by    indentures    of    settlement,   dated   the   2nd    and   3rd   of 

80  See  llardwick  v.  .Myiid,  1  Anstnither,  109  (1793). 


Sec.  6)  WHO   MAY   EXECUTE   A   TRUST.  485 

November  in  that  year.  On  the  same  3rd  day  of  November  an  ap- 
pointment, which  was  prepared  by  the  same  solicitor  who  prepared 
the  settlement,  was  executed  by  the  husband  and  wife,  by  which  Pow^- 
ell,  one  of  the  defendants,  who  was  a  private  sailor,  was  named  as  a 
single  trustee  in  the  place  of  Stafford  and  Braithwaite,  who  were  al- 
leged to  be  desirous  of  being  discharged  from  the  trust ;  and  the 
£500.  having  been  invested  in  the  purchase  of  three  per  cent,  con- 
solidated annuities,  the  stock  was  transferred  by  Stafford  and  Braith- 
waite to  the  new  appointed  single  trustee,  and  by  him  immediately 
sold  out  and  handed  over  to  the  husband,  who  shortly  afterwards  be- 
came bankrupt. 

The  bill  was  filed  by  the  children  of  the  marriage  against  the  new 
trustee,  and  against  Stafford,  praying  a  retransfer  of  the  stock  which 
had  been  so  transferred  to  the  husband.  Braithwaite,  the  other  trus- 
tee, died  insolvent,  and  his  representatives  were  not  made  parties  to 
the  suit.  It  appeared,  upon  reference  to  the  terms  of  the  settlement, 
that  it  was  the  clear  intention  of  the  parties  that  there  should  in  all 
times  be  two  trustees  of  the  property  comprised  in  the  settlement; 
andl  it  was  adm.itted  by  the  counsel  for  the  defendant  Stafford  that 
this  was  the  effect  of  the  settlement. 

The  Master  oif  the  Rolls.  The  decree  must  be  according  to  the 
prayer  of  the  bill,  against  the  new  trustee  and  the  defendant  Stafford. 
The  concurrence  in  the  appointment  of  a  single  trustee,  with  the  trans- 
fer of  the  stock  by  Stafford  and  Braithwaite  to  such  single  trustee, 
was  a  plain  breach  of  trust  on  their  part,  and  made  them  respon- 
sible for  the  stock  so  transferred.  This  being  the  case,  it  is  unneces- 
sary to  direct  those  inquiries  for  the  examination  of  the  solicitor  who 
prepared  the  settlement  and  new  appointment  of  trustees,  which  would 
otherwise  have  been  necessary  in  order  to  discover  who  were  the  parties 
and  privies  to  the  fraud  thus  committed. 


BRICKENKAMP  v.  REES. 

(Supreme  Court  of  Missouri,  1879.     69  Mo.  426.) 

Hough.  J.  The  plaintiff's  intestate  executed  and  delivered  to  the 
defendant,  Rees,  as  trustee,  a  deed  of  trust  of  certain  land  in  Frank- 
lin County,  to  secure  the  payment  of  certain  notes  to  the  defendant 
Jones,  the  cestui  que  trust  in  said  deed.  After  default  in  the  pay- 
ment of  the  notes,  and  upon  the  request  of  the  defendant  Jones,  the 
holder  thereof,  and  after  due  notice  given  by  the  trustee  of  the  time, 
terms  and  place  of  sale,  and  of  the  property  to  be  sold,  said  land  was 
sold,  and  the  defendant  Jones  became  the  purchaser.  Jones  having 
refused  to  pay  the  purchase  money,  the  present  suit  was  instituted 
for  specific  performance.  The  separate  answers  of  the  defendants 
admitted  the  sale  and  purchase  by  Jones;    and,  with  other  defenses 


486  THE   DITTIES   OF   A  TRUSTEE.,  (Ch.  5 

in  avoidance  thereof,  averred  that  the  defendant,  Rees,  was  not  present 
at  the  auction.  The  Circuit  Court  found  the  issues  for  the  defendant, 
and  dismissed  the  plaintiff's  petition.  This  judgment  was  affirmed 
by  the  court  of  appeals  and  the  plaintifif  has  brought  the  case  here 
by  a  writ  of  error. 

The  sale  took  place  at  the  courthouse  door  in  Union,  the  auctioneer 
or   crier   standing  in   the   door,   and   the   persons  attending  the   sale, 
eight  or  ten  in  number,  being  inside  the  hall.    The  testimony  as  to  the 
presence  of  the  trustee   during  the  sale  was  conflicting.     Four  wit- 
nesses testified  that  hd  was  present,  and  three,  including  the  trustee, 
testified  that  he  was  not.     It  is  conceded  that  he  was  present  at  the 
courthouse  door  before  the  sale  began,  and  that  after  the  sale  was 
over  he  went  with  the  crier  and  the  purchaser,  Jones,  into  the  col- 
lector's office  a  few   feet  distant  from  the  'door  where  the  sale  was 
made.     The  trustee  testified  that  during  the  sale  he  was  not  at  the 
courthouse,  but  in   a  saloon  on  the  opposite  side  of  the  street,  and 
that  he  was  not  present  at  the  sale  because  he  did  not  think  it  was 
necessary  for  hir,i  to  be  there.     Some  of  the  witnesses  who  testified 
that  he  was  present  were  bidders,  and  were  more  observant,  doubt- 
less, of  other  matters  than  of  the  presence  or  absence  of  the  trustee. 
The   positive    testimony   of    the   trustee,    who,    so    far   as   the   record 
shows,    is   entirely  disinterested,   must,    under   the   circumstances,   be 
regarded  as  conclusive  of  his  absence,  especially  as  he  is  corroborated 
in  this  particular  by  the  crier,  who,  in  soliciting  bids,  would  very  nat- 
urally observe  the  entire  assemblage,  in  as  much  as  it  was  a  small  one. 
The  counsel  for  the  plaintiff  contends,  however,  that  such  absence 
from  the  place  of  sale  as  that  testified  to  by  the  trustee,  will  not  avoid 
the  sale ;   that  he  was  present  at  its  conclusion  to  do  all  that  he  could 
have  done,  had  he  been  present  at  the  actual  crying  of  the  sale.    In  this, 
we  think,  the  learned  counsel  for  the  plaintifif  is  in  error.     It  was  the 
duty  of  the  trustee  to  be  present  during  the  crying  of  the  sale,  to 
observe    the   progress    thereof,   protect   the    interests   of   the    parties 
concerned,  to  reject  fraudulent  bids  made  to  frustrate  the  sale,  and, 
if  necessary,  to  adjourn  the  sale.    Graham  v.  King,  50  Mo.  22,  11  Am. 
Rep.  401;    Bales  v.  Perry,  51  Mo.  452;    Vail  v.  Jacobs,  62  Mo.  130; 
Perry  on  Trusts,  §§  779,  780;   Gray  v.  Veirs,  33  Md.  18.    If,  however, 
the  auctioneer  may  lawfully  make  a  sale  in  the  absence  of  the  trustee, 
and  should,  during  his  absence,  accept  a  bid,  declare  the  person  making 
the  same  to  be  the  purchaser,  and  by  a  proper  memorandum  in  writing 
complete  the  sale,  it  would  be  out  of  the  power  of  the  trustee  to  set 
such  sale  aside.     White  v.  Watkins,  23   Mo.  427.     And  in  this  way 
the  trustee  might  substitute  the  auctioneer  for  himself  in  the  exercise 
of  that  very  discretion  which  the  law  declares  is  a  personal  trust  and 
cannot  be  delegated  by  him.     The  trustee,  himself,  should  be  present 
to  sanction  the  acceptance  of  the  bid  by  the  auctioneer  before  any 
binding  memorandum  of  sale  is  made.     Whether  the  sale  was,  in  fact, 
judiciously   conducted   and  advantageous  in  its  terms  to  the   debtor. 


Sec.  6)  WHO   MAY   EXECUTE   A   TRUST.  487 

are  questions  not  involved  in  the  present  inquiry.     Bales  v.  Perry,  51 
Mo.  452. 

The  judgment  of  the  court  of  appeals  will  be  affirmed.®" 


PARKER.  Trustee,  v.  JOHNSON  and  Others. 
(Court  of  Chancery  of  New  Jersey,  1883.     37  N.  J.  Eq.  367.) 

On  exceptions  to  Master's  report. 

The  Chancellor  [Theodore  Runyon].  »^  The  ninth  exception  is 
that  the  Master  has  allowed  the  trustee  $238.86  commissions  on  the 
rents  collected,  and  has  allowed  him  in  addition  five  per  cent  on  the 
sums  disbursed;  thus  subjecting  the  rents  to  fifteen  per  cent  com- 
missions for  collections  and  disbursements. 

A  trustee  may  employ  necessary  assistants  in  executing  his  trust. 
and  pay  them.  He  may  employ  agents,  collectors,  accountants  and 
other  persons  properly  employed  in  similar  affairs.  Perry  on  Trusts, 
§  912;  Wilkinson  v.  Wilkinson,  2  Sim.  &  Stu.  237.  No  complaint 
is  made  in  this  case  that  the  allowances  to  the  agent  and  trustee  are 
too  great  for  the  services  and  they  do  not  appear  to  be  so.     *     *     * 


Ex  parte  BELCHIER. 

Ex  parte  PARSONS. 

(In  Chancery,  before  Lord  Hardwicke,  Chancellor,  1754.     1  Ambler,  218.) 

On  cross-petitions,  and  exceptions  to  the  assignment  of  commission- 
ers of  bankrupt,  the  case  appeared  to  be : 

Mrs.  Parsons  was  chosen  assignee  of  the  effects  of  her  son,  John 
Parsons,  a  bankrupt ;  and  there  being  a  large  quantity  of  tobacco  to 
be  sold,  she  employed  one  Wiggan,  a  broker,  to  sell  the  same  by  auction. 

9  0  See  Taylor  v  Hopkins,  40  111.  442  (1866) ;  Grover  v.  Hale,  107  111.  638 
(1883)  •  Graham  v.  King,  50  Mo.  22,  11  Am.  Rep.  401  (1861)  ;  Howard  v. 
Thornton,  50  Mo.  201  (1862);  Bales  v.  Perry,  51  Mo.  44!)  (1863);  Vail  v. 
Jacobs  62  Mo.  130  (1874) ;  Spurlock  v.  Sproule,  72  Mo.  503  (1880)  ;  Powell  v. 
Tuttle,'  3  N.  Y.  396  (1850) ;  Fuller  v.  O'Neal,  69  Tex.  349,  6  S.  W.  181.  5  Am. 
St.  Rep.  59  (1887) ;  s.  c,  82  Tex.  417,  18  S.  W.  479,  481  (1891) ;  Smith  v. 
Lowther,  35  W.  Ya.  300,  13  S.  E.  999  (1891). 

Contra:  Connollv  v.  Belt,  5  Cranch,  C.  C.  405:  Fed.  Cas.  No.  3,117  (1838); 
Smith  V.  Black,  115  U.  S.  308,  6  Sup.  Ct.  50,  29  L.  Ed.  398  (1885);  Johns  v. 
Sergeant,  45  Miss.  ;332  (1871)  ;  Tyler  v.  Herring,  67  Miss.  169.  6  South.  840.  19 
Am.  St.  Rep.  263  (1889) ;   Dunton  v.  Sharpe,  70  Miss.  850,  12  South.  800  (189.3). 

Trustees  may,  however,  delegate  the  performance  of  purely  ministerial 
acts.  Gillespie  v.  Smith.  29  111.  473,  81  Am.  Dec.  328  (1863) ;  Telford  v.  Bar- 
ney, 1  G.  Greene  (Iowa)  575,  591  (1848) ;  Keim  v.  Lindley  (N.  J.)  30  Atl.  1063, 
1074  (1895);  Hawlev  v.  James,  5  Paige  (N.  Y.)  318.  487  (1835);  Blight  v. 
Schenck,  10  Pa.  285,  51  Am.  Dec.  478  a849) ;  Bohlen's  Estate,  75  Pa.  304,  317 
(1874). 

9  1  Only  a  part  of  the  opinion  is  given. 


488  Tin:  ih'tiks  of  a  tuustee.  (Ch.  5 

The  money  was  paid  to  the  broker,  and  after  remaining-  in  his  hands 
for  about  ten  days,  he  (Hed  insolvent ;  and  the  commissioners  were 
of  the  opinion  the  assignee  ought  to  bear  the  loss. 

It  was  proved  by  several  persons'  depositions,  that  it  is  the  common 
method  of  business,  to  sell  mercantile  goods  by  auction,  and  to  em- 
ploy a  broker,  and  for  him  to  receive  the  money. 

Lord  IIardwicke,  Chancellor,  after  argument  at  bar:  If  Mrs.  Par- 
sons is  chargeable  in  this  case,  no  man  in  his  senses  would  act  as  as- 
signee under  commissions  of  bankrupt.  This  court  has  laid  down  a 
rule  with  regard  to  the  transactions  of  assignees,  and  more  so  of  trus- 
tees, so  as  not  to  strike  a  terror  into  mankind  acting  for  the  benefit  of 
others,  and  not  for  their  own. 

Courts  of  law  and  equity  too,  are  more  strict  as  to  executors  and 
administrators ;  but  where  trustees  act  by  other  hands,  either  from 
necessity,  or  conformable  to  the  common  usage  of  mankind,  lhc\-  are 
not  answerable  for  losses. 

There  are  two  sorts  of  necessities:  1st.  Legal  necessity;  2nd.  Moral 
necessity. 

As  to  1st:  A  distinction  prevails  where  two  executors  join  in  giving 
a  discharge  for  money  and  one  of  them  only  receives  it,  they  are  both 
answerable  for  it,  because  there  is  no  necessity  for  both  to  join  in 
the  discharge,  the  receipt  of  either  being  sufficient ;  but  if  trustees 
join  in  giving  a  discharge,  and  one  only  receives,  the  other  is  not  an- 
swerable, because  his  joining  in  the  discharge  was  necessary. 

2d.  Moral  necessity,  from  the  usage  of  mankind.  If  trustee  acts 
as  prudently  for  the  trust  as  for  herself,  and  according  to  the  usage 
of  business. 

If  trustee  appoints  rents  to  be  paid  to  a  banker  at  that  time  in  credit, 
and  the  banker  afterwards  breaks,  the  trustee  is  not  answerable. 

So  in  the  employment  of  stewards  and  agents :  The  receiver  of  Lord 
Pl_\ni()uth's  estate  took  bills  in  the  country,  of  persons  who  at  the  time 
were  reputed  of  credit  and  substance,  in  order  to  return  the  rents  to 
London :  the  bills  were  protested,  and  the  money  lost,  and  yet  the 
steward  was  excused,  3  Atk.  480.  None  of  these  cases  are  on  account 
of  necessity,  but  because  the  persons  acted  in  the  usual  method  of  busi- 
ness. 

Objection :  The  goods  were  in  a  warehouse,  but  it  does  not  api)ear 
the  broker  had  a  key  to  the  warehouse ;  if  he  had,  he  would  then  be 
in  possession  of  the  goods;  and  if  he  had  in  such  case  embezzled  any 
of  them,  Mrs.  Parsons  would  not  be  liable  for  such  loss.  If  she  would 
not  in  such  case  of  embezzlement,  no  more  reason  that  she  should  in 
this  case. 

Objection:    Mrs.  Parsons  herself  might  have  received  the  money. 

It  is  not  usual  to  receive  the  money  one's  self ;  a  question  frequently 
happens,  by  reason  of  bankruptcy,  as  to  goods,  which  are  shi])ped  but 
not  imi)orted,  to  whom  they  bek^ig.  In  those  cases,  this  court  gener- 
ally orders  the  goods  to  be  sold,  and  the  money  paid  into  the  bank, 


Sec.  6)  WHO   MAY   EXECUTE   A   TRUST.  489 

for  the  benefit  of  the  parties  who  shall  be  entitled  in  the  event.  But 
yet  the  broker  is  the  hand  to  receive  the  money  first. 

Objection:     She  might  have  appointed  another  person  to  receive  it. 

The  answer  to  that  is :    Nil  agit  exemplum,  quod  litem  lite  resolvit. 

Objection:  She  might  have  taken  security;  but  to  do  that  upon 
every  occasion  would  tend  greatly  to  the  hindrance  of  business. 

Therefore  of  opinion  Mrs.  Parsons  ought  not  to  be  charged  with 
the  value  of  the  goods. 


BOSTOCK   V.  FLOYER. 

(In  rhancery.  before  Sir  John  Romilly.  Master  of  the  Rolls,  1865.    3-5  Beavan, 

003.) 

In  1833  a  sum  of  money  was  placed  by  Lord  H.  in  the  hands  of  Mr. 
Wilmot,  in  trust  for  the  plaintiff,  Mrs.  Bostock. 

In  1853  Mr.  Wilmot  employed  a  Mr.  Conyers,  a  solicitor  in  York- 
shire in  large  practice  and  high  repute,  to  procure  an  investment  of 
i400. 

Conyers  obtained  possession  of  the  £400.  and  represented  that  he  had 
laid  it  out  on  the  mortgage  of  a  copyhold  property  belonging  to  one 
John  Patrick  Stephenson,  and  he  forwarded  to  Mr.  Wilmot  a  parcel 
of  deeds  which  was  found  amongst  Mr.  Wilmot's  documents  after  his 
decease.  This  parcel  contained  (inter  alia)  a  copy  of  what  purported 
to  be  a  surrender,  dated  20th  April,  1853,  by  John  Patrick  Stephenson, 
to  the  use  of  Richard  Coke  Wilmot,  his  heirs  and  assigns,  of  two 
closes,  subject  to  a  condition  for  making  voidl  the  surrender  on  pay- 
ment by  John  Patrick  Stephenson  of  said  sum  and  interest  on  the  7th 
day  of  the  next  ensuing  July. 

Interest  was  duly  paid  by  Conyers  to  Wilmot  and  by  him  to  the 
plaintiff  from  1853  down  to  Wilmot's  death  in  1856,  and  the  interest 
continued  to  be  paid  by  Wilmot's  executors  or  Conyers,  from  1856 
down  to  July,  1863. 

In  December,  1863,  Conyers  died,  and  in  1864  it  was  discovered 
that  the  alleged  mortgage  was  a  mere  fiction,  that  the  copy  surrender 
to  Wilmot  had  been  signed  by  Conyers,  the  steward  of  the  manor, 
but  that  no  such  surrender  ever  existed.  It  further  appeared,  that 
the  property  had  been  sold  by  J.  P.  Stephenson,  to  Conyers  in  1856, 
and  that  he  had  mortgaged  it  to  third  parties. 

Mrs.  Bostock  instituted  this  suit  in  1864,  to  make  Floyer,  the  ex- 
ecutor of  Wilmot,  liable  for  the  £400.  and  interest. ^- 

The  Master  of  the  Rolls.  I  am  of  opinion  that  the  liability  of  this 
trustee  is  fixed  by  the  ordinary  doctrine  of  this  court. 

Here  is  a  gentleman  who  accepts  the  ofihce  ot  trustee  and  receives 
£400,  he  gives  it  to  his  solicitor  to  invest,  the  solicitor  puts  the  money 
into  his  own  pocket  and  never  invests  it  at  all.    It  is  the  ordinary  case 

»2  The  statement  of  facts  is  abridged. 


490  TIIK    DITIKS    OF    A   TUUSTKH.  (Ch.  5 

of  a  trustee  who  is  liable  for  the  default  of  his  solicitor.  Mr.  Ilaynes 
thinks  that  there  is  some  ditference,  because  a  surrender  of  copy- 
holds is  forged  by  a  solicitor,  who  was  a  steward  of  the  manor,  and 
who  writes  a  regular  surrender  of  copyholds  belonging  to  an  existmg 
person  and  sends  it  to  the  trustee  as  evidence  that  he  had  invested  the 
money  ;  but  he  was  acting  as  solicitor  for  the  trustee  and  was  his 
agent.  There  is  no  receipt  for  the  purchase  money,  and,  on  searching 
the  rolls,  it  is  found  that  the  whole  thing  is  a  fiction.  Roupell's  case 
is  distinguishable  from  the  present,  for  there  the  forgery  was  not  that 
of  the  mortgagee's  solicitor.  Here  a  man  employs  an  agent  who  cheats 
him;  the  loss  must  fall  on  the  trustee  and  not  on  the  cestui  que  trust 
who  never  employed  him. 

I  think  the  loss  must  fall  on  W'ilmot,  who  selected  this  gentleman, 
and  did  not  take  the  precaution  he  might  have  taken  to  see  whether 
the  mortgage  had  been  made  or  not."^ 


TTOPGOOD  v.  PARKIN. 

(In  Chancery,  before  Sir  .John  Romilly.  Master  of  the  Rolls,  1870.     Law  Re- 
Reports,  11   E(iuity,  74.) 

This  was  a  suit  by  the  children  of  Joseph  Hopgood  and  Honor,  his 
late  wife,  for  the  purpose  of  compelling  James  Parkin,  the  surviving 
trustee  of  the  settlement  executed  on  the  marriage  of  their  parents,  and 
the  representatives  of  Robert  Govett,  a  deceased  trustee,  to  make  good 
the  loss  sustained  by  the  investment  of  the  trust  funds  on  a  security 
which  had  proved  insufficient. 

By  a  settlement  dated  the  3rd  of  March.  1842,  and  made  on  the  mar- 
riage of  Joseph  Hopgood  and  Honor  Davey,  a  sum  of  £10,000.  3  per 
cent  consols  in  possession,  and  a  sum  of  £7,218.  2s.  3d.,  3  per  cent 
Reduced  Annuities  in  reversion  expectant  on  the  death  of  Maria 
Davey,  was  settled  on  the  usual  trusts  for  the  husband  and  wife  and 
issue  of  the  marriage.  The  Rev.  James  Parkin  and  the  Rev.  Robert 
Govett  (since  deceased)  were  the  trustees  of  the  settlement,  and  the 
£10,000.  consols  were  transferred  into  their  names. 

In  1855  the  Rev.  Robert  Govett,  William  Govett  Romaine  and  the 
Rev.  John  Clement  Govett,  who  were  trustees  of  another  settlement 
(for  the  sake  of  distinction  called  tlie  Govett  family  settlement),  ad- 
vanced £12,000.  of  the  trust  money  belonging  to  that  family  to  one 
Henry  Ernest  on  the  security  of  a  mortgage  of  his  estate  at  Llanon,  in 
the  county  of  Carmarthen. 

The  solicitor  for  the  Govett  trustees  was  Mr.  Charles  AUicrt  Govett. 
Mr.  Ernest's  solicitor  was  Mr.  John  Charles  Williams,  a  partner  in 
the  firm  of  Messrs.  Goodwin,  Williams,  Edwards  &  Partridge. 

0  3  See  In  re  Dewar,  ZS  W.  R.  497  (1SS5) ;    In  re  Weall,  L.  R.  42  Ch.  Div.  674 

(1889). 


Sec.  6)  WHO   MAY    EXKCTJTR   A   TRUST.  491 

For  the  purpose  of  this  mortgage  the  Llanon  estate  was  vaUied  by 
Mr.  Pctherick,  a  surveyor  recommended  by  Mr.  John  Charles  Wil- 
Hams.     The  value  placed  on  the  estate  by  him  was  £19,047. 

In  June,   1857,  Mr.  Ernest  gave  notice  of  his  intention  to  pay  off 
this  mortgage.    On  the  15th  of  July,  1857,  the  mortgage  was  paid  off, 
and  the  estate  reconveyed  to  Ernest.     For  this  purpose  a  temporary 
loan  was  in  the  first  instance  obtained  from  the  Equity  and  Law  Life 
Insurance  Office ;   and  then,  in  order  to  pay  off  this  loan,  John  Charles 
Williams,  the  solicitor  of  Mr.  Ernest,  negotiated  with  Charles  Albert 
Govett,  who  acted  not  merely  as  solicitor  for  the  Govett  trustees,  but 
also  as  solicitor  for  the  trustees  of  the  Hopgood  family,  to  get  an  ad- 
vance out  of  the  money  settled  on  the  marriage  of  Mr.  and  Mrs.  Hop- 
good  on  the  security  of  the  estate.     Maria  Davey  had  then  just  died, 
and  £7,218.  2s.  3d.  Reduced  3  Per  Cents  had  fallen  into  possession, 
and  become  subject  to  the  trusts  of  the  settlement.     The  advance  was 
agreed  to  by  Charles  Albert  Govett,  and  sufficient  of  both  funds  of 
£10,000.  consols  and  £7,218.  2s.  3d.    Reduced  were  sold  out  on  the  31st 
of  July,  1857,  to  produce  £13,000.,  which  was  advanced  on  the  security 
of  a  new  mortgage  by  Ernest  of  the  Llanon  estate,  dated  the  3rd  of 
August,   1857.     The  property  comprised  in  this  mortgage,  however, 
was  not  exactly  the  same  as  that  comprised  in  the  former ;  about  two- 
thirds  of   the  estate  included  in  the  mortgage  of   1855  was  retained 
and  other  property  equal  in  quantity  and  value  to  the  one-third  omitted 
was  added  to  the  new  mortgage  security.     Mr.  Govett,  the  solicitor, 
received  for  his  services  a  lump  sum  of  £250. ;    he  made  no  new  valu- 
ation, no  new  inquiries.     Having  in  his  possession  the  abstract  of  title 
delivered  on  the  occasion  of  the  mortgage  of  1855.  he  did  not  require 
any  fresh  abstract ;   he  never  inquired  whether  there  existed  any  prior 
incumbrances;    and  he  apparently  trusted   entirely   to  John   Charles 
Williams,   who   shortly   afterwards   became  a  bankrupt.     The   conse- 
quence was  that  it  turned  out,  first,  that  the  property  on  which  the  ad- 
vance was  made  was  worth  about  £16,000.,  instead  of  £19,000.;    and, 
secondly,  that  there  were  two  other  mortgages  on  the  estate,  one  dated 
the  18th  of  March,   1857,  for  £4,000.  and  interest  at  6  per  cent  per 
annum,  on  the  property  included  in  the  former  mortgage,  and  another 
for  £3.500,  at  5  per  cent  per  annum,  dated  the  1st  of  July,  1857,  on 
another  part  of  the  property. 

A  suit  of  Hopgood  v.  Ernest  was  instituted  to  settle  the  priorities 
of  these  mortgages,  which  were  severely  contested.  In  this  suit,  after 
much  litigation,  only  one  of  the  two  last  mentioned  mortgages  was 
ultimately  held  to  be  prior  to  that  of  the  plaintiffs.  The  property  was 
sold,  and  it  turned  out,  after  taking  the  accounts  of  what  was  produced 
by  the  sale  and  what  was  due  to  the  first  mortgagee  for  principal,  in- 
terest, and  costs,  that  a  loss  of  £6,555.  6s.  3d.,  or  thereabouts,  had  been 
sustained  by  reason  of  this  advance  by  the  trustees,  and  that  nothing 
could  be  recovered  from  Mr,  Henry  Ernest  personally. 
Honor  Hopgood  died  in  1864. 


492  THE   DUTIKS   OF   A   TRfSTEE.  (Cll.  5 

Lord  Romili.v,  M.  R.  This  case  involves  to  some  extent  a  question 
of  very  considerable  importance  which,  broadly  stated  and  without 
qualification,  is  shortly  this:  If  trustees  are  defrauded,  and  by  reason 
of  the  fraud  practiced  upon  them  lose  part  of  the  trust  estate,  does  the 
loss  fall  upon  them  or  upon  their  cestuis  que  trust?  In  Eaves  v.  Hick- 
son,  20  Beav.  136,  I  held  that  if  a  person  obtained  trust  property  from 
trustees  by  means  of  a  forgery,  the  loss  fell  on  them  and  not  on  the 
cestuis  que  trust.  Here  the  trustees  advanced  trust  money  on  a  prop- 
erty sufficient  to  cover  the  mortgage  if  it  were  the  first  mortgage— the 
fact  of  the  existence  of  a  prior  mortgage  was  carefully  concealed  from 
them:  does  the  loss  fall  on  them  or  on  their  cestuis  que  trust? 
Though,  in  my  opinion,  this  is  the  point  which  lies  at  the  bottom  of  the 
question  to  be  decided  here,  yet  there  are  in  the  present  case  many 
qualifying  circumstances  on  both  sidles  which  must  be  considered,  and 
which  renders  it  necessary  shortly  to  refer  to  the  facts  which  are 
proved  in  this  cause:    [His  Lordship  stated  them,  as  above.] 

The  question  is,  on  "whom  does  this  loss  fall?  First,  it  is  material  to 
consider  the  course  pursued  by  the  solicitor  of  the  trustees.  It  is  true 
ihat  his  conduct  is  not  theirs;  but  he  is  appointed  by  them,  he  is  their 
agent  for  the  management  of  the  afifairs  of  the  trust,  and  if  he  mis- 
conducts himself  through  ignorance  or  negligence,  or  wilfully,  he  is 
answerable  to  the  trustees,  and  they  cannot,  in  my  opinion,  throw  any 
of  the  loss  thereby  incurred  on  their  cestuis  que  trust.  Now  what  is 
the  conduct  of  the  soHcitor  in  this  case?  It  does  not  involve  one  iota 
of  moral  turjjitude.  lie  acted,  I  have  no  doubt,  as  he  believed,  for  the 
best  for  all  parties ;  but  in  so  acting  he  did  not  display  the  caution 
and  vigilance  which  is  to  be  expected  from  and  is  usually  displayed  by 
a  solicitor  for  his  client.  The  dates  of  the  mortgages  plainly  show  this. 
The  mortgage  of  the  Llanon  estate  to  the  Govett  trustees  was  on  the 
13th  of  October,  1855.  The  mortgage  to  the  Hopgood  trustees  was 
on  the  3rd  of  August,  1857.  In  the  meantime,  on  one  part  of  the 
property  included  in  the  former  mortgage,  a  mortgage  for  £4,000.,  with 
6  per  cent  interest  per  annum,  had  been  effected  by  Ernest,  the  mort- 
gagor, by  an  indenture  dated  the  18th  of  March,  1857  ;  and  on  another 
part  of  the  property  a  mortgage  had  been  effected  by  Ernest,  the  mort- 
gagor, for  £3,500.,  with  interest  at  5  per  cent  per  annum.  It  is  true 
that  this  latter  mortgage,  though  prior  in  date,  was  postponed!  to  the 
Hopgood  trustees'  mortgage  but  it  was  so  after  much  expensive  liti- 
gation, the  cost  of  wdiich,  when  added  to  the  debt,  increases  the  de- 
ficiency of  the  estate. 

Though  both  these  mortgages  had  been  effected  in  the  interval  be- 
tween the  mortgage  with  Govett's  trustees  and  that  to  Hopgood's  trus- 
tees, yet  Mr.  C.  A.  Govett,  the  solicitor,  never  inquired  whether  any 
fresh  incumbrances  had  been  created,  nor  did  he  recjuire  a  fresh  ab- 
stract to  be  delivered.  Whether  John  Charles  Williams  would,  if  ap- 
plied to,  have  disclosed  the  fact  of  there  being  two  fresh  incumbrances, 
or  whether,   if   required  to   furnish  an  abstract  continued  down   to 


Sec.  6)  WHO   MAY   EXECUTE   A   TRUST.  '  493 

August,  1857,  be  would!  have  concealed  these  facts,  it  is  not,  in  my 
opinion,  material  now  to  consider.  If  he  had  done  so,  and  wilfully  and 
knowingly  deceived  Mr.  C.  A.  Govett  by  assertion  of  what  was  false, 
or  by  the  suppression  of  what  was  true,  it  might  have  altered  the 
character  of  the  case  and  the  liability  of  the  trustees.  But  the  trustees 
are  bound  to  employ  competent  persons,  and  if  they  do  not  the  loss 
must  fall  on  them.  The  reason  which  Mr.  Govett  gives  for  not  ask- 
ing for  a  fresh  abstract  is  singularly  inappropriate ;  it  is  that  he  had 
already  got  it.  This  is  true,  but  it  came  down  to  October,  1855.  What 
he  wanted  was  an  abstract  down  to  August,  1857 ;  or,  if  he  dispensed 
with  that,  he  should  have  required  a  statutory  declaration  that  no  fresh 
charge  had  been  created  on  the  property.  All  this  he  neglects,  yet  he 
takes  a  liquidated  sum  for  costs,  as  if  he  had  gone  regularly  through 
the  investigation  of  title  afresh,  in  the  ordinary  manner.  The  valua- 
tion, also,-  is  very  unsatisfactory.  Mr.  Govett,  for  this  first  mortgage, 
employed  Mr.  Petherick,  on  the  recommendation  of  the  mortgagor's 
solicitor,  and  he  appears  to  me  to  have  valued  the  property  consider- 
ably above  its  real  value ;  but  this  is  not  so  material  as  the  omission 
to  require  that  an  abstract  should!  be  furnished  bringing  the  title  down 
to  the  time  of  the  transaction  in  question,  or,  if  not,  the  proper  evi- 
dence should  be  furnished  that  no  further  incumbrance  had  been 
created  prior  to  the  3rd  of  August,  1857,  when  the  trustees  were  about 
to  advance  the  money.  If  the  trustees  of  the  Hopgood  family  had  paid 
off  the  mortgage  to  Govett's  trustees,  and  taken  an  assignment  of  it 
as  a  subsisting  mortgage,  it  would  have  been  different;  but  they  do 
nothing  of  the  sort,  they  only  require  evidence  to  show  that  the  first 
mortgage  to  Govett's  trustees  had  been  paid  off;  and  without  any- 
thing to  show  that  fresh  incumbrances  had  not  been  created,  and  thus 
without  evidence  and  without  inquiry,  they  advance  the  money  at  once, 
obtaining  only  a  second  mortgage  on  a  property  insufficient  even  for 
a  first  incumbrance  to  that  amount.  I  use  the  expression  "they  do 
this."  because  it  is  exactly  the  same  if  it  be  done  by  the  trustees  them- 
selves personally  or  by  an  incompetent  or  negligent  agent.  They  must, 
therefore,  bear  the  loss  and  not  the  cestuis  que  trust,  whom  they 
were  appointed  to  protect. 

The  consequence  is  that  I  must  make  a  decree  compelling  the  sur- 
viving trustee,  Mr.  Parkin,  and  the  executors  of  the  deceased  trustee, 
Robert  Govett,  to  make  good  the  loss  sustained  by  the  trust  fund  in 
the  circumstances  I  have  above  detailed  of  its  having  been  advanced 
on  an  insufficient  security ;  for  which  purpose  the  proper  and  neces- 
sary accounts  must  be  taken,  with  liberty  to  the  Chief  Clerk  to  adopt 
the  accounts  taken  in  the  suit  of  Hopgood  v.  Ernest;  and  if  the 
executors  of  Robert  Govett,  the  deceased  trustee,  do  not  admit  assets 
sufficient  for  this  purpose,  there  must  be  the  usual  account  of  his  es- 
tate, and  the  trustees  must  pay  the  costs  of  this  suit.  Of  course,  I 
shall  give  C.  A.  Govett  no  costs ;  but  I  cannot  make  him  pay  anything 
in  this  suit. 


494  THE   DUTIKS   OF   A   TKISTKE.  (Ch.  5 

SPEIGHT  V.  GAUNT. 

(In  the  Court  of  Appeal,  1SS2.     Law  Reports,  22  Chancery  Division,  727.) 

By  his  will  dated  the  16th  of  February,  1875,  John  Speight  be- 
queathed all  his  real  and  personal  estate  to  Isaac  Gaunt  and  Alfred 
Wilkinson,  whom  he  ai)i)ointed  trustees  andl  executors  of  his  will, 
upon  certain  trusts.     He  died  March  31,  1877. 

Souk  of  the  securities  had  been  sold  by  one  Cooke,  a  stockbroker 
doing  business  at  F.radford,  and  the  proceeds  paid  into  the  Bradford 
Bank  to  the  credit  of  the  trust  account.  Subsequently  Cooke  was  em- 
ployed by  Gaunt  to  buy  £5,000.  stock  of  each  of  the  corporations  of 
Halifax,  Huddersfield  and  Leeds. 

On  the  24th  of  February,  1881,  Cooke  brought  to  Gaunt  a  "bought 
note,"  filled  up  on  a  printed  form  as  follows : 

"John  Cooke  &  Son,  Stockbrokers, 
Exchange  Bank  Street,  Bradford,  Feb.  24,    1881. 
"To  the  executors  of  the  late  John  Speight: 

"We  have  this  day  bought  for  you  as  per  your  order,  subject  to  the 
rules  of  the  London  Stock  Exchange : 

Commissions 

)n  Debenture  Stock  105 1/2  nett 

do.  100       nett 

do.  100       nett 


£  5,000. 

Leeds  Corpo 

5,275. 

5,000. 

Huddersfield 

5,000. 

5.000. 

Halifax 

5,000. 

£15,275. 

"Account 

[Signed]     John  Cooke  &  Son." 

Cooke  said  he  wanted  the  money  for  these  stocks  to  pay  next  day. 
Gaunt  signed  three  checks  for  £5,000.  each  to  the  order  of  Messrs. 
John  Cooke  &  Son.  Cooke  misapplied  these  checks  to  his  own  use, 
filed  a  liquidation  petition  and  then  absconded. 

Certain  of  the  cestuis  que  trust  brought  their  action  against  Gaunt 
for  a  breach  of  trust  and  asked  that  he  make  good  to  the  estate  the 
loss  with  4  per  cent  interest. 

Vice  Chancellor  P.acon  decreed  that  Gaunt  make  good  the  £15,275. 
(within  6  ny)nths)  with  interest  at  4  per  cent  and  costs. 

From  this  decree  Gaunt  appealed. 

LiNDLKY,  L.  J."*  This  case  appears  to  me  to  be  one  of  very  great 
importance,  not  only  to  Mr.  Gaunt  and  the  cestuis  que  trust,  but  also 
to  trustees  in  general  who  have  to  invest  money  or  do  invest  money 
through  brokers. 

9*  The  concurring  opinions  of  Jessel.  M.  R.,  and  Bowen,  L.  J.,  are  omitted. 
The  House  of  Lords  afhrmed,  9  App.  Oas.  1  (1883). 


Sec.  6)  WHO   MAY   EXECUTE   A   TRUST.  495 

The  first  observation  to  be  made  is  that  this  is  a  case  in  which  the 
trustee  is  not  even  accused  of  having;  acted  in  any  way  with  a  view  to 
his  own  benefit,  or  otherwise  than  with  perfect  bona  fides  and  honesty, 
a  remark  which  of  course  is  important,  because  one  approaches  such 
a  case  in  a  different  state  of  mind  from  that  with  which  one  would 
approach  a  case  if  one  were  deahng  with  a  dishonest  trustee. 

The  next  remark  is  that  the  trust  for  investment  was  so  worded 
that  nobody  pretends  that  the  investment  of  the  trust  property  in  de- 
bentures or  debenture  stock  of  these  corporations  was  not  within  the 
investment  clause.  It  is  not  suggested  that  it  would  be  a  breach  of 
trust  on  the  part  of  the  trustee  in  this  case  to  invest  the  trust  money 
in  that  kind  of  securities  in  which  he  directed  the  broker  to  invest  it. 

Now  what  the  trustee  did  in  this  case  was  this.  Some  of  the  trust 
moneys  to  the  extent  of  i  13,000.  had  been  paid  over,  and  in  that  trans- 
action Mr.  Cooke,  I  understand,  had  been  employed.  He  was  the 
family  broker.  He  was  not  the  broker  whom  Mr.  Gaunt  generally 
employed  in  his  own  business,  but  he  was  a  person  recommended  by 
the  family.  I  do  not  attach  much  importance  to  that,  but  it  is  a  cir- 
cumstance which  should,  I  think,  be  mentioned.  Mr.  Cooke  at  the  time 
was  a  broker  in  good  repute.  He  was  a  person  to  whom  an  ordinary 
prudent  man  desiring  to  employ  a  broker  in  Bradford  would  have 
recourse.  Then  Mr.  Gaunt,  being  desirous  of  investing  il5,000.  in 
debentures  or  securities  of  these  corporations,  intrusts  Mr.  Cooke  to 
make  the  investment. 

The  first  point  that  occurs  to  my  mind  is  this,  Was  it  proper  for  the 
trustee  to  employ  Mr.  Cooke  in  the  transaction  at  all?  Because  if  it 
was  not,  I  take  it  that  .the  trustee  must  be  responsible  for  the  conse- 
quences. A  trustee  has  no  business  to  cast  upon  brokers  or  solicitors 
or  anybody  else  the  duty  of  performing  those  trusts  and  exercising 
that  judgment  and  discretion  which  he  is  bound  to  perform  and  exer- 
cise himself.  On  the  other  hand,  a  trustee  is  not  bound  to  do  every- 
thing himself.  A  trustee  is  entitled  to  employ  a  broker  and  solicitors 
to  do  that  which  in  the  ordinary  course  of  business  other  people  would 
employ  brokers  and  solicitors  to  do. 

The  real  importance  of  this  case  is,  that  it  lies  between  these  two 
propositions — that  a  trustee  cannot  delegate  his  trust,  and  that,  on 
the  other  hand,  he  is  entitled  to  employ  persons  to  do  that  which  an 
ordinary  man  of  business  would  employ  an  agent  to  do.  Now,  look- 
ing at  the  matter  fairly  and  properly  as  a  business  man  would  look 
at  it,  can  it  be  said  to  be  an  improper  thing  on  the  part  of  a  trustee 
who  is  desirous  of  investing  £15,000.  in  this  class  of  securities  to  go 
to  a  broker  ?  That  he  might  have  acted  otherwise  is  plain  enough  ;  but 
was  it  a  reasonable  and  proper  thing  not  to  apply  to  the  secretaries  or 
treasurers  of  these  corporations,  but  to  employ  a  broker  for  that  pur- 
pose ?  So  far  as  the  evidence  goes,  it  appears  to  me  that  on  the  balance 
of  the  evidence  it  is  impossible  to  say  that  this  was  an  improper  step 
for  a  trustee  to  take.     Although  business  men  can  do  these  things  for 


496  TiiK  DfTiKS  OF  A  Tra'STHr:.  (Ch.  ■'i 

themselves,  nnlcs?;  we  can  go  the  length  of  saying  that  the  employment 
of  Mr.  Cooke  was  an  improper  delegation  of  the  trust  or  an  improper 
employment,  it  will  follow  that  it  was  not  an  unreasonable  thing  or  a 
breach  of  trust  to  employ  a  broker  to  do  this  kind  of  work ;  and  the 
conclusion  that  I  have  arrived  at  on  that  point  is  that  we  cannot  say 
the  trustee,  acting  honestly,  was  not  entitled  to  employ  a  broker  to  do 
this  kind  of  business. 

Then  the  next  thing  is,  what  did  Mr.  Gaunt  employ  Air.  Cooke  to 
do?  He  emjiloyed  him  to  invest  this  money  in  these  securities.  He 
did  not  tell  him  or  suggest  to  him  how  it  had  better  be  done,  he  did 
not  know,  and  I  do  not  think  he  was  bound  to  ascertain,  whether  these 
securities  were  in  the  market  in  the  ordinary  commercial  sense,  or 
where  Mr.  Cooke  was  to  get  them  from;  he  left  that  to  Mr.  Cooke's 
discretion,  and  I  think  he  was  not  guilty  of  negligence  in  so  doing. 
Mr.  Cooke  told  him  he  would  get  them  for  him.  There  had  been 
apparently  some  discussion  as  to  the  class  of  bonds,  Mr.  Gaunt  pre- 
ferring to  have  Halifax  bonds,  and  although  Mr.  Cooke  said  there- 
would  be  some  difficulty  about  Halifax  bonds,  the  result  is  that  he 
comes  to  Mr.  Gaunt  and  says  that  he  has  got  them,  that  is  that  he 
has  got  £5,000.  Halifax  corporation  debenture  stock.  I  do  not  at- 
tach much  importance  to  the  distinction  pointed  out  between  debentures 
and  debenture  stock.  The  substance  of  the  thing  is  what  was  wanted 
was  securities  of  these  corporations,  whether  debentures  or  debenture 
stock.  Nothing  turns  upon  that  so  far  as  I  can  see.  Mr.  Gaunt  would 
have  been  satisfied  with  either,  and  either  would  be  within  the  trust. 

I  now  come  to  the  bought  note,  which  is  a  very  important  docu- 
ment, and  I  confess  I  cannot  look  at  it  from  the  same  point  of  view 
as  \lce  Chancellor  Bacon  did.  The  bought  note  is  a  printed  form, 
filled  up,  of  course,  with  a  pen.  Judging  from  the  words  of  the  docu- 
ment, and  from  the  appearance  of  it,  and  bringing  to  bear  upon  it  the 
knowledge  which  every  one  has  of  the  ordinary  transactions  of  busi- 
ness, I  confess  this  document  would  have  completely  misled  me.  I 
could  not  possibly,  looking  at  it  with  the  utmost  care  and  vigilance, 
such  as  an  ordinary  man  would  exercise,  extract  from  this  document 
the  slightest  information  or  notice  that  this  was  a  purchase  other  than 
in  the  ordinary  course  of  business  on  the  Stock  Exchange.  If  it 
w'ould  mislead  a  person  like  myself,  why  should  it  not  mislead  others? 
I  am  quite  aware  that  experts  have  been  called  who  say  that,  to  their 
experienced  eyes,  there  are  signs  on  this  document  which  indicate,  to 
them  at  any  rate,  irregularities ;  but  the  question  is  not  whether  experts 
like  brokers  or  those  who  are  accustomed  to  deal  in  these  things  see 
irregularities ;  the  question  is,  whether  these  signs  of  irregularity  are 
such  as  would  attract  the  attention  of  an  ordinary  prudent  man  of 
business. 

There  is  no  irregularity  of  that  sort  at  all  in  it  that  I  can  discern. 
It  is  a  question  of  fact,  and  not  a  question  of  law,  whether  upon  the 
face  of  this  document  there  are  or  are  not  such  signs  of  impropriety 


Sec.  6)  WHO   MAY   EXECUTE   A   TRUST.  497 

as  to  excite  the  suspicion  of  anybody.  Nobody  suggests  any,  except 
that  the  experts  say  that  there  are  signs  which  would  put  them  on 
inquiry. 

Now  the  signs  which  are  visible  to  them  are  apparently  these :  First 
of  all,  the  absence  of  the  name  of  the  selling  broker,  of  which  I  do  not 
think  much ;  and,  secondly,  the  fact  that  there  is  nothing  charged  for 
stamps  or  commission,  and  no  date  for  the  settlement  of  the  account. 
The  absence  of  a  charge  for  commission  is  explained  by  the  fact  that  in 
the  commission  column,  the  word  "commission"  being  in  print,  under  it 
is  written  "nett,"  that  is  to  say  that  the  purchase  was  to  be  for  a  nett 
price.  Then  it  is  said  that  the  word  "account"  being  printed,  it  ought 
to  have  been  followed  by  a  date,  and  that  a  broker  would  look  with 
suspicion  on  a  document  with  the  word  "account"  in  it  not  followed 
by  the  date.  I  do  not  pretend  to  say  that  there  are  not  signs  of  suspi- 
cion to  the  eyes  of  a  broker,  but  we  are  not  looking  at  it  with  the  eyes 
of  a  broker.  We  are  looking  at  this  document  with  the  eyes  of  ordinary 
men  of  business,  and  there  is  so  evidence  to  show  that  there  is  anything 
which  would  lead  an  ordinary  man  of  business  to  suppose  that  there 
was  anything  wrong.  I  am  not  able  to  come  to  the  conclusion  that  Mr. 
Gaunt  was  put  on  inquiry,  or  ought  to  have  been  put  on  inquiry,  as 
a  reasonable  and  cautious  man.  If  anything  was  calculated  to  lull 
suspicion  in  his  mind,  this  document  was,  in  my  opinion,  calculated  to 
do  so.  That  he  was  deceived  is  plain  enough  upon  the  evidence,  but 
I  cannot  see  that  blame  is  to  be  imputed  to  him  for  not  suspecting  that 
there  was  something  wrong.  Upon  this  point,  and  it  is  a  question  of 
fact  not  of  law,  I  differ  from  the  Vice  Chancellor,  who  seems  to  have 
been  more  impressed  than  I  am  with  the  evidence  of  the  experts,  and 
to  have  looked  at  this  paper  with  the  eyes  of  an  expert,  and  too  little 
with  the  eyes  of  an  ordinary  man  of  business. 

Now.  assuming  that  the  trustee  was  justified  in  employing  Mr. 
Cooke,  and  assuming  that  he  was  not  negligent  in  not  having  his  sus- 
picions aroused  when  this  document  was  brought  to  him,  the  next 
question  is,  was  he  acting  improperly  in  paying  the  purchase  money 
to  the  broker?  That  is  to  say,  ought  he,  as  a  prudent  man  of  business, 
to  have  paid  it  to  somebody  else,  namely,  to  the  principals  from  whom 
the  broker  ought  to  have  got,  but  did  not  get,  these  securities,  whether 
upon  the  Stock  Exchange  or  otherwise?  If  the  trustee  had  notice,  and 
really  did  know  that  these  things  had  not  been  bought  on  the  Stock  Ex- 
change, it  is  quite  possible  that  he  ought  so  to  have  paid  it.  I  say  nothing 
about  that.  It  might  be  that  in  that  case  the  trustee  would  be  bound 
to  see  further  into  the  application  of  the  money ;  but,  misled  as  he 
was,  and  entitled  as  he  was  to  treat  these  things  as  bought  by  the  broker 
in  the  ordinary  way  of  his  business  as  a  broker  on  the  Stock  Exchange. 
it  appears  to  me  that  it  is  perfectly  impossible  to  hold  that  he  was 
bound  to  see  to  the  application  of  the  money,  in  the  sense  that  he  was 
bound  to  pay  the  persons  with  whom  the  broker  negotiated  the  pur- 
Kbn.Te.— 32 


498  THE  nrxiES  of  a  trustee.  (Ch.  5 

chase.  We  know  the  way  in  which  business  is  done  through  brokers 
in  buying  ordinary  stock.  If  a  broker  buys  £10,000.  of  stock  there 
are  sometimes  half  a  dozen  people  from  whom  he  gets  the  stock.  It 
is  not  in  the  ordinar}'  course  of  business  for  a  buyer,  whether  a  trustee 
or  not,  to  pay  to  persons  from  whom  the  broker  lias  bought ;  he  pays 
the  broker.  He  is  entitled  to  do  that  by  the  ordinary  course  of  busi- 
ness. I  do  not  myself  understand  that  there  is  any  evidence  that,  in 
l)oint  of  fact,  a  trustee  or  any  other  person  employing  a  broker  to  buy 
could  die  it  in  any  other  way.  As  a  matter  of  business  I  believe  he 
could  not.  At  all  events,  the  evidence  is  conclusive  that  the  ordinary 
practice  in  employing  a  broker  on  such  occasions  is  to  send  a  check 
to  the  broker.  There  was,  therefore,  no  negligence  in  Mr.  Gaunt 
doing  so ;  there  was  no  impropriety  or  breach  of  trust  in  his  conduct 
up  to  this  jjoint. 

Then  if  we  look  a  little  farther,  we  shall  see  how  the  thing  was  done. 
Mr.  Gaunt  did  not  find  out,  nor  could  he  by  reasonable  diligence  have 
found  out  anything  which  would  lead  him  to  stop  his  own  checks.  If 
anything  could  be  brought  home  to  him  to  show  that  he  was  negli- 
gent in  not  stopping  his  checks  the  case  would  have  been  quite  dif- 
ferent;  but  there  was  nothing  to  justify  him  in  doing  so,  there  was 
nothing  sufficient  to  excite  his  suspicion. 

Then  it  is  said  that  there  was  negligence  in  not  getting  the  securi- 
ties. If  the  ordinary  course  of  business  had  been  that  the  securities 
should  be  exchanged  for  the  checks,  of  course  it  would  be  different ; 
but  that  is  not  the  ordinary  course  of  business.  You  pa}'  the  broker 
and  he  gets  you  the  securities.  Fie  sees  to  all  that.  That  is  the  ordi- 
nary course  of  business.  It  is  very  true  that  the  broker  did  not  fail 
for  three  weeks  or  a  month  afterwards,  but  so  far  as  the  evidence  goes 
it  seems  to  me  clear  to  demonstration  that  no  discovery  Mr.  Gaunt 
could  have  made  after  the  checks  were  cashed  could  have  saved  the 
property.  If  he  was  not  negligent  in  not  looking  after  the  matter 
during  the  month.  I  do  not  see  that  the  lajxse  of  time  or  the  so-called 
negligence  caused  the  loss.  The  loss  was  anterior  to  that  negligence, 
if  negligence  there  were.  I  have  made  these  observations  in  conse- 
quence of  the  passage  that  has  been  read  from  the  judgment  of  the  late 
Lord  Hatherly  in  Mendes  v.  Guedalla,  2  J.  &  H.  2.S9.  I  have  looked  at 
the  case  since  it  was  cited,  and  it  appears  to  me,  having  regard  to  the 
facts  which  were  before  the  court,  that  the  passage  which  was  read 
does  not  go  to  the  length  contended  for,  so  far  as  I  can  understand  it. 
In  that  case  there  was  negligence  in  not  looking  after  the  securities, 
the  negligence  was  long  continued,  and  but  for  that  negligence  and 
if  incjuiry  had  been  made  the  securities  might  have  been  got  back. 
The  charge  there  was  that  the  trustees  trusted  the  agent  for  several 
years,  and  that  they  put  the  securities  in  a  box  and  never  asked  any- 
thing about  them.  There  is  no  doubt  that  in  that  case  there  was  not 
only  negligence,  but  the  evidence  was  such  as  to  show  that  but  for  the 
negligence  the  loss  would  not  have  been  incurred.     As  to  Mr.  Gaunt 


Sec.  6)  WHO   MAY   EXECUTE   A   TRUST.  499 

not  asking-  for  and  not  getting-  these  secnrities,  the  time  was  short,  and 
the  misappropriation  of  the  fundi  had  taken  place,  and  I  am  satisfied 
myself  that  the  loss  would  have  been  sustained  all  the  same  if  he  had 
asked  for  them.  In  other  words  the  cause  of  the  loss  was  not  the  want 
of  inquiry  by  Mr.  Gaunt,  but  the  fraud  which  was  practiced  upon  him. 

Now  I  do  not  propose  to  go  through  the  authorities,  but  I  will 
advert  to  two  cases,  because  they  have  been  brought  to  the  attention 
of  the  court  and  they  require  notice.  One  is  Bostock  v.  Floyer,  in 
which  Lord  Romilly  held  that  a  man  was  responsible  for  the  sum  of 
£400.  which  he  had  given  to  his  solicitor  to  invest.  The  solicitor  had 
pretended  to  invest  it  on  a  mortgage  of  some  copyholds,  but  he  had 
not  done  so,  and  the  money  was  lost,  and  the  trustee  was  held  re- 
sponsible. As  I  understand  it  the  ratio  decidendi  of  the  case  was  this, 
that  it  was  not  the  ordinary  course  of  business  for  a  trustee  to  place 
money  in  the  hands  of  a  solicitor  to  invest.  It  was  not  a  specific  in- 
vestment, it  was  handed  to  the  solicitor,  and  in  that  point  of  view  the 
case  is  intelligible  enough  upon  the  ground  that  it  was  not  right  for 
the  trustee  to  hand  over  the  money  to  the  solicitor  for  the  purpose  of 
mvestment.  The  other  case  was  Hopgood  v.  Parkin,  cited  by  Mr. 
Millar.  That  case  certainly  goes  much  further  than  I  should  have 
thought  right ;  but  in  the  result  the  case  was  appealed.  An  infant 
was  concerned,  and  the  Court  of  Appeals  sanctioned  a  compromise  on 
behalf  of  the  infant. 

I  wish  most  emphatically  to  say  that  if  trustees  are  justified  by  the 
ordinary  course  of  business  in  employing  agents,  and  they  do  employ 
agents  in  good  repute  and  whose  fitness  they  have  no  reason  to  doubt, 
and  employ  those  agents  to  do  that  which  is  in  the  ordinary  course  of 
their  business,  I  protest  against  the  notion  that  the  trustees  guarantee 
the  solvency  or  honesty  of  the  agents  employed.  Such  a  doctrine  would 
make  it  impossible  for  any  man  to  have  anything  to  do  with  a  trust. ''^ 
I  dififer  from  the  V^ice  Chancellor  upon  the  question  of  fact :  the  prin- 
ciples of  law,  which  he  stated  in  the  first  part  of  his  judgment  are  en- 
tirely sound,  but  I  differ  from  the  conclusion  at  which  he  arrived  on 
the  bought  note,  and  so  differing  from  him  I  can  not  agree  with  the 
judgment  which  he  pronounced. 


Re  PARTINGTON. 
PARTINGTON  v.  ALLEN. 

(In  Chancery,  before  Stirling,  Justice,  1887.     57  Law  Times  Reports.  G.j4.) 

In  this  case  an  originating  summons  was  taken  out  by  Mrs.  Part- 
ington, one  of  the  trustees  of  the  will  of  the  testator,  W.  H.  Parting- 
ton, asking  for  a  declaration  that  the  trustees  were  not  chargeable  with 

9  5  See  In  re  Bird,  L.  R.  16  Eq.  203  (1873)  ;  Roehfort  v.  Seaton,  [1896]  1 
Ir.  R.  18;  Christy  v.  McBride,  2  111.  75  (1832);  Holeman  v.  Blue,  10  111. 
App.  130  (1881). 


500  Tin:  dutiks  of  a  tuustee.  (Ch.  5 

any  breach  of  trust  in  respect  of  tlieir  having  invested  moneys  subject 
to  the  trusts  of  the  will  upon  certain  securities  therein  mentioned;  or 
that  if  any  such  breach  of  trust  was  chargeable  it  might  be  declared  that 
the  defendant  Allen  was  primarily  liable  in  respect  thereof,  and  he 
might  be  ordered  to  make  good  any  loss  occasioned  thereby.  The  de- 
fendants were  Mr.  Allen,  the  other  trustee,  and  Mr.  James  Parting- 
ton, a  son  of  the  testator,  and  one  of  the  beneficiaries  under  the  will. 
The  testator  died  in  1876,  having  by  his  will,  dated  the  29th  of  May, 
1875.  appointed  his  wife  (the  plaintiff),  J.  Janion  (since  deceased),  and 
the  defendant  Allen,  with  whom  he  had  been  in  partnership  as  a  solic- 
itor, his  trustees  and  executors.  After  certain  bequests  and  directions, 
he  directed  that  his  trustees  should  appropriate  out  of  his  personal  es- 
tate and  invest  £30,000.,  and  pay  the  income  to  his  wife  during  widow- 
hood, and  after  her  death,  or  second  marriage,  that  sum  was  to  fall 
into  the  residue,  which  he  directed  to  be  held  upon  certain  trusts  in 
favor  of  his  children  by  a  former  marriage.  The  investments  au- 
thorized for  the  trust  funds  were  (inter  alia)  freehold,  copyhold, 
or  leasehold  securities  in  England  or  Wales  (such  leaseholds,  if  for 
years,  having  sixty  years  to  run).  And  the  testator  directed  that 
his  trustees,  J.  Janion,  or  the  defendant  Allen,  if  he  should  be  em- 
ployed as  the  solicitor  to  his  trustees,  should  be  allowed  all  profes- 
sional charges. 

The  trustees  made  various  investments  from  time  to  time,  and, 
amongst  others,  the  three  mortgages  out  of  which  these  proceedings 
arose,  viz.,  a  mortgage  for  £2.500.  on  a  freehold  property  at  Staly- 
bridge,  and  two  mortgages  for  £2,400.  and  £1,500.  respectively  on 
land  and  houses  at  Goole.  All  of  these  mortgages  carried  interest  at 
5  per  cent.  The  vStalybridge  property  consisted  (according  to  the 
particulars  given  by  the  proi)osed  mortgagor)  of  a  public  house,  rent 
£200. ;  three  cottages,  rent  3s.  each,  £23.  8d. ;  and  six-stall  stable  and 
coachhouse,  at  a  rent  of  about  £30.,  and  some  land,  the  whole  sub- 
ject to  a  chief  rent  of  £6.  18s.,  and  producing  altogether  a  rent  of 
£246.  10s.  With  reference  to  this  security,  Allen,  on  the  8th  Jan., 
1878,  wrote  to  a  firm  of  surveyors,  at  Manchester,  as  follows : 

"We  shall  feel  obliged  if  you  will  value  the  freehold  property  at 
Stamford  street,  Stalybridge,  whereof  the  particulars  are  contained 
in  the  plan  sent  herewith,  and  are  also  described  on  the  other  side. 
The  valuation  is  required  for  mortgage  purposes,  and  your  valuation 
should  state  not  only  the  value  of  the  property,  but  also  the  maximum 
amount  which  might  in  your  opinion  be  safely  lent  by  way  of  first 
mortgage  thereon  by  trustees.  We  understand  that  the  George  Hotel 
was  opened  only  on  the  liJth  Oct.  last  as  a  fully  licensed  house,  and  that 
the  present  tenant  thereof  is  the  son-in-law  of  Mr.  John  Marsland, 
the  owner  of  the  property,  who  has  informed  us  that  he  residies  also 
in  the  hotel.  *  *  *  You  will  be  good  enough  also  to  check  the 
correctness  of  the  rentals,  and  insert  the  particulars  of  the  tenancies 
in  your  valuation." 


Sec.  6)  WHO   MAY   EXECUTE   A   TRUST.  501 

The  surveyors  wrote  in  reply,  saying  that  they  had  surveyed  the 
property,  which  they  described,  stating  it  to  be  subject  to  an  annual 
chief  rent  of  £6.  10s.,  and  that  in  their  opinion  the  value  of  the  whole 
was  £4,174.,  and  it  was  a  good  and  sufficient  security  for  an  advance 
on  mortgage  of  £3,130.  Mr.  Allen  subsequently  saw  the  surveyors  and 
pointed  out  that  they  had  not  stated  whether  they  had  checked  the 
rentals,  when  they  replied  that  they  had  done  so,  and  that  the  rents 
then  payable  were  correctly  stated  in  the  particulars  set  out  in  his 
letter.    Upon  this  £2,500.  was  advanced  upon  this  security. 

As  regards  the  mortgage  for  £2,400.  on  property  at  Goole,  Allen, 
in  the  name  of  his  firm,  on  the  30th  of  March,  1878,  wrote  to  Fox 
and  Sons,  surveyors  of  Leeds,  the  following  instructions : 

"On  the  other  side  we  send  you  short  particulars  of  a  property  at 
Goole,  upon  which  we  have  been  requested  to  lend  some  money  on 
mortgage,  and  which  our  clients  will  be  prepared  to  do  subject  to 
your  furnishing  us  with  a  satisfactory  valuation  of  the  property.  We 
do  not  know  who  are  the  owners  of  the  property,  but  the  business  has 

been  introduced  to  us  by  Mr.  Gardiner,  of  the  Office,  Leeds, 

and  to  whom  we  have  sent  this  letter  for  delivery  to  you  in  order  that 
he  may  negotiate  with  you  respecting  the  amount  of  your  fee  for 
making  the  required  valuation,  but  for  payment  of  which  we,  as  be- 
tween you  and  ourselves,  are  of  course  responsible.  Please  take  care 
to  state  in  your  valuation,  not  only  what  you  consider  to  be  the  valu- 
ation of  the  property,  but  also  the  amount  which  may  safely  be  ad- 
vanced on  mortgage  thereon,  and!  of  course  a  better  identification 
should  be  inserted  in  the  valuation  than  appears  in  the  particulars." 

The  letter  then  went  on  to  say  that  Messrs.  Fox  would  of  course  ex- 
ercise their  independent  judgment  as  to  the  valuation  of  the  property, 
but  giving  them  a  reference  to  a  person  at  Goole  if  they  wanted  in- 
formation as  to  it,  or  the  tenants,  or  the  possibility  of  its  always  being 
well  tenanted,  whatever  might  be  the  state  of  trade  or  otherwise  in 
Goole  for  the  time  being. 

The  particulars  (as  furnished  by  the  proposed  mortgagor)  were: 
"Freehold   property,   situate  in  Goole,   and   comprising  twenty-one 
houses,  let  at  4s.  per  week  each — £218.  8s.     One  house  and  shop  let 
at  an  annual  rent  of  £20.— £238.  8s. ;  less  rates,-  etc.,  £21. ;  total  valua- 
tion £217.  8s." 

Messrs.  Fox,  on  the  10th  April,  1878,  made  a  report  that  the  prop- 
erty consisted  of  modern  and  substantial  dwellings,  occupying  an 
acre  of  1,770  square  yards,  and  produced  a  net  rental  of  £217.,  and 
that  they  were  of  opinion  that  the  property  was  worth  £3,884.,  and 
was  a  very  ample  security  for  a  loan  on  mortgage  of  £2,000. ;  that  the 
property  was  generally  fully  occupied,  and  the  leakages  trifling. 

On  the  11th  April,  'l878,  Allen  wrote  to  Mrs.  Partington,  inclosing 
particulars  of  this  security,  which,  he  said,  had  been  recently  submitted 
to  him,  and  "so  necessary  was  it  in  order  to  retain  the  first  option  of 
accepting  or  declining  the  same,  that  I  at  once  instructed  Messrs.  Fox 


502  THE   DUTIES   OF   A   TRUSTEE.  (Ch.  5 

and  Sons  *  *  *  tQ  inspect  and  value  the  property  without  delay, 
and  I  inclose  also  copy  of  their  valuation."  He  also  said  that  they 
were  at  liberty  to  decline  the  security  if  either  of  them  thought  fit, 
but  he  should  regret  the  loss  of  the  same,  having  regard  to  the  great 
difficulty  of  now  obtaining  good  mortgage  securities  at  5  per  cent. 

On  the  16th  May  Allen  again  wrote  to  Mrs.  Partington,  saying  that 
Mr.  Middlcwood,  the  owner  of  the  property,  had  informed  him  that 
he  could  dispense  with  obtaining  a  further  loan  for  £800.,  if  the 
trustees  would  lend  £2,400..  instead  of  £2,000.  only,  on  the  property 
referred  to  in  the  valuation  of  the  10th  April ;  that  he  had  at  once 
written  to  Messrs.  Fox,  asking  whether  they  could  advise  the  loan  be- 
ing increased,  and  heard  from  them  that  the  property  was  a  very 
ample  security  for  such  increased  sum,  and  said,  "I  presume  you  will 
agree  with  me  in  deciding  to  let  the  same  be  advanced."  ]\Iessrs.  Fox 
had  on  the  15th  May  1878  altered  their  valuation  of  the  10th  April  by 
adding  in  red  ink,  after  £2,000.,  the  words  "or  £2,400.  if  required." 
Mrs.  Partington  agreed  to  the  proposal  and  the  £2,400.  was  advanced. 

In  the  case  of  the  £1,500.  mortgage,  the  particulars  were  not  ma- 
terially different  from  those  in  the  case  of  the  other  two,  and  need 
not  be  stated  in  the  report. 

On  the  24th  Jan.,  1879,  Mr.  Marsland  was  adjudicated  bankrupt, 
and  in  March,  1879,  Mr.  Middlewood  liquidated  his  affairs  by  ar- 
rangement. Default  having  been  made  in  payment  of  the  interest  un- 
der the  mortgages,  the  trustees  entered  into  possession  of  the  several 
properties,  and  shortly  afterwards  put  them  up  for  sale,  but  no  sale 
was  efifected,  the  highest  bids  being  less  than  the  amounts  advanced. 
In  August,  1885.  the  Stalybridge  property  was  sold  for  £1,000.,  and  the 
two  properties  at  Goole  were  subsequently  sold  together,  under  an 
order  of  the  court,  for  £1.600. 

Under  these  circumstances  the  plaintifif  took  out  her  summons.  On 
the  13th  May,  1886,  an  order  was  made  directing  inquiries,  and  on 
the  30th  April.  1887,  the  Chief  Clerk  made  his  certificate.  He  found 
that  the  mortgage  on  the  Stalybridge  property  was  a  proper  invest- 
ment, hut  that  the  other  two  mortgages  on  the  properties  at  Goole 
were  improper  investments,  and  the  trustees  were  responsible  for  the 
same. 

Summonses  were  taken  out  by  the  different  parties  to  vary  this  cer- 
tificate. The  plaintifif  and  the  defendant  Allen  asked  that  the  second 
and  third  mortgages  might  be  stated  to  be  proper  investments,  and  the 
defendant  I'artridge  that  the  first  mortgage  might  be  declared  to  be  an 
improper  investment.  They  were  adjourned  into  court,  and  now 
came  on  for  hearing.  This  was  also  the  further  consideration  of  the 
action.  It  was  arranged  that  the  question  of  the  liability  of  the  trus- 
tees to  the  cestuis  que  trust  should  be  dealt  with  first,  and  the  ques- 
tion between  the  two  trustees  afterwards. 

Stirling,  J.  These  summonses  raise  the  question,  which  is  always 
an  unpleasant  one,  whether  certain  investments  on  mortgage  which 


Sec.  6)  wno  may  exfxute  a  trust.  503 

have  been  made  by  the  trustees  of  the  will  of  the  testator  in  the  action 
are  improper  investments,  and,  if  so,  whether  the  trustees,  or  either 
of  them,  are,  or  is,  responsible  for  the  loss  which  has  been  occasioned 
to  the  trust  estate.    Now,  the  law  on  the  subject  has  been  recently  con- 
sidered to  a  very  considerable  extent,  both  by  the  Courts  of  first  in- 
stance, and  by  the  Court  of  Appeal,  and  by  the  House  of  Lords,  par- 
ticularly in  two  cases  of  Re  Speight ;  Speig^ht  v.  Gaunt,  and  Re  White- 
ley  ;  Whitelev  v.  Learovd.     In  the  case  of  Speight  v.  Gaunt,  when  be- 
fore the  Court  of  Appeal,  48  L.  T.  Rep.  N.  S.  279 ;  22  Ch.  Div.  727.  the 
Master  of  the  Rolls  (Sir  George  Jessel)  says  this:    "In  the  first  place, 
I  think  we  ought  to  consider  what  is  the  liability  of  a  trustee  who 
undertakes  an  office  which  requires  him  to  make  an  investment  on  be- 
half of  the  cestui  que  trust.    It  seems  to  me  that  on  general  principles  a 
trustee  ought  to  conduct  the  business  of  the  trust  in  the  same  manner 
that  an  ordinary  prudent  man  of  business  would  conduct  his  own,  and 
that  beyond  that  there  is  no  liability  or  obligation  on  the  trustee."     In 
the  case  of  Whiteley  v.  Learoyd,  which  came  before  the  Court  of  Ap- 
peal, that  was  commented  upon,  and  accepted,  subject  to  this  qualifi- 
cation, laid  down  by  all  the  judges,  I  think,  in  the  Court  of  x\ppeal, 
but  more  particularly  by  Lindley.  L.  J.     He  says :    "I  accept  this  prin- 
ciple"— which  is  the  one  that  I  have  just  read — "but,  in  applying  it, 
care  must  be  taken  not  to  lose  sight  of  the  fact  that  the  business  of 
the  trustee,  and  the  business  which  the  ordinary  prudent  man  is  sup- 
posed to  be  conducting  for  himself,  is  the  business  of  investing  money 
for  the  benefit  of  persons  who  are  to  enjoy  it  at  some  future  time, 
and  not  for  the  sole  benefit  of  the  person  entitled  to  the  present  in- 
come.    The  duty  of  a  trustee  is  not  to  take  such  care  only  as  a  pru- 
dent man  would  take  if  he  had  only  himself   to  consider;  the  duty 
rather  is  to  take  such  care  as  an  ordinary  prudent  man  would  take  if 
he  were  minded  to  make  an  investment  for  the  benefit  of  other  people 
for  whom  he  felt  morally  bound  to  provide."     That  is  one  principle 
which  is  always  to  be  had  regard  to  in  considering  the  propriety  of  an 
investment.    Another  principle,  which  is  also  laid  down  in  both  cases, 
is  this :  that  a  trustee  is  not  bound  to  do  everything  in  executing  the 
trust  himself;  he  may  avail  himself  of  the  services  of  people  whose  as- 
sistance or  advice  he  requires.     For  example,  he  may   avail  himself 
of  the  assistance  of  a  broker,  if  the  investment  is  one  which  requires 
the  services  of  a  broker;  of  a  valuer,  if  the  investment  be  one,  such  as 
the  purchase  or  mortgage  of  land,  which  requires  the  services  of  a 
valuer;  and  he  can  avail  himself  of  the  services  of  a  solicitor  as  re- 
gards matters  as  to  which  he  requires  legal  advice  and  assistance.    But 
that,  again,  is  subject  to  this  qualification ;  that  he  must  not,  in  availing 
himself  of  the  services  of  such  persons,  delegate  to  them  the  duties 
which,  by  accepting  the  trust,  he  has  agreed  himself  to  perform.     In 
Speight  v.  Gaunt,  Lindley,  L.  J.,  says:     "A  trustee  has  no  business  to 
cast  upon  brokers,  or  solicitors,  or  anybody  else,  the  duty  of  perform- 
ing those  trusts,  and  exercising  that  judgment  and  discretion,  which  he 


504  THE   DUTIES   OF   A   TRl'STEE.  (Ch.  5 

is  bound  to  perform  and  exercise  himself.  On  the  other  hand,  a  trus- 
tee is  not  bound  to  do  everything  himself.  A  trustee  is  entitled  to  em- 
ploy brokers  and  solicitors  to  do  that  which,  in  the  ordinary  course  of 
business,  other  people  would  employ  brokers  and  solicitors  to  do.  The 
real  importance  of  this  case  is,  that  it  lies  between  two  propositions — 
that  a  trustee  cannot  dcleg;ate  his  trust,  and  that,  on  the  other  hand. 
he  is  entitled  to  employ  persons  to  do  that  which  ordinary  men  of 
business  would  employ  an  ai^ent  to  do.  Xow.  looking  at  the  matter 
fairly,  and  properly,  as  a  business  man  would  look  at  it,  can  it  be  said 
to  be  an  improper  thing  on  the  part  of  a  trustee  who  is  desirous  of 
investing  £15,000.  in  this  class  of  securities  to  go  to  a  broker?  That  he 
might  have  acted  otherwise  is  plain  enough,  but  was  it  a  reasonable 
and  proper  thing  not  to  apply  to  the  secretaries  or  treasurers  of  these 
corporations,  but  to  employ  a  broker  for  that  purpose?  So  far  as 
the  evidence  goes,  it  appears  to  me  that  on  the  balance  of  the  evidence 
it  is  impossible  to  say  that  this  was  an  improper  step  for  a  trustee  to 
take.  Although  business  men  can  do  these  things  for  themselves,  un- 
less we  can  go  the  length  of  saying  that  the  employment  of  ]\Ir.  Cooke 
was  an  improper  delegation  of  the  trust,  or  an  improper  employment, 
it  will  follow  that  it  was  not  an  unreasonable  thing  or  a  breach  of  trust 
to  employ  a  broker  to  do  this  kind  of  work ;  and  the  conclusion  that 
I  have  arrived  at  on  that  point  is  that  we  cannot  say  the  trustee,  act- 
ing honestly,  was  not  entitled  to  employ  a  broker  to  do  this  kind  of 
business.  Then  the  next  thing  is,  what  did  j\Ir.  Gaunt  employ  Mr. 
Cooke  to  do?  He  employed  him  to  invest  this  money  in  these  securi- 
ties. He  did  not  tell  him  or  suggest  to  him  how  it  had  better  be 
done;  he  did  not  know,  and  I  do  not  think  he  was  bound  to  ascer- 
tain, whether  these  securities  were  in  the  market  in  the  ordinary  com- 
mercial sense,  or  where  Mr.  Cooke  w^as  to  get  them  from.  He  left 
that  to  Mr.  Cooke's  discretion,  and  I  think  he  was  not  guilty  of  neg- 
ligence in  so  doing."  Those  qualifications  were  again  observed  upon 
and  enforced  by  all  the  judges  of  the  Court  of  Appeal  in  Whitelcy  v. 
Learoyd,  and  Lindley,  L.  J.,  whose  judgment  I  will  read,  because  he 
puts  it  shortly  and  clearly,  refers  to  that  in  these  terms.  In  dealing 
with  the  investment  which  had  been  made  in  that  case,  he  says :  "One 
observation  applies  to  both  of  them,  viz.,  that  the  trustees  acted  bona 
fide,  and  obtained  and  acted  on  the  advice  of  a  solicitor  and  valuer 
who  were  apparently  competent  men  in  their  respective  professions. 
It  was  contended  on  behalf  of  the  trustees  that  this  circumstance 
alone  was  enough  to  exonerate  the  trustees  from  liability.  But  this 
contention  goes  too  far.  If  it  were  to  prevail,  the  court  would,  in 
effect,  decide  that  trustees  could  delegate  their  trust  to  any  competent 
persons,  and  so  terminate  their  own  responsibility.  This,  however, 
trustees  cannot  do.  They  may  and  must  seek  advice  on  matters  they 
do  not  themselves  understand;  but,  in  acting  on  advice  given  to  them, 
they  must  act  with  that  prudence  which  I  have  already  endeavored  to 
describe."     So  that  therefore  the  result  of  these  two  cases  is  this: 


Sec.  6)  WHO   MAY   EXECUTE   A   TRUST.  505 

that  trustees  may  avail  themselves  of  the  assistance  and  advice  of  oth- 
er persons  in  the  ordinary  course  of  business ;  but  that,  having  ob- 
tained that  advice  and  assistance,  they  are  not  to  adopt  it  blindly,  but 
exercise  on  it  the  judgment  which  an  ordinary  prudent  person,  acting 
in  the  way  described  by  Lindley,  L.  J-,  would  act  in  reference  to  his 
own  matters.  So  much  for  the  general  principle  by  which  trustees 
are  to  be  guided.  But,  with  reference  to  investments  on  mortgage, 
there  is  something  still  further  to  be  considered.  This  court  and  its 
officers  from  long  experience  have  arrived  at  what  I  cannot  call  a 
rule  of  law,  but  a  general  result  of  experience,  as  to  the  extent  to 
which  trustees  may  safely  go  in  making  advances  upon  real  security. 
The  rule  has  again  been  considered  in  recent  cases,  and  particularly  by 
Kay,  J.,  in  the  case  of  Fry  v.  Tapson,  and  in  the  case  of  Re  Olive ; 
Olive  V.  Westerman.  He  states  the  rule  in  the  last  case  from  Mr. 
Lewin's  book  on  Trusts,  in  these  terms :  "Trustees  cannot  be  ad- 
vised to  advance  more  than  two-thirds  of  the  actual  value  of  the  es- 
tate, if  it  be  freehold  land;  and  if  the  property  consists  of  freehold 
houses,  they  should  not  lend  so  much  as  two-thirds,  but,  say  one-half 
of  the  actual  value.  The  rule,  however,  of  two-thirds,  or  one-half, 
is  only  a  general  one ;  and  where  trustees  have  lent  on  the  security 
of  property  of  less  value,  but  have  acted  honestly,  they  have  been 
protected  by  the  court,  and  have  been  allowed  their  costs.  As  to 
buildings  used  in  trade,  and  the  value  of  which  must  depend  on  ex- 
ternal and  uncertain  circumstances,  trustees  will  not  in  general  be  jus- 
tified in  lending  so  much  as  one-half."  Then  the  learned  Judge  con- 
tinues :  "No  one  ever  said  that  the  rule  as  to  lending  not  more  than 
one-half  the  value  of  house  property  was  a  hard  and  fast  rule.  Of 
course,  when  applying  that  rule,  all  the  circumstances  must  be  looked 
at.  But  surely  trustees  when  they  are  lending  trust  moneys  upon 
house  property,  knowing,  as  I  must  take  them  to  know,  the  rule  which 
has  been  certainly  followed  since  1836,  should  tell  their  valuers  that 
they  are  lending  trust  moneys,  and  that  they  do  not  desire  to  lend 
more  than  one-half  the  actual  value  of  the  property.  They  should  ask 
for  a  valuation  which  would  enable  them  to  judge  whether  they  are 
justified  in  loaning  the  amount  they  propose  to  loan."  Now  that 
rule  is  certainly  one  which  in  the  chambers  attached  to  this  court  is 
constantly  acted  on.  If,  for  example,  an  application  is  made  in  an  ad- 
ministration action  by  trustees  for  the  sanction  of  the  court  to  lend 
money  on  mortgage,  and  the  valuation  was  produced,  the  first  thing 
the  Chief  Clerk  would  consider  would  be  whether  the  amount  pro- 
posed to  be  advanced  was  within  the  limit  stated  in  that  rule,  and  if 
it  exceeded  that  limit,  the  person  proposing  to  make  the  advance 
would  immediately  be  required  to  make  an  explanation,  and  to  justify 
his  proposal.  It  appears  from  the  judgment  which  I  have  just  read  of 
Kay,  J.,  that  trustees  may  now  be  supposed  to  know  this  rule,  and 
have  regard  to  it ;  and  certainly  if,  in  point  of  fact,  a  trustee  is  found 
to  know  it,  and  he  is  found  to  deviate  from  it,  I  apprehend  there  is 


506  THE   DUTIES   OF  A   TIU'STEE.  (Cll.  5 

no  question  but  that  he  is  called  on  to  justify  what  he  does,  and  to 
explain  how  he  came  to  deviate  from  the  rule  thus  laid  down.  Now, 
in  the  present  case,  the  trustees  who  ha\  c  made  these  investments  are 
trustees  both  of  whom  are  named  in  the  will.  They  are  the  tenant 
for  life,  tiie  widow  of  the  testator,  who  was  himself  a  solicitor,  and 
his  partner  in  the  business  of  a  solicitor,  Mr.  Allen.  [His  Lordship 
referred  to  the  terms  of  the  will,  and  continued:]  The  trust  estate 
has  been,  to  a  very  large  extent,  invested  on  mortgage.  It  apjx^ars 
that  not  fewer  than  twenty  mortgages  for  various  sums  have  been 
taken  by  the  trustees  as  investments,  all  of  them,  I  think,  with  the 
exception  of  one,  carrying  interest  at  5  per  cent. ;  and  it  appears  from 
the  admissions  which  have  been  put  in  evidence  with  reference  to  the 
bills  of  costs,  that  bills  of  costs  to  a  considerable  amount  have  been 
paid  in  respect  of  the  work  done  by  Mr.  Allen's  firm  for  the  estate, 
and  in  connection,  as  I  understand,  with  these  mortgages  and  other- 
wise. Mr.  Allen  took  the  more  active  part,  to  say  the  least,  in  making 
these  investments,  which  are  now  called  in  question,  and  I  propose 
first  to  deal  with  the  case  as  between  the  cestuis  que  trust  and  with 
him,  and  then  afterwards  to  consider  the  liability  of  Mrs.  Partington, 
his  co-trustee.  Now  a  trustee,  when  his  conduct  with  reference  to  an 
investment  on  mortgage  is  challenged,  has  two  courses  open  to  him. 
He  may,  in  the  first  place,  say  that  he,  in  making  the  investments, 
acted  as  an  ordinary  man  of  prudence  would  do ;  that  he  employed  a 
proper  solicitor  and  a  proper  valuer;  that  he  gave  them  all  proper 
and  necessary  instructions ;  that  he  received  from  the  solicitor  and 
from  the  valuer  opinions  and  valuations  which,  on  the  face  of  them, 
justified  him  in  acting  as  he  did  ;  and  he  may  say  that  that  being 
so,  if  it  turns  out  there  is  a  mistake  in  the  opinion  or  the  valua- 
tion, on  the  faith  of  which  he  acted,  that  is  the  misfortune  of  the 
cestui  que  trust,  but  is  not  to  be  attributed  to  him  as  a  fault.  Tn 
the  cases  which  I  have  to  consider  that  defence  is  relied  on.  Then 
the  trustee  has  also  got  what  I  may  call  a  second  line  of  defence. 
Supposing  it  turns  out  that  the  valuations  or  opinion  cannot  be  re- 
lied on,  it  is  still  open  to  him  to  show  that,  notwithstanding  that, 
the  investment  is  such  as  an  ordinary  man  of  prudence  would 
have  made  at  the  time,  and  that  it  is  a  proper  security.  In  that  case 
the  burden  of  showing  it,  I  apprehend,  clearly  lies  on  the  trustee  who 
asserts  this  to  be  the  case.  [His  Lordship  then  stated  the  facts  as  to 
the  advance  upon  the  Stalybridge  property,  and  continued:]  Now, 
upon  these  instructions,  some  observations  occur.  In  the  first  ])lace, 
Mr.  Allen  so  far  complies  with  the  rule  laid  down  by  Kay,  J.,  that  he 
informs  the  valuer  that  the  proposed  lenders  are  trustees.  But  he 
does  not  follow  the  rule  comjiletely,  because  that  is  only  half  of  what 
Kay,  J.,  said.  Kay,  J.,  said  trustees  "should  tell  their  valuers  that 
they  are  lending  trust  moneys,  and  that  they  do  not  desire  to  lend 
more  than  one-half  the  actual  value  of  the  property."  Therefore,  he 
did  not  completely  comply  with  the  requirements  as  laid  down  by  Kay, 


Sec.  6)  WHO   MAY   EXECUTE   A   TRUST.  507 

J.,  and  it  was  the  more  imperative  on  him  to  do  that  in  this  case,  be- 
cause the  property  is  not  mere  house  property,  as  was   the  case  in 
Olive  V.   Westerman.     It  partly  consisted  of  an  hotel,  and  the  rent 
might  depend  to  a  considerable  extent  on  the  license,  and  on  the  specu- 
lative nature  of  the  business  that  was  carried  on  there.     Therefore  I 
think  he  oui^dit  to  have  directed  the  attention  of  the  surveyors  to  that 
subject,  and  have  ascertained  actually  what  value  could  be  attributed 
to  the  property  independently  of  its  occupation  as  an  hotel.     But  I 
think  there  is  more  than  that.     The  property  is  stated  in  the  letter, 
and  was  known  to  Mr.  Allen  to  be  in  the  occupation  of  the  son-in-law 
of  Mr.  Marsland,  and  he  also  knew  that  Mr.   Marsland,  the  owner, 
himself  resided  in  the  hotel,  and  that  it  was  only  opened  as  an  hotel 
on  the  13th  Oct.  preceding.     He  also  either  knew,  or  ought  to  have 
known,  as  the  fact  was,  that  there  was  no  written  agreement  what- 
ever for  the  tenancy.     Now,  when  it  is  stated  the  property  is  let  at 
so  much,  and  the  relation  of  landlord  and  tenant  really  subsists,  the 
rent  reserved  is   some  evidence,  at  least   fair  evidence,  of  what   the 
annual  value  of  the  property  is,  but  where  it  has  only  been  occupied 
for  a  short  time  by  a  son-in-law  of  the  owner,  and  the  owner  himself 
is  living  in  the  house,  the  nature  of  the  relationship  is  such  that  no 
guide  as   to  the  annual  letting  value  can  be  derived   from  the  rent, 
which  is  stated  to  be  reserved.     I  think,  therefore,  that  it  was  the 
duty  of  Mr.  Allen  pointedly  to  call  the  attention  of  the  valuers,  if  he 
meant  to  rely  on  this  valuation,  to  this  circumstance,  and  to  ascertain 
what  the  real  annual  value  of  the  property  was,  and  that  it  is  not 
enough  for  him  to  say  that  the  proposed  mortgagees  are  trustees,  and 
assume  that  the  valuer  on  that  will  give  him  a  correct  valuation  which 
will  enable  him  to  act  without  exercising  any  judgment  in  the  matter. 
But  it  does  not  stop  there,  because,  so  far  from  directing  him  to  in- 
quire into  the  annual  letting  value  of  the  property,  he  gave  instructions 
simply  to  check  the  correctness  of  the  rentals,  and  therefore  the  in- 
dication, so  far  as  it  is  given  by  these  instructions  to  the  valuers  is 
simply  this:  check  the  accuracy  of  the  statements  in  the  particulars, 
that  is  to  say,  find  out  whether  the  hotel  is  really  let  for  £200.  a  year. 
Under  these  circumstances  I  do  not  think  that  is  enough.     Then  as 
to  the  valuation.     It  seems  to  me,  on  the  face  of  it,  that,  having  re- 
gard to  the  fact  that  Mr.  Allen  was  a  trustee-solicitor,  and  knew,  as 
the  evidence  shows,  perfectly  well  the  rule  of  the  Court,  it  was  not 
a  valuation  which  ought  to  have  been  acted  on  by  him  without  fur- 
ther inquiry.     He  says  that  the  valuer  whom  he  employs  is  telling  him 
that  a  trustee  may  safely  lend  to  the  extent  of  three-fourths  of  the 
value  which  he  puts  on  the  property,  the  rule  of  court,  of  which  he  was 
perfectly  aware,  being  that  prima  facie  on  the  best  real  estate  security 
you  are  only  to  go  to  the  extent  of  two-thirds,  this  being  not  property 
of  that  class,  but,  in  the  first  place,  house  property,  and.  in  the  second 
place,  property  deriving  part  of  its  value  from  the  circumstance  of  its 
being  occupied  for  business.     I  do  not  wish  to  pass  over  some  minor 


uOS  TITE    DUTIES   OF  A  TRUSTEE.  (Ch.  5 

matters,  which  are  these,  tliat  in  the  valuation  the  chief  rent  was 
inaccurately  stated  to  a  small  extent,  and  that  it  does  not  contain  the 
particulars  of  the  tenancies,  as  it  was  required  to  do ;  but  I  think  on 
that  footing  further  inquiry  ought  to  have  been  made  by  Air.  Allen  if 
he  was  really  desirous  to  act  as  a  prudent  man,  and  as  a  trustee  ought 
to  have  done.  So  far  as  appears,  the  only  further  inquiry  which  is 
made  is  the  conversation  with  the  surveyors  as  to  their  omission  to 
state  whether  they  had  checked  the  rentals.  Under  these  circum- 
stances, I  think,  that  this  valuation  was  one  which  cannot  be  relied 
on  by  him.  Then  the  onus  is  on  him  of  showing  that  he  acted  as  a 
prudent  man  in  lending-  this  money,  and  that  the  value  of  the  property 
in  1878  was  such  as  to  justify  an  advance  of  £2,500.  When  one  goes 
into  the  evidence  it  does  not  seem  to  me  that  he  in  the  least  fulfils 
the  burden  which  is  thrown  upon  him.  [His  Lordship  then  referred 
to  the  evidence  and  continued:]  Therefore,  it  seems  to  me  that,  on 
the  whole.  Air.  Allen  fails  as  regards  this  security,  and  I  must  hold 
it  was  an  improper  investment  in  the  first  instance.  [His  Lordship 
then  stated  the  facts  as  to  the  mortgage  for  £2.400.  on  the  property  at 
Goole  and  said  as  to  the  instructions  of  the  30th  Alarch,  1878:]  I  must 
make  this  remark,  not  that  I  intend  to  decide  the  case  on  it;  but  I  re- 
peat what  I  said  in  the  course  of  the  argument,  that  to  introduce  the  val- 
uer to  the  mortgagor,  or  to  the  mortgagor's  agent,  as  presumably  Air. 
Gardiner  was,  for  the  purpose  of  negotiating  the  amount  of  the  fee, 
seems  to  me  to  be  an  inadvisable  course  on  behalf  of  trustees  or  persons 
in  the  position  of  Air.  Allen.  In  the  case  wdiich  came  before  me  last 
year,  and  which  was  referred  to  in  the  argument  (Smith  v.  Stoneham), 
it  was  discovered  that  advantage  had  been  taken  of  that  circumstance 
to  induce  the  valuer  by  the  promise  of  a  further  fee  from  the  mortgagor 
to  make  a  favorable  valuation.  I  do  not  say  that  anything  of  the  kind 
occurred  here.  I  have  no  ground  for  saying  so.  I  merely  make  the 
remark  in  passing,  that  the  course  pursued  here  was  an  unfortunate 
one,  and  does  sometimes  give  rise  to  unfortunate  circumstances.  But, 
as  I  said  before,  I  do  not  decide  the  case  in  any  way  on  that  ground. 
Then  as  to  the  particulars,  this  remark  occurs :  It  is  clearly  the  duty 
of  a  trustee,  or  anybody  acting  on  his  behalf,  who  proposes  to  lend 
money  on  a  security,  to  ascertain  that  the  particulars  which  are  given 
to  him  with  reference  to  that  security  are  correct.  It  cannot  be  right 
for  a  trustee  to  assume  without  investigation  that  the  statements  made 
to  him  by  the  proposed  borrower  are  correct.  The  representation 
which  is  made  with  reference  to  this  property  is,  that  it  is  a  freehold 
property  let  at  weekly  rents.  From  that  at  once  it  is  to  be  inferred, 
and  without  any  inquiry,  and,  of  course,  if  it  could  not  be  inferred  it 
is  the  duty  of  the  trustee  to  ascertain,  that  the  landlord  pays  all  the 
rates  and  taxes.  The  rates  and  taxes  and  other  outgoings  are  rep- 
resented to  be  of  the  amount  of  £21.  a  year.  It  was  the  duty  of  the 
trustee  to  ascertain  first  of  all  that  these  were  the  weekly  rents,  and 
that  all  the  property  was  let;  and  secondly,  what  the  amount  of  the 


Sec.  6)  WHO  MAY   EXECUTE  A  TRUST.  5U9 

rates  and  other  outgoings  would  be.  There  is  no  evidence  before  me 
that,  except  by  means  of  the  letter  which  is  addressed  to  Messrs.  Fox, 
the  valuers  chosen  by  Mr.  Allen,  Mr.  Allen  did  in  any  way  ascertain 
or  endeavor  to  ascertain  whether  the  particulars  thus  given  to  him 
were  correct,  and  there  is  no  indication  in  this  letter,  as  there  was  in 
the  letter  to  Messrs.  liridgen  in  the  former  case,  even  to  check  the  cor- 
rectness of  the  rentals,  or  to  insert  the  particulars  of  the  tenancies. 
There  is  still  less  any  direction  to  ascertain  whether  the  statement 
as  to  the  amount  of  rates  and  outgoings  was  correct.  Now,  in  point 
of  fact,  it  turns  out  that  at  the  time,  out  of  the  twenty-one  houses  said 
to  be  let  at  weekly  rents,  four  were  unlet.  It  turns  out  that  in  point 
of  fact  the  sum  payable  for  rates  and  outgoings  was  very  much  larger 
than  stated.  It  appears  that  in  Goole  the  rates  are  very  high,  they 
amount  to  6s.  in  the  pound,  and  the  statement  which  is  made  in  evi- 
dence in  reference  to  them  is,  that  on  this  property  alone  the  amount 
of  rates  would  come  to  very  nearly  £60.  Then,  of  course,  if  the  se- 
curity had  to  be  enforced,  the  trustees  could  not  themselves  collect 
weekly  rents,  the  one  residing  in  London  and  the  other  residing  in 
Manchester,  and  it  would  have  been  necessary  that  a  collector  should 
be  employed.  That  would  be  another  deduction  from  the  amount. 
And  then  there  was  the  ordinary  average  amount  of  repairs  to  be  con- 
sidered. Now,  there  is  no  evidence  that  in  this  respect  Mr.  Allen 
made  any  inquiry  or  gave  any  direction  whatever,  except  the  letter 
to  Messrs.  Fox,  the  valuers.  Mr.  Fox  has  made  an  affidavit,  and 
he  states  what  he  did  in  the  matter,  and  he  says  that  he  found  four  of 
the  houses  were  unlet,  that  is  to  say,  a  fifth  part  of  the  property,  and 
that  he  made  inquiries  of  certain  of  the  tenants  of  the  houses  as  to 
the  rents  which  were  then  paid,  and  that  the  result  of  the  inquiries 
was  his  finding  that,  after  deducting  the  rates  and  taxes  from  the  gross 
rentals,  the  net  annual  value  of  the  property  was  £217.  That  is  ob- 
viously insufficient.  He  only  inquired  of  some  of  the  tenants.  He 
did  not  report,  as  he  ought  to  have  done,  that  the  property  was  new. 
But  that  was  a  matter  which  a  trustee  ought  to  have  ascertained,  and 
there  was  no  inquiry  made  at  all,  so  far  as  appears,  as  to  the  amount 
of  the  rates  and  taxes,  which  turned  out  to  be  very  dififerent  from 
what  they  were  represented  to  be.  [His  Lordship  then  referred  to 
the  alteration  in  Messrs.  Fox's  report  of  the  10th  April  1878  and 
continued:]  In  the  first  instance,  the  valuation  which  was  given  by 
Messrs.  Fox  went  quite  up  to  the  limit  to  which,  according  to  the 
rule  I  have  already  referred  to,  and  of  which  Mr.  Allen  was  perfectly 
aware,  a  prudent  trustee  would  prima  facie  lend.  It  is  now  in- 
creased to  £2.400.,  going  considerably  beyond  that  limit;  and  if  Mr. 
Allen  is  to  rely  upon  that  valuation  so  altered,  it  is  surely  incumbent 
on  him  to  show  that  there  were  circumstances  in  the  case  which  jus- 
tified his  lending  that  additional  sum  on  the  property.  He  has  given 
no  evidence  as  to  the  inquiries  he  made  beyond  this  letter,  wdiich  is  in 
evidence,  which  passed  between  him  and  Mrs,  Partington.     It  seems 


510  TIIK   DUTIES   OF   A   TRI'STEE.  (Ch.  5 

to  me  a^ain  there  that  he  has  fallen  short  of  the  duty  which  a  trustee 
undertakes  when  he  lends  on  property  of  this  kind,  and  that  again  the 
valuation    he   obtained    is    not   sufficient    under    the   circumstances   to 
justify  what  he  did.     Then,  we  have  to  consider  whether,   notwith- 
standini^  that  the  valuation  is  not  satisfactory,  the  property  is  one  on 
which  a  i)rudent  man   would  have  lent.     It  seems  to  me  again,  the 
burden  being  on  him,  he  falls  far  short  of  justifying  it,  and  that,  in 
fact,  the  evidence  is  the  other  way.      [His  Lordship  referred  to  the 
evidence,  and  continued:]     Upon  the  whole,  I  have  come  to  the  con- 
clusion that  this  again  was  an  improper  investment.      [His  Lordship 
then  dealt   with  the  mortgage  for  il.500..  coming  to  the  conclusion 
that  that  al.so  was  an  improper  investment.     He  continued:]     I  hold, 
therefore,  as  regards  all  the  three  mortgages,  they  were  improper  in- 
vestments made  from  time  to  time  by  Mr.  Allen,  and  that  he  is  at  all 
events  liable.     But  there  still  remains  the  question  to  consider  whether 
Mrs.  Partington,  who  did  not  take  so  active  a  part  in  the  transaction 
is,  as  between  her  and  the  cestuis  que  trust,  also  liable.     It  was  con- 
tended  in  the   first  place  on   her  behalf  that   she  was   not;   and  the 
trustees'   indemnity   clause,   wliich   goes   somewhat   beyond   the    usual 
form,  was  relied  upon.     That  clause  runs  in  this  way:     "I  declare 
that  my  trustees  shall  not  be  answerable  for  each  other's  acts  or  re- 
ceii:)ts,  nor  for  any  bank  or  banker  to  whom  any  trust  property  may 
be  intrusted  for  the  purpose  of,  or  until  an  investment,  or  any  other 
loss  whatever  happening  without  their  own  respective  wilful  default, 
but  shall  be  responsible  for   so  much  money   only  as   shall   come  to 
their  own  respective  hands,"  and  so  forth.     It  does  not  seem  to  me 
that  that  meets  this  case.     What  is  complained  of  is  that  the  money 
subject   to   the    trust    was    invested    in    an    improper    security.     That 
money  was  standing  to  the  joint  account  of  Mrs.  Partington  and  Mr. 
Allen.     The  check  was  drawn  upon  that  account,  and  signed  by  IMrs. 
Partington  as  well  as  by  ^Ir.  Allen,  and  the  money  was  handed  over, 
as  I  assume,  to  the  mortgagor.     That  was  her  act  just  as  much  as  it 
was  Mr.  Allen's,  and,  if  the  investment  was  an  improper  one,  it  does 
not  seem  to  me  that  she  can,  on  the  ground  of  this  indemnity  clause, 
be  exonerated   from   it.     But   then   it   was   said  that   she,   under  the 
terms  of  the  will,  was  employing  Allen  as  her  solicitor,  that  she  was 
entitled  to  employ  a  solicitor  within  the  proper  scope  of  his  bu.siness, 
and  that  she  did  employ  him  to  do  matters  which  were  within  the 
scope  of  that  business,  and  that  she  acted  on  his  advice,  and,  conse- 
quently, if  he  made  a  mistake,  or  was  guilty  of  any  negligence,  the  loss 
must  fall  on  the  trust  estate,  and  not  on  her.     Now  the  answer  which 
was  given,  as  I  understood,   in  the  first  instance,  to  that  argument 
was  this— that  it  does  not  in  the  least  matter  that  Mrs.  Partington  em- 
ployed Mr.  Allen  as  her  solicitor;  that,  even  if  she  had  employed  an 
independent  solicitor,  and  he  had  been  guilty  of  negligence,  still  she 
was  answerable  for  his  acts.     I  am  not  prepared  to  decide  this  case 
on  that  broad  view.     There  are   certainly   a  number  of   cases   from 


Sec.  6)  WHO   MAY    EXECUTE   A   TRUST.  511 

which  I  do  not  desire  to  chssent  in  any  way  in  which  it  has  been  held 
that  the  advice  of  a  solicitor,  or  the  opinion  of  counsel,  does  not  in- 
demnify trustees.  If  a  trustee  is  distributing  a  fund,  and  any  diffi- 
culty arises  as  to  the  persons  who  may  be  entitled,  he  can  have  re- 
course to  the  court,  and  he  would  be  completely  indemnified  by  the 
order  of  the  court.  If  under  those  circumstances  he  chooses  to  rely 
on  the  advice  of  a  solicitor  or  the  opinion  of  counsel,  he  gets  no  in- 
demnity, and  he  must  take  the  consequences  of  so  doing.  The  same 
remarks  apply  to  many  other  acts  of  trustees,  and  the  facilities  which 
are  now  given  by  the  present  practice  to  trustees  for  coming  and 
obtaining  the  opinion  of  the  court  as  to  matters  in  the  administration 
of  the  trust  are  so  great,  that  in  that  class  of  cases  the  rule  to  which 
I  have  referred  is  not  in  the  least  likely  to  be  relaxed.  But,  leaving 
all  those  cases  in  full  and  perfect  force  and  entirely  undisturbed,  there 
remain  a  large  class  of  cases  in  wdiich  the  opinion  of  the  court  can- 
not be  got,  and  yet  in  which  it  is  necessary  to  have  the  advice  of  a 
solicitor.  The  present  case  is  an  illustration.  Here  trustees  are  about 
to  invest  on  mortgage  security.  They  must  employ  a  solicitor  to 
investigate  the  state  of  the  title,  and  it  cannot  be  that  at  every  stage 
they  are  to  come  to  the  court  and  ask  the  court  to  say  whether  the 
solicitor  is  doing  what  is  right.  Yet  it  has  been  held,  in  cases  of  which 
Hopgood  V.  Parkin,  22  L.  T.  Rep.  N.  S.  772;  L.  Rep.  11  Eq.  74,  is 
one,  that  a  trustee  employing  a  solicitor  as  to  whose  competence  no 
objection  could  be  raised,  and  who  yet  is  guilty  of  some  negligence,  is 
liable  to  make  good  a  loss  of  the  trust  fund  arising  from  the  solicitor 
having  failed  to  take  proper  precautions.  Lord  Romilly  in  that  case 
says :  "It  is  material  to  consider  the  course  pursued  by  the  solicitor 
of  the  trustee.  It  is  true  that  his  conduct  is  not  theirs;  but  he  is 
appointed  by  them,  he  is  their  agent  for  the  management  of  the  affairs 
of  the  trust,  and  if  he  misconducts  himself,  through  ignorance  or  neg- 
ligence, or  wilfully,  he  is  answerable  to  the  trustees,  and  they  cannot, 
in  my  opinion,  throw  any  of  the  loss  thereby  occasioned  on  the  cestuis 
que  trust." 

That  case  of  Hopgood  v.  Parkin  was  cited  in  the  case  of  Speight  v. 
Gaunt.  Sir  George  Jessel  does  not,  so  far  as  I  observe,  comment 
on  it  directly,  but  he  does  observe  that  there  are  cases  which  have  been 
decided  against  trustees  which  would  be  now  repudiated.  I  do  not 
know  whether  Hopgood  v.  Parkin  was  one  of  those  which  he  had  in 
view ;  but  Lindley,  L.  J.,  expressly  deals  with  Hopgood  v.  Parkin,  and 
he  says  in  respect  to  it :  "That  case  certainly  goes  much  further  than 
I  should  have  thought  right ;  but  in  the  result  the  case  was  appealed — 
an  infant  was  concerned,  and  the  Court  of  Appeal  sanctioned  a  com- 
promise in  behalf  of  the  infant."  Then  he  adds  this:  "I  wish  most 
emphatically  to  say,  if  trustees  are  justified  by  the  ordinary  course  of 
business  in  employing  agents,  and  they  do  employ  agents  of  good 
repute,  and  whose  fitness  they  have  no  reason  to  doubt,  and  employ 
those  agents  to  do  that  which  is  in  the  ordinary  course  of  their  busi- 


512  THE   DUTIES   OF   A  TRUSTEE.  (Cll.  5 

ness,  I  protest  against  the  notion  that  the  trustees  guarantee  the  hon- 
esty or  solvency  of  the  agents  employed."     That  is  laid  down  with 
respect  to  the  empli)\iucnt  of  a  hroker,  and  I  must  say,  speaking  for 
myself,  that  I  do  not  see  why  a  similar  observation  should  not  apply 
to  the  case  of  a  trustee  employing  a  solicitor  in  good  repute  whose 
fitness  he  has  no  reason  to  doubt,  and  where  the  employment  is  only 
to  do  that  which  is  in  the  ordinary  course  of  business.     I  do  not  see 
why  in  a  case  of  that  sort  a  trustee  should  be  held  to  guarantee  the 
solvency  or  competency  of  his  solicitor  any  more  than  he  guarantees 
the  solvency  or  honesty  of  his  broker,  and,  if  ever  the  case  arises  in 
which  that  has  to  be  decided,  I  shall,  if  it  come  before  me,  consid-cr 
long  before  I  follow  Ilopgood  v.  Parkin.     But,  in  my  opinion,  in  the 
present  case  that  question  does  not  arise.    In  the  first  place,  Mrs.  Part- 
ington was  tenant  for  life,  and  she  was  interested  to  a  certain  extent 
in  getting  a  good  income ;  and  it  is  possible — I  say  no  more — that  that 
may  have  influenced  her  mind,  perhaps  unconsciously,  and  rendered 
her  less  cautious  than   she  would  otherwise  have  been.     And,  sec- 
ondly,— and  I  here  desire  to  express  myself  with  the  greatest  caution, 
because  there  is  still  an  imjxjrtant  question  remaining  to  be  decided 
between  her  and  Mr.  Allen— I  think,  giving  her  the  full  benefit  of 
everything  which  may  be  said  for  her,  and  having  regard  to  the  cor- 
respondence which  took  place,  I  should,  if  I  held  she  was  free  from 
liability  in  this  case,  be  allowing  her  to  do  that  which  the  authorities 
say  a  trustee  is  not  at  liberty  to  do,  namely,  delegate  the  responsibility 
which  he  himself  must  assume.     She  could  not  delegate  that  responsi- 
bility to  Mr.  Allen  in  his  capacity  of  co-trustee,  because  the  cestuis 
que  trust  are  entitled  to  the  benefit  of  the  independent  judgment  of 
every  trustee.     She  could  not  properly  in  this  case  delegate  it  to  him 
if  she  employed  him  as  solicitor,  because  she  was  bound,  according  to 
what  was  laid  down  in  Speight  v.  Gaunt  and  Whiteley  v.  Learoyd,  not 
to  delegate  her  duty  as  trustee  to  the  solicitor,  but  simply  to  take 
his  advice,  and  then  consult  and  act  on  it  as  a  prudent  trustee  would 
do.     In  this  case,  without  going  into  the  evidence,  for  the  reasons  I 
have  mentioned,  I  think  Mrs.  Partington  failed  in  that  respect,  if  she 
relied  on  Mr.  Allen ;  and,  if  I  were  to  hold  her  free  from  responsibility 
in  the  matter,  I  should  be  allowing  her  to  delegate  to  him  the  respon- 
sibility she  was  bound  to  take  upon  herself.     I  therefore  hold,  with- 
out prejudice  to  any  question  between  her  and  Mr.  Allen,  that,  as  be- 
tween her  and  the  cestuis  que  trust,  she  is  responsible  for  the  invest- 
ments made,  jointly  and  severally,  with  Mr.  Allen. 


Ch.  6)  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  513 


CHAPTER  VI. 

CONSTRUCTIVE  TRUSTS  AND  EQUITABLE  LIENS— TRAC- 
ING PROPERTY  WRONGFULLY  APPROPRIATED 
INTO  ITS  SUBSTITUTE. 


FERRARS  V.  CHERRY  et  al. 

(In  Chancery,  1700.     2  Vernon,  .38.3.) 

The  defendant  purchased  from  the  plaintiff's  father  and  mother  the 
lands  in  question  by  deed  and  fine,  whereby  they  conveyed  to  him 
and  his  heirs ;  whereas  pursuant  to  an  agreement  made  on  their  mar- 
riage, the  estate  was  settled  to  the  plaintiff's  father  for  life,  part 
to  the  mother  for  her  jointure,  remainder  of  the  whole  to  the  first 
and  other  sons  in  tail  male,  etc.  And  it  appeared  by  the  proofs  in  the 
case,  that  the  defendant  Cherry  had  notice  of  the  settlement,  and  that 
the  same  amongst  the  other  writings  was  delivered  to  him.  Upon  his 
purchase,  the  defendant  took  in  a  mortgage  term,  which  was  prior  to 
the  settlement,  and  enters,  and  afterwards  sold  the  estate,  part  to  How- 
land,  and  other  part  to  Harwood,  who  were  made  defendants  to  the 
bill,  and  pleaded  they  were  purchasers  without  notice ;  and  the  plain- 
tiff' not  being  able  to  prove  any  notice  upon  them,  the  bill  as  against 
them  was  dismissed;  but  as  against  the  defendant  Cherry,  the  court 
decreed  him  to  account  for  the  consideration  money  for  which  he 
sold  the  estate,  with  interest,  from  the  decease  of  the  plaintiff's  father 
and  mother,  thereout  discounting  what  was  due  on  the  mortgage  made 
prior  to  the  settlement.     *     *     *  i 


LOWTHER  V.  CARLTON. 

(In  Chancery,  before  Lord  ChanceUor  Ilardwicke.  1741.     2  Atkins.  242.) 

Lord  Chancellor.  -  This  is  a  bill  brought  to  impeach  a  purchase 
made  thirty-two  years  ago:  the  defendant  was  a  purchaser  with  no- 
tice from  the  Marquis  of  Wharton,  who  bought  without  notice. 

It  is  certainly  the  rule  of  this  court,  that  a  man  who  is  a  purchaser 
with  notice  himself  from  a  person  w^ho  bought  without  notice,  may 
shelter  himself  under  the  first  purchaser,  or  otherwise  it  would  very 
much  clog  the  sale  of  estates.     *     *     * 

1  A  part  of  the  case  is  omitted.  2  Only  part  of  the  case  is  given. 

Ken. Tr.— .3.3 


514  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  (Cll.  6 

BOVEY  V.  SMITH. 

(In  Chancery,  before  Tx)rd  Chancellor  Nottinf^ham.  1082.     1  Vernon,  60.) 

A  trustee  having  sold  the  land  to  a  stranger,  that  had  no  notice  of 
the  trust,  and  a  fine  with  proclamations  and  five  years  past,  the  trus- 
tee afterwards,  for  valuable  consideration  really  paid,  purchases  these 
lands  again  of  the  vendee.  And  it  was  decreed  by  the  Lord  Chan- 
cellor, with  the  concurring  opinion  of  the  Lord  Chief  Justice  North, 
that  the  trustee,  notwithstanding  the  fine,  proclamations,  and  non- 
claim  for  five  years,  should  stand  seized  in  trust  as  at  first,  as  if  the 
land  had  never  been  sold,  nor  any  fine  levied. 


BRAINARD  SHALER  and  Others  v.  MARY  E.  TROW- 
BRIDGE and  Others. 

(Court  of  Errors  and  Appeals  of  New  .Jersey,  1877.    28  N.  J.  Eq.  595.) 

Van  Syckel,  J.  ^  In  January,  1865,  Joseph  A.  Trowbridge,  Brain- 
ard  Shaler,  John  Kiersted  and  Wynkoop  Kiersted  entered  into  part- 
nership in  the  leather  business,  which  was  terminated  by  the  death  of 
Trowbridge  December  14th,  1869.  During  its  continuance  Trowbridge 
had  charge  of  the  books  and  finances.  The  contested  question  on  this 
appeal  is,  whether  certain  real  estate  and  certain  policies  of  life  in- 
surance, to  which  Mary  E.  Trowbridge  held  the  legal  title  at  her 
husband's  death,  should  be  decreed  to  be  in  equity  the  property  of  the 
firm.  The  evidence  shows  that  Trowbridge  alone  drew  the  firm's 
checks,  and  exclusively  managed  its  money  affairs,  and  that  the  yearly 
balance-sheets,  made  up  and  presented  by  him  to  the  firm,  were  false 
and  fraudulent.  Checks  of  the  firm  to  the  amount  of  $103,155.97  were 
drawn  by  him  to  his  own  individual  use,  and  paid  at  the  bank,  none 
of  which  were  either  included  in  his  yearly  balance-sheets,  or  charged 
to  him  on  the  books  of  the  firm.  At  the  same  time  the  amount  drawn 
by  him  during  the  existence  of  the  partnership,  and  actually  charged 
to  his  accounts,  exceeded  what  he  would  have  been  entitled  to,  by  the 
articles  of  co-partnership,  by  more  than  $15,000;  so  that,  upon  an 
adjustment  of  the  partnership  concerns,  he  will  be  indebted  to  the  firm 
in  more  than  $118,000. 

Out  of  the  moneys  drawn  upon  the  uncharged  checks,  or  by  the 
checks  themselves  in  some  instances,  Trowbridge  paid  for  the  real 
estate  and  the  policies  of  insurance  now  in  controversy.  The  policies 
were  issued,  in  the  first  place,  in  favor  of  Trowbridge  himself,  and 
the  half-yearly  premiums  paid  by  the  uncharged  checks  of  the  firm 
to  the  insurance  company's  agent.     In  April,  1868,  they  were  changed, 

3  The  opinion  of  the  master  is  omitted. 


Ch.  6)     CONSTRUCTIVE  TRUSTS,  ETC. TRACING  PROPERTY. 


515 


by  Trowbridge's  request,  so  as  to  be  payable  to  his  wife,  who,  after 
her  husband's  death,  received  the  several  amounts  due  upon  the  policies 
from  the  insurance  companies.  Upon  this  statement  of  facts,  which 
the  case  satisfactorily  establishes,  shall  the  real  estate  and  the  pro- 
ceeds of  the  policies,  be  declared  to  be  held  in  trust  by  the  wife  as  the 
property  of  the  firm? 

This  is  not  a  case  of  resulting  trust,  where  the  trust  results,  or  is 
implied,  from  the  contracts  and  relations  of  the  parties.  It  arises, 
ex  maleficio,  out  of  the  active  fraud  and  dishonest  conduct  of  the 
partner  Trowbridge  and  may  be  termed  a  constructive  trust,  which 
equity  will  fasten  on  the  conscience  of  the  offending  party,  and  con- 
vert him  into  a  trustee  of  the  legal  title,  and  order  him  to  hold  and 
execute  it  in  such  manner  as  to  protect  the  rights  of  the  defrauded 
party,  and  promote  the  interests  and  safety  of  society.  It  differs  from 
other  trusts  in  that  it  is  not  within  the  intention  or  contemplation  of 
the  parties  at  the  time  the  contract  is  made  upon  which  it  is  con- 
strued by  the  court,  but  it  is  thrust  upon  a  party  contrary  to  his  in- 
tention and  against  his  will.     1  Perry  on  Trusts,  §  166. 

If  a  person,  occupying  a  fiduciary  capacity,  purchases  property  with 
fiduciary  funds  in  his  hands,  and  takes  the  title  in  his  own  name,  he 
will,  by  construction,  be  charged  as  a  trustee  for  the  person  entitled 
to  the  beneficial  interest  in  the  fund  with  which  such  purchase  was 
made.  This  rule  applies  to  a  partner  who  fraudulently  purchases  for 
himself  with  the  partnership  funds,  and  it  extends  to  personal  as  well 
as  real  estate ;  in  every  case  the  equitable  ownership  rests  in  the  per- 
son from  whom  the  consideration  moves.  Johnson  v.  Dougherty,  18 
N.  J.  Eq.  406 ;  Cutler  v.  Tuttle,  19  N.  J.  Eq.  558 ;  Dyer  v.  Dyer,  1 
Lead.  Cas.  in  Eq.  203 ;   1  Perry  on  Trusts,  §§  127-130. 

In  Taylor  v.  Plumer,  3  M.  &  S.  575,  Lord  Ellenborough  said  that 
if  A  is  trusted  by  B  with  money  to  purchase  a  horse  for  him,  and  he 
purchases  a  carriage  with  that  money,  B  is  entitled  to  the  carriage. 
That  it  made  no  difference,  in  reason  or  in  law,  into  what  other  form, 
different  from  the  original,  the  change  may  have  been  made,  for  the 
product  of  or  substitute  for  the  original  thing  still  follows  the  nature 
of  the  thing  itself,  as  long  as  it  can  be  ascertained  to  be  such,  and  the 
right  ceases  only  when  the  means  of  ascertainment  fail.  This  is  de- 
clared to  be  the  settled  rule,  in  Story's  Eq.  Juris.  §§  1258,  1259. 

So  completely  are  the  two  things  identified,  even  at  law,  where  the 
conversion  can  be  clearly  traced,  that  in  equity  a  distinction  can  never 
be  drawn,  between  the  money  misappropriated  and  the  results  of  its 
investment,  in  favor  of  the  fraud-doer. 

Nor  does  it  make  any  difference  that  the  investment  turns  out  to  be 
a  profitable  one,  for,  whatever  the  profit  may  be,  it  must  belong  to 
the  cestui  que  trust.  It  is  a  constructive  fraud  upon  the  latter  to  use 
his  property  unlawfully  and  to  retain  the  profit  of  the  misapplication, 
it  being  a  fundamental  principle  in  regard  to  a  trustee  that  he  shall 
derive  no  gain  to  himself   from  the  employment  of  the  trust   fund. 


516  CONSTRUCTIVE   TRUSTS,  ETC. TRACING    PROPERTY.  (Cll.  6 

2  Story's  Eq.  Juris.   §   1261 ;    McKnight's  Ex'rs  v.  Walsh.  24  X.  J. 
Eq.  509. 

Much  more  does  pubHc  policy  require  tliat  one  who  has  corruptly 
thrust  himself  into  the  position  of  a  trustee,  shall  not  profit  by  his 
fraud.  The  fact  that  this  property  has  been  passed  into  the  hands  of 
the  wife  does  not  prevent  the  application  of  the  equitable  principles. 
She  received  it  as  a  gift  from  her  husband,  without  paying  any  con- 
sideration whatever  for  it.  When  once  a  fraud  has  been  committed, 
not  only  is  the  person  who  committed  the  fraud  precluded  from  de- 
riving any  benefit  from  it.  but  every  innocent  person  is  so,  likewise, 
unless  he  has.  in  good  faith,  acquired  a  subsequent  interest  for  value ; 
for  a  third  person,  by  seeking  to  derive  any  benefit  under  such  a 
transaction,  or  to  retain  any  benefit  resulting  therefrom,  becomes  par- 
tices  criminis,  however  innocent  of  the  fraud  in  the  beginning.  1 
Perry  on  Trusts,  §  172,  and  cases  cited. 

It  is  urged  that  a  life  policy  should  be  exempt  from  the  equitable 
rule  which  applies  to  other  transactions,  because  it  differs  in  its  char- 
acter from  ordinary  investments,  and  is  a  beneficial  provision  for  the 
family,  which  should  be  favored. 

Public  policy  clearly  forbids  the  adoption  of  this  suggestion;  it 
would  invite  the  commission  of  the  wTong  by  assuring  the  wrongdoer 
that  there  is  one  mode  in  which  he  could  surely  profit  by  his  turpitude, 
in  securing  a  provision  for  his  family.  The  policy  is  the  thing  which 
the  partnership  money  purchased,  and  it  stands  in  the  place  of  what 
was  corruptly  abstracted.  Whether  the  policy  would  be  productive, 
when  terminated  by  death,  of  more  or  less  than  the  premiums  paid 
upon  it,  would  depend  upon  the  length  of  the  life  insured.  The  fact 
that  it  has  a  contingent  value  does  not  distinguish  it,  in  principle, 
from  an  investment  in  the  purchase  of  stock,  or  of  an  annuity,  and 
can  give  no  support  to  the  claim  of  the  widow,  that  nothing  should  be 
exacted  of  her  beyond  the  amount  of  premiums  paid  upon  it  out  of 
the  firm  funds.  If  this  suit  had  been  prosecuted  in  the  lifetime  of  the 
husband,  and  the  policy  had  been  disposed  of  to  the  company  for  its 
surrender  value,  it  would  hardly  have  been  insisted  that  he  could  claim, 
in  a  court  of  conscience,  a  rig^it  to  any  excess  of  the  proceeds  after 
refunding  to  his  firm  the  amount  of  the  premiums.  All  the  premiums 
were  paid  with  the  partnership  funds — nothing  was  paid  by  the  wife. 
The  transfer  to  her,  therefore,  cannot  change  the  equities,  nor  divest 
the  trust. 

The  inflexible  rule,  in  equity,  will  be  equally  violated,  whether  she 
takes  the  value  of  the  policies  in  excess  of  the  premiums  paid,  or  the 
appreciation  in  the  real  estate. 

Trowbridge  contributed  nothing,  in  money  or  otherwise,  to  the  pur- 
chase or  support  of  the  policies.  The  entire  sum  derived  from  them 
is  the  product  of  the  partnership  money.  He  did  no  act  upon  which 
he  could  have  based  the  slightest  claim  in  equity  to  be  benefitted  by 
the  transaction.     It  would  be  idle  to  denounce  his  turpitude,  and,  at 


Ch.  6)  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  517 

the  same  time,  to  reward  it  by  allowing  him  to  transmit  its  fruits  to 
his  family.  His  wife  can  derive,  through  so  corrupt  a  source,  no 
equitable  rights  to  these  policies ;  neither  public  policy,  nor  the  intrin- 
sic justice  of  the  case,  would  be  promoted  by  allowing  her  to  do  so. 

In  my  opinion,  the  decree  below  should  be  affirmed,  and  the  case 
remitted,  that  it  may  be  proceeded  in  accordingly.  * 

Decree  unanimously  affirmed. 


RICHARD  G.  WATSON  v.  ROBERT  THOMPSON,  Admin- 
istrator, et  al. 

(Supreme  Court  of  Rhode  Islaud,  1879.     12  R.   I.  4G6.) 

Bill  in  equity  to  establish  a  title  to  realty.  The  facts  are  stated  in 
the  opinion  of  the  court. 

DuRFEE,  C.  J.  ^  This  is  a  suit  in  equity  by  Richard  G.  Watson,  a 
son  and  one  of  the  heirs  at  law  of  Elisha  Watson,  Jr.,  late  of  South 
Kingston,  deceased,  against  said  EHsha's  widow  and  the  other  heirs, 
and  against  the  administrator  of  his  estate.  The  bill  sets  forth  that 
Susan  Watson,  a  former  wife  of  Elisha,  died  May  7,  1834,  intestate, 
and  the  owner  of  an  undivided  moiety  of  the  Burke  Farm,  so  called, 
in  South  Kingston.  She  left  her  husband  and  two  children  by  him, 
to  wit.  the  complainant  and  Henry  C.  Watson,  then  infants,  surviving 
her.  Elisha  Watson,  Jr.,  was  subsequently  appointed  guardian  of  the 
two  children,  and  as  such  was  authorized  by  the  General  Assembly, 
at  its  January  session  in  1842,  to  sell  all  their  right,  title,  and  interest 
in  the  Bufke  Farm,  under  the  advice  and  direction  of  the  Court  of 
Probate  of  South  Kingston,  first  giving  bond  with  surety,  to  make 
the  sale  according  to  the  direction  of  said  court,  and  to  invest  the 
proceeds  in  other  real  estate  or  productive  property  for  the  benefit  of 
the  children  after  his  decease,  he  being  entitled,  as  tenant  by  the 
curtesy,  to  the  use  and  income  of  the  property  during  his  life.  Elisha 
Watson,  Jr.,  accordingly  sold  the  Burke  Farm  under  the  direction 
of  the  court,  first  giving  bond  as  directed.  He  received  $2,000  for 
the  half  in  which  his  children  were  interested.  Subsequently,  in  1843, 
he  purchased  a  farm,  called  the  Bentley  Farm,  at  or  near  Narragansett 
Pier,  in  South  Kingston,  containing  about  one  hundred  and  eighty- 
three  acres,  for  which  he  paid  the  sum  of  $8,250.  The  bill  alleges 
that  the  $2,000,  proceeds  of  the  sale  of  one-half  of  the  Burke  Farm, 
were  used  in  making  up  said  sum  of  $8,250.,  and  were  invested  by 
Elisha  Watson,  Jr.,  in  the  Bentley  Farm  for  the  benefit  of  his  children 

4  Lehman  v.  Gunn,  124  Ala.  213,  27  South.  475.  51  L.  R.  A.  112.  82  Am.  St. 
Rep.  159  (1899);  Holmes  v.  Oilman,  138  N.  Y.  3(;9.  34  N.  B.  205,  20  L.  R.  A. 
56(J,  34  Am.  St.  Rep.  4t;3  (1893);  Dayton  v.  Claflin  Co..  19  App.  Div.  120,  45 
N.  Y.  Supp.  1005  (1897) ;  Bromley  v.  Cleveland,  Cincinnati,  Chicago  &  St. 
Louis  Ry.  Co.  and  Others.  103  Wis.  502.  79  X.  W.  741  (1899). 

6  A  part  of  the  opinion  Is  omitted. 


518  CONSTRUCTIVE   TRUSTS,  ETC. TRACING    PROPERTY,  (Ch.  6 

after  his  decease.  Wc  think  the  evidence  shows  that  the  $2,000.  were 
used  in  the  purchase  of  tlie  Bentley  Farm.  After  1843,  Elisha  Wat- 
son, Jr.,  sold  and  conveyed  to  different  persons  many  different  parcels 
of  the  Bentley  Farm,  until,  at  the  time  of  his  decease,  he  had  reduced 
the  Farm  to  between  fifty  and  sixty  acres,  a  part  of  which  he  had 
mortgag-cd.  He  died  May  31,  1S77,  deeply  insolvent.  Henry  C.  Wat- 
son had  died  before  him,  December  9,  1<S6;3,  bcin.f^  childless  and  unmar- 
ried. The  bill  alleges  and  claims  that  the  complainant  succeeded  to  the 
interest  of  Henry  C.  Watson  in  the  Bentley  Farm  as  his  sole  heir  at 
law.  The  bill  also  alleges  and  claims  that  the  part  of  the  Bentley  Farm 
remaining  unsold  was  reserved!  "by  Elisha  Watson,  Jr.,  for  the  com- 
plainant as  his  equitable  part  thereof.  The  prayer  is,  that  a  decree 
may  be  entered  vesting  the  title  of  the  remaining  part,  or  of  so  much 
thereof  as  he  is  equitably  entitled  to,  in  the  complainant. 

[After  holding  that  the  complainant  was  not  the  heir  at  law  of 
Henry  C.  Watson  the  Chief  Justice  continued:] 

2.  The  second  question  is.  Is  the  complainant  entitled  to  any,  and 
if  any,  to  what  relief?  The  defendant  contends  that  the  complainant  is 
not  entitled  to  relief,  because  Elisha  Watson,  Jr.,  did  not  invest  the 
$2,000.  which  he  received  from  the  sale  of  the  Burke  Farm  in  the 
purchase  of  the  Bentley  Farm,  for  the  benefit  of  the  complainant  and 
liis  brother,  but  solely  for  his  own  benefit,  having  borrowed  it  for 
that  purpose,  and  that  subsequently,  after  the  complainant  came  of 
age,  he  settled  with  him  for  it,  fully  repaying  him.  In  support  of  this 
view,  a  good  deal  of  evidence  was  submitted ;  but  we  are  not  satis- 
fied that  the  money  was  ever  repaid.  Elisha  Watson,  Jr.,  was  entitled 
to  the  use  or  income  of  it  during  his  life,  and  therefore  no  inference 
of  payment  can  be  drawn  from  mere  lapse  of  time.  And  as  to  the 
point  that  he  borrowed  the  money,  tlie  answer  is,  that  he  could  not 
borrow  it  from  anybody  but  himself,  his  wards  having  no  capacity  to 
lend  it ;  and  it  is  settled  that  if  a  guardian  uses  the  money  of  his  ward 
in  the  purchase  of  real  estate,  a  trust  will  result  to  the  ward,  and  the 
ward  has  his  election  either  to  have  the  estate  conveyed  to  him,  or  to 
have  the  money  repaid  with  interest.     Perry  on  Trusts,  §§  127,  128. 

It  is  contended  that  no  trust  resulted  in  favor  of  the  complainant, 
because  the  Bentley  Farm  was  paid  for  in  part  only  out  of  the  pro- 
ceeds of  the  Burke  Farm.  We  do  not  think  this  position  is  tenable. 
On  the  contrary,  it  is  now  well  settled,  that  if  land  is  conveyed  to  a 
person  who  pays  for  it  partly  out  of  his  own  funds  and  partly  out  of 
funds  which  he  holds  in  trust  for  another,  a  trust  will  result  to  the 
other  in  i)roportion  to  his  interest  in  the  funds  employed.  Botsford  v. 
Burr,  2  John.  Ch.  (N.  Y.)  405;  Pinney  v.  Fellows,  15  Vt.  525  ;  Buck 
V.  Swazey,  35  Me.  41.  56  Am.  Dec.  681 ;  Perry  on  Trusts,  §  132.  The 
rule  goes  even  farther,  and  holds  that  if  a  trustee  purchase  an  estate 
with  trust  funds,  adding  funds  of  his  own,  a  trust  will  result  to  the 
cestui  que  trust,  and  the  burden  will  be  on  the  trustee  to  show  the 
amount  of  his  own  funds,  or  otherwise  the  cestui  que  trust  will  take 


Ch.  6)  CONSTRUCTIVE  TRUSTS,  ETC. TRACING   PROPERTY.  519 

the  whole.  Russell  v.  Jackson,  10  Hare,  204,  214;  McLarren  v. 
Brewer,  51  Me.  402;   Seaman  v.  Cook,  14  111.  501,  505. 

The  price  paid  for  the  Bentley  Farm  was  $8,250.  Of  this  $1,000, 
being  four  thirty-thirds  of  the  whole  sum,  belonged  to  the  complain- 
ant, subject  to  a  life  interest  in  Elisha  Watson,  Jr.  It  follows  that  the 
equitable  fee  of  an  undivided  four  thirty-thirds  of  the  Bentley  Farm 
resulted  to  the  complainant,  subject  to  a  life  estate  in  Elisha  Watson, 
Jr.,  the  moment  the  farm  was  conveyed  to  Elisha  Watson,  Jr.  If 
Elisha  Watson,  Jr.,  had  kept  the  farm  entire  until  his  decease,  then 
the  complainant,  unless  his  claim  were  in  some  way  impaired,  would 
have  been  entitled  to  a  conveyance  of  an  undivided  four  thirty-thirds 
of  the  farm. 

W'e  have  seen  that  Elisha  Watson,  Jr.,  did  not  preserve  the  farm 
entire,  but  sold  and  conveyed  away  the  larger  portion  of  it.  What 
effect  had  this  on  the  equitable  interest  of  the  complainant?  We 
think  it  is  perfectly  clear  that  every  time  Elisha  Watson,  Jr.,  sold  and 
conveyed  away  any  part  or  parcel  of  the  Bentley  Farm,  he  sold  and 
conveyed  away  the  complainant's  equitable  interest  in  that  part  or 
parcel,  provided  the  grantee  was  a  purchaser  for  value  and  without 
notice,  and  that  after  every  such  sale  and  conveyance  there  remained 
for  the  complainant  in  the  farm  only  his  resulting  trust  in  an  un- 
divided four  thirty-thirds  of  what  was  left.  The  complainant  seems 
to  suppose  that,  having  lost  his  resulting  interest  in  what  was  sold, 
he  can  have  the  loss  made  good  to  him  by  a  proportional  increase  of 
interest  in  what  is  left.  But  this  surely  cannot  be  so.  His  interest 
was  inherent  in  every  part.  As  soon  as  any  part  was  soldi  his  in- 
terest in  that  part  was  converted  into  an  interest  in  the  price  re- 
ceived for  it.  It  remained  a  resulting  trust  or  equity  in  the  price,  or 
in  the  property  in  which  the  price  was  invested,  so  long  as  it  could  be 
traced  specifically;  and  when  it  ceased  to  be  specifically  traceable,  it 
became  simply  a  personal  debt  or  demand  to  be  recovered  of  Elisha 
Watson,  Jr.,  or  out  of  his  estate,  like  any  other  personal  debt  or  de- 
mand.    Thompson's  Appeal,  22  Pa.  16.     *     *     * 

We  decide  that  the  complainant  is  entitled  to  have  four  undivided 
thirty-thirds  of  the  part  of  the  Bentley  Farm  remaining  unsold  and 
not  under  mortgages,  free  and  clear  of  all  claims  of  the  widow,  heirs, 
or  creditors  of  Elisha  Watson,  Jr.  We  also  decide  that  he  is  en- 
titled in  like  manner  to  four  thirty-thirds  of  the  mortgaged  part,  sub- 
ject to  the  mortgage,  the  other  twenty-nine  thirty-thirds,  however, 
being  primarily  chargeable  with  the  mortgage  debt. 

The  decree  may  be  drawn  to  carry  the  decision  into  effect.  ' 

Decree  accordingly, 

8  Docker  v.  Somes,  2  Myl.  &  K.  655  (18.'?4);  In  re  Mulligan.  IIG  Fed.  715, 
717  (1902) ;  Kyle  v.  Barnett,  17  Ala.  306  (1S.")0) ;  Tilford  v.  Torrey,  53  Ala. 
130  (1875) ;  Kelly  v.  Browning,  113  Ala.  420,  21  South.  928  (1S9G) ;  Howison 
V.  Baird,  145  Ala.  683,  40  South.  94  (1905);  Byrne  v.  McGrath,  130  Cal.  316, 
(!2  Pac.  .559.  80  Am.  St.  Rep.  127  (1900) ;  Bazemore  v.  Davis,  55  Ga.  504  (1875); 
Harris  v.   Mclntyre,  118  111.  275,  8  N.  E.   182   (1886);    Reynolds  v.   Sumner, 


520  CONSTRUCTIVE   TUTSTS,  ETC. TRACING   PROPERTY.  (Cll.  G 

:\IRS.  A.  E.  FAXT  ct  al.  v.  J  AS.  DUX  BAR,  Administrator,  et  al. 
(Suprouie  Court  of  Mississippi.  ISlt:].     71  -Miss.  5TU,  15  South.  i50.) 

From  the  Chancery  Court  of  X^oxnbce  Cotmty. 

In  1871,  S.  P.  Fant  died  intestate,  leavin;^  as  his  heirs  his  widow 
and  tliree  minor  children,  Ida,  Iley  and  S.  P.  Fant.  With  the  excep- 
tion of  an  insurance  policy  of  $5,000  in  favor  of  his  heirs,  he  left  no 
estate.  Soon  after  his  death.  Dr.  J.  C.  Fant  (pialified  as  guardian  of 
said  minors,  and  collected  their  interest  in  the  insurance  policy, 
amounting  to  $3,660.29,  which  sum  he  reported  to  the  court  in  his  in- 
ventory and  accounts.  Without  obtaining  an  order  of  court  therefor, 
he  immediately  loaned  the  entire  amount  to  a  mercantile  firm,  taking 
their  note  for  $4,026.27,  due  December  23,  1872,  which  amount  in- 
cluded interest  to  maturity.  He  reported  the  loan  to  the  court,  which 
dechned  to  approve  it,  and  the  amount,  witli  interest  thereon,  was  car- 
ried forward  in  the  accounts  of  the  guardian  as  being  money  in  his 
hands,  and,  in  his  accounts,  he  was  allowed  credit  for  the  interest, 
which,  as  the  only  income  of  the  wards,  he  had  exj^ended  for  their 
sui)i)ort.  Meantime,  in  1873,  the  firm  to  which  the  guardian  had 
loaned  the  money  of  said  wards,  being  unable  to  repay  the  loan, 
executed  to  Dr.  Fant,  in  his  own  name,  a  deed  to  a  store-house  and 
lot  in  Macon,  Miss.,  reciting  as  the  consideration  the  sum  of  $4,099.48, 
being  the  amount  of  principal  and  interest  due  at  that  time.  The  deed 
was  executed  and  delivered  with  the  understanding  that  it  was  to 
stand  as  a  mortgage  until  January,  1874,  when,  if  the  debt  was  not 
sooner  paid,  it  was  to  be  absolute,  and  in  full  payment  of  the  loan  and 
interest.  The  debt  was  not  paid,  and  Dr.  Fant  took  possession  of  the 
store-house,  and  continued  in  possession  until  his  death  in  1889,  and, 
dtuing  this  time,  he  paid  the  taxes,  insurance  and  repairs,  and  col- 
lected the  rents.  At  his  death,  his  widow  took  possession,  and  has 
continued  in  possession  ever  since. 

The  guardianship  was  never  settled,  and  the  amount  due  by  Dr. 
Fant,  as  guardian,  to  his  said  wards,  was  not  paid,  and,  in  March, 
1890,  Iley  W.  Fant  filed  his  bill  against  the  heirs  of  his  said  guardian, 
reciting  the  circumstances  of  the  purchase  of  the  lot  as  above  nar- 

12<!  III.  58,  18  N.  E.  3.34,  1  L.  K.  A.  327.  9  Am.  St.  Kep-  r>23  (1888):  F:nislor 
V.  .Jones,  7  Ind.  277  (1855);  Bitzer  v.  Bobo.  39  Minn.  18.  .38  X.  W.  ()09  (l.s.ss); 
White  V.  Drew,  42  Mo.  5()1  (18()8)  ;  Boweii  v.  .Mclve.in,  82  Mo.  594  (1884); 
Siiiiw  V.  Shiiw,  8(i  Mo.  .594  (1885);  Jones  v.  Klkins.  14.3  Mo.  (547,  45  S.  W. 
2G1  (1898);    Crawford  v.  Jones,  1(53  Mo.  577,  (J3  S.   W.   8.38  (1901);    McLeod 


V.  Veuable,  1(J3  Mo.  53(i,  ()3  S.  W.  847  (1!K)1);  Johnston  v.  Johnston,  173 
Mo.  91,  120,  73  S.  W.  202,  01  L.  R.  A.  10().  9(!  Am.  St.  Hep.  480  (1902);  Crow- 
ley v.  Crowley,  72  N.  H.  241.  56  Atl.  190  (190.3);  Dayton  v.  Chiflin  Co.,  19  App. 
Div.  120,  45  N.  Y.  Supp.  1005  (1897);  Collins  v.  Corson  (\.  J.  Ch.)  30  Atl.  8(i2 
(1894)  ;  Mayer  v.  Kane,  (i9  N.  J.  I<:q.  733,  01  Atl.  374  (1!M)5)  ;  I.von  v.  Akin, 
78  N.  C.  2.58  (1878);  Wallace  v.  DufHeld,  2  Serj?.  tt  K.  (I'a.)  .521,  7  Am.  Dec. 
000  (1810);  Kuiip's  Appeal,  lOO  I'a.  531  (1882);  Lloyd  v.  Woods,  17(5  Pa.' 0,3. 
34  Atl.  920  (189(i);  (Greene  v.  IlasUell.  5  II.  I.  447  (18.58);  Moffatt  v.  Shepard, 
2  Pin.  (Wis.)  GO,  52  Am.  Dee.  141  (1847). 


Ch.  6)  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  521 

rated,  and  praying  that  a  resulting  trust  be  established  in  his  favor 
to  the  extent  of  a  third  interest  therein.  This  bill  was  answered  by 
the  defendants,  and,  apart  from  the  defence  noticed  in  the  opinion, 
many  other  matters  of  controversy  were  introduced  into  the  suit, 
mostly  relating  to  the  course  of  the  guardianship  and  the  rights  of 
the  parties  growing  out  of  the  collection  by  the  guardian  of  the  rents 
and  profits  of  the  lot  and  his  expenditures  for  taxes,  insurance  and 
repairs.  In  view  of  the  opinion  which  is  confined  to  the  consideration 
of  a  single  point,  it  is  not  necessary  to  state  the  parts  touching  these 
matters. 

Pending  the  suit,  complainant,  Iley  W.  Fant,  died,  and  the  cause 
was  revived  in  the  name  of  James  Dunbar,  administrator.  Before  a 
final  disposition  thereof,  S.  P.  Fant,  another  of  the  wards,  having 
come  of  age,  also  filed  a  bill,  setting  up  substantially  the  same  facts  in 
regard  to  the  guardianship  and  the  purchase  of  the  store-house  and 
lot,  but,  instead  of  asking  that  a  trust  be  declared  in  his  favor  as  to 
a  one-third  interest  in  the  house  and  lot,  he  claimed  the  right  of  elect- 
ing whether  to  take  a  proportionate  interest  therein,  or  to  claim  an 
accounting  for  his  money  so  expended  and  interest,  as  constituting  a 
charge  on  the  property. 

These  two  causes  were  by  consent  consolidated.  The  court  below 
rendered  a  decree  finding  the  facts  as  to  the  guardianship  and  pur- 
chase of  the  property  as  above  stated,  and  decreeing  that  the  com- 
plainants, Iley  W.  Fant  and  S.  P.  Fant,  by  virtue  of  the  unauthorized 
loan  of  their  funds,  and  the  purchase  by  their  guardian  in  his  own 
name  of  the  house  and  lot  in  payment  of  the  principal  and  interest  of 
the  loan,  became  entitled  each  to  a  third  interest  in  the  house  and  lot, 
and  a  like  interest  in  the  rents  collected  therefrom.  On  the  other  hand, 
the  decree  allowed,  as  against  the  rents,  all  proper  sums  expended  by 
the  guardian  for  taxes,  insurance  and  repairs  on  the  property. 

The  decree  also  adjusted  other  matters  of  controversy  between 
the  parties,  but  the  only  portion  thereof  specially  noticed  by  this  court 
is  that  which  gave  complainants  each  a  third  interest  in  the  house 
and  lot,  notwithstanding  the  consideration  of  the  conveyance  thereof 
to  Dr.  Fant  exceeded  by  about  $700  the  principal  of  the  amount  be- 
longing to  the  wards,  which  had  been  loaned  to  the  owners  of  the  prop- 
erty. Although  such  excess  represented  interest  on  the  loan,  it  will 
be  borne  in  mind  that  the  guardian  in  his  accounts  had  been  allowed 
for  expenditures  in  behalf  of  the  wards  as  against  this  interest,  which 
represented  their  income.    The  defendants  have  appealed. 

Cooper,  J.,  delivered  the  opinion  of  the  court. 

On  the  evidence  it  is  entirely  settled  what  part  of  the  purchase  price 
of  the  lot  described  in  the  pleading  and  evidence  was  the  money  of  his 
wards,  and  what  part  was  the  money  of  Dr.  Fant,  the  guardian.  Un- 
der these  circumstances,  his  wards  had  the  right,  at  their  election,  to 
charge  their  money,  with  interest,  upon  the  lot,  or  to  take  an  interest 
therein  proportionate  to  the  amount  of  their  rhoney  that  went  into  it 


522  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  (Ch.  6 

as  compared  to  the  purchase  price.  They  have  not  the  right  to  elect 
to  take  the  entire  interest  in  the  property,  for  that  would  be  to  appro- 
priate not  their  own  but  the  property  of  tlie  guardian.  Before  making 
their  election,  the  wards  are  entitled  to  have  accounts  stated  in  both 
aspects,  and,  being  thus  advised,  to  elect  that  which  is  the  more  bene- 
ficial to  them.  "^ 

Decree  reversed  and  cause  remanded. 


JOHN  C.  BOHLE  et  al..  Appellants,  v.  DIEDRICH  HASSEL- 
BROCH,    Respondent. 

(Court  of  Errors  and  Appeals  of  New  .Tersey,   1002.     64  N.   J.  Eq.   334,   51 
Atl.  508,  61   L.  R.   A.  323.) 

On  appeal  from  a  decree  advised  bv  Vice  Chancellor  Stevens,  whose 
opinion  is  reported  in  61  N.  J.  Eq.  470,  48  Atl.  916. 

Dixon.  J.  Anton  L.  Bohle,  who  died  in  1863,  leaving  a  widow  and 
four  children,  by  his  will  appointed  his  wife,  Anna,  his  executrix  and 
gave  her  all  his  property  in  trust  for  the  maintenance  of  herself  and 
his  children  during  her  life,  andl  gave  it  after  her  death  to  his  children. 
The  will  directed  the  trustee  to  keep  the  property  invested  "on  good 
first  bonds  and  mortgages  of  real  estate."  In  August  1864,  the  widow 
married  Diedrich  Tlasselbroch,  by  whom  she  afterwards  had  three 
children.  In  January,  1868,  she  purchased  two  plots  of  land  in  Hobo- 
ken,  taking  title  thereto  in  her  own  name.  The  purchase  price  of 
these  lots  was  $14,700,  but  as  they  were  encumbered  for  $2,000,  only 
$12,700  was  to  be  paid  in  cash.  Of  this  sum  more  than  one-half,  but 
exactly  how  much  cannot  be  ascertained,  was  paidi  with  money  which 
Mrs.  Hasselbroch  held  in  trust  under  Mr.  Bohle's  will.  At  that  time 
Mr.  Bohle's  children  were  all  minors,  living  with  their  mother  and 
stepfather.  In  December,  1898,  Mrs.  Hasselbroch  died,  and  by  her  will 
devised  her  Hoboken  lots  to  the  three  surviving  children  of  Mr.  Bohle, 
who  now  own  the  interest  of  their  deceased  sister,  and  are  in  posses- 
sion of  the  property.  Mr.  Hasselbroch  having  brought  an  action  of 
ejectment  against  these  children,  claiming  that  he  was  entitled  to  the 
possession  of  the  property  as  tenant  by  the  curtesy  of  his  wife's  fee, 
they  filed  the  present  bill  to  restrain  that  suit,  on  the  ground  that  in 
equity  their  mother  was  only  tenant  for  life  and  they  were  owners  of 
the  fee,  because  of  the  improper  use  of  the  trust  funds  in  the  purchase. 
The  Chancellor's  decree  denied  this  relief,  but  adjudged  that  the  com- 
plainants were  entitled  to  a  lien  on  the  property,  prior  to  the  husband's 
curtesy,  for  so  much  trust  money  as  was  shown  to  have  been  used  in 

7  A  similar  risht  of  election  between  a  trust  in  a  proportionate  share  and 
an  e(iuit:ible  lien  for  the  nioiiev  invested  and  interest  was  recognized  in  the 
following  cases:  Kitzer  v.  Bol)o,  3!)  Minn.  18,  38  N.  W.  309  (1888);  Crawford 
V  .Tones,  163  Mo.  577,  63  S.  W.  838  (1901);  Greene  v.  Haskell,  5  R.  I.  447 
(1858). 


Ch.  6)  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  523 

the  purchase,  viz.,  $6,423,  and  interest  since  Mrs.  Hasselbroch's  death, 
less  rents  and  profits.    From  this  decree  the  complainants  appeal. 

It  is  clear  that  Mrs.  Hasselbroch  committed  a  breach  of  trust  when 
she  used  the  trust  fund  in  buying-  real  estate,  and  took  the  title  to  her- 
self without  providing-  any  bond  and  mortg-age  as  a  first  lien  in  favor 
of  the  trust  estate,  as  directed  by  the  will  of  her  deceased  husband; 
and  the  question  is,  what  equitable  situation  was  thereby  created? 

Several  settled  doctrines  of  courts  of  equity  are  pertinent  to  this 
inquiry. 

It  is  a  fundamental  principle  in  regard  to  trust  estates  that  the 
trustee  shall  derive  to  himself  no  gain,  benefit  or  advantage  by  the  use 
of  the  trust  funds ;  whatever  profit  may  be  made  shall  belong  to  and 
become  parcel  of  the  trust  estate.  McKnight's  Executor  v.  Walsh,  24 
N.  J.  Eq.  498.  An  outgrowth  of  this  principle  is  that,  as  between  cestui 
que  trust  and  trustee  and  all  persons  claiming  under  the  trustee  other- 
wise than  by  purchase  for  valuable  consideration  without  notice,  all 
property  belonging  to  the  trust,  however  much  it  may  be  changed  or 
altered  in  its  nature  or  character,' continues  to  be  subject  to  or  affected 
by  the  trust.  Pennell  v.  Defifell,  4  De  G.,  M.  &  G.  372,  378.  As  a  con- 
comitant of  the  rule  just  stated,  and  to  efifectuate  fully  the  fundamental 
principle,  another  rule  exists,  that,  when  the  trustee  has  improperly 
changed  the  form  of  the  estate,  the  cestuis  que  trust  may  elect  whether 
they  will  accept  the  estate  in  its  form  or  will  hold  the  trustee  responsi- 
ble for  it  in  its  original  condition.  Ferris  v.  Van  Vechten,  7Z  N.  Y. 
113.  If  the  improper  conversion  turns  out  to  be  advantageous,  they 
may  adopt  it  and  take  the  profit ;  if  it  results  in  loss,  they  may  insist 
on  having  an  equivalent  for  the  estate  as  it  was  before  the  change ; 
and  when  the  cestuis  que  trust  are  infants,  the  court  will  deal  with  the 
matter  as  it  shall  consider  best  for  their  interests.  Holcomb  v.  Exec- 
utor of  Holcomb,  11  N.  J.  Eq.  281.  This  right  of  election  by  the  cestuis 
que  trust  is  upheld  by  courts  of  equity  in  many  cases  where  there  has 
been  misconduct  on  the  part  of  the  trustee,  as  may  be  seen  by  refer- 
ence to  Fox  V.  Mackreth,  1  Lead.  Cas.  Eq.  115,  and  has  been  fully 
approved  by  this  court.  Mulford  v.  Bowen,  9  N.  J.  Eq.  797 ;  Stewart 
V.  Lehigh  Valley  Railroad  Co.,  38  N.  J.  Law,  505.  It  is  enforced  in 
cases  like  the  present,  for  if  a  trustee  purchases  property  with  trust 
funds  in  his  hands,  and  takes  title  in  his  own  name  and  for  his  own 
benefit,  he  will,  at  the  option  of  the  cestuis  que  trust,  be  decreed  to 
hold  it  in  trust  for  them.  Durling  v.  Hammar,  20  N.  J.  Eq.  220; 
Story,  Eq.  Jur.  §§  1260,  1262.  And  if,  in  such  a  purchase,  he  has 
mixed  up  moneys  of  his  own  with  the  trust  funds,  a  trust  will  still 
result  to  the  cestuis  que  trust  at  their  option,  and  the  burden  will  be 
on  the  trustee  to  show  the  amount  of  his  own  funds  used  in  the  pur- 
chase, and  so  far  as  he  fails  to  make  that  distinction  the  court  holds 
the  property  bound  by  the  trust.  Russell  v.  Jackson,  10  Hare,  204, 
213;  In  re  Pumfrey,  L.  R.  22  Ch.  Div.  255;  Perry,  Trusts,  §  128;  2 
Pom.  Eq.  Jur.  §  1076  (2). 


52-4        CONSTRUCTIVE  TRUSTS,  KTC. TUACIXO  PROPERTY.     (Cll.  6 

In  accordance  with  these  doctrines  we  think  that  the  complainants, 
when  their  right  to  the  possession  of  the  trust  estate  matured  by  the 
death  of  their  mother,  were  entitled,  upon  showing-  that  the  trust  funds 
had  formed  a  considerable  part  of  the  purchase  money  by  which  their 
mother  had  acquired  title  to  the  Hoboken  lots,  to  elect  whether  they 
would  claim  a  lien  upon  the  lots  for  the  amount  of  the  trust  funds 
used  in  the  purchase,  or  would  claim  the  lots,  subject  to  be  charged, 
in  favor  of  the  personal  reiiresentatives  of  their  mother,  with  so  much 
of  the  purchase  money  as  consisted  of  her  own  funds,  and  that,  in  en- 
deavoring- to  ascertain  how  much  was  trust  money  and  how  much  was 
the  trustee's  own,  every  reasonable  intendment  should  be  made  against 
the  trustee  through  whose  fault  the  trust  had  become  obscure. 

Since  the  complainants,  being  in  possession  of  the  lots,  have  filed 
their  bill  in  equity  to  have  it  decreed  that  by  their  trustee's  purchase 
they  became  owners  of  the  fee  in  remainder  after  their  mother's  life 
estate,  they  have  thereby  elected  to  take  the  real  estate  in  lieu  of  the 
trust  money  invested  therein,  and  to  hold  it  charged  only  with  their 
mother's  own  money  so  invested.  Such  a  charge  gives  the  husband 
no  right  to  maintain  ejectment,  and  consequently  the  comj^lainants  are 
entitled  to  a  decree  restraining  his  suit. 

The  present  proceedings  are  not  adapted  to  the  ascertainment  either 
of  the  amount  of  the  charge  or  of  the  persons  entitled  to  enforce  it. 

Let  the  decree  appealed  from  be  reversed  and  a  decree  be  entered  as 
above  indicated. 


JAMES  A.  CAMPimLL  v.  JOHN  B.  DRAKE  et  al. 

(Suiireine  Court   of  North  Carolina,  1844.     39  N.  C.  94.) 

Cause  removed  from  the  Court  of  Equity  of  Wake  County,  at  the 
Fall  Term,  1845. 

The  bill  states  that  the  plaintiff  kept  a  retail  shop  in  Raleigh,  and 
that  a  lad,  by  the  name  of  John  Farrow,  was  his  shopkeeper  for  sev- 
eral years;  and  that,  while  in  his  employment.  Farrow  abstracted,  to 
a  considerable  amount,  money  and  goods  belonging  to  the  plaintiff, 
and  that  with  the  money  of  the  plaintiff,  taken  without  his  knowledge 
or  consent.  Farrow  purchased  a  tract  of  land  at  the  price  of  $500.  The 
bill  states  a  great  number  of  facts,  tending  to  show  that  Farrow  paid 
for  the  land  with  the  effects  of  the  plaintiff,  which  he  dishonestly 
converted  to  that  purpose.  Farrow  afterwards  died  under  age,  and 
the  land  descended  to  his  brothers  and  sisters;  and  the  i)laintift",  hav- 
ing discovered  his  losses  of  money  and  merchandise,  and  that  Farrow 
had  purchased  the  land  as  aforesaid,  filed  this  bill  against  his  heirs, 
and  therein  insists,  that  he  has  a  right  to  consider  the  purchase  as 
made,  and  the  land  held,  for  the  use  of  the  plaintiff,  and  that  Farrow 
should  be  declared  a  trustee  for  him. 


Ch.  6)  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  525 

The  bill  was  answered,  so  as  to  put  in  issue  the  various  charges  of 
dishonesty  by  Farrow,  and  the  fact  that  the  land  was  paid  for  with 
money  purloined  from  the  plaintiff :  and  much  evidence  was  read  to 
those  points. 

RuFFiN,  C.  J.  The  Court,  though  naturally  inclined  to  every  pre- 
sumption in  favor  of  innocence,  and  especially  of  a  young  person,  who 
seems  to  have  been  so  well  thought  of  while  he  lived,  is  satisfied  from 
the  proofs,  that  the  plaintilT  was  much  plundered  by  this  youth;  and 
we  have  no  doubt,  that  every  cent  of  the  money  with  which  he  paid  for 
the  land,  he  had  pilfered  from  his  employer.  Nevertheless,  we  believe 
the  bill  cannot  be  sustained.  The  object  of  it  is  to  have  the  land  itself, 
claiming  it  as  if  it  had  been  purchased  for  the  plaintiff  by  an  agent 
expressly  constituted ;  and  it  seems  to  us,  thus  stated,  to  be  a  bill  of 
the  first  impression.  We  will  not  say,  if  the  plaintiff  had  obtained 
judgment  against  the  administrator  for  the  money  as  a  debt,  that  he 
might  not  come  here  to  have  the  land  declared  liable,  as  a  security, 
for  the  n:oney  laid  out  for  it.  But  that  is  not  the  object  of  this  suit. 
It  is  to  get  the  land,  which  the  plaintiff  claims  as  his ;  and,  upon  the 
same  principle,  would  claim  it,  if  it  were  worth  twenty  times  his 
money,  which  was  laid  out  for  it.  Now,  we  know  not  any  precedent 
of  such  a  bill.  It  is  not  at  all  like  the  cases  of  dealings  with  trust  funds 
by  trustees,  executors,  guardians,  factors,  and  the  like;  in  which  the 
owner  of  the  fund  may  elect  to  take  either  the  money  or  that  in  which 
it  was  invested.  For,  in  all  those  cases,  the  legal  title,  if  we  may  use 
the  expression,  of  the  fund,  is  in  the  party  thus  misapplying  it.  He  has 
been  entrusted  with  the  whole  possession  of  it,  and  that  for  the  pur- 
pose of  laying  it  out  for  the  benefit  of  the  equitable  owner;  and  there- 
fore all  the  benefit  and  the  trustee  ought,  in  the  nature  of  his  office, 
and  from  his  relation  to  the  cestui  que  trust,  to  account  for  to  that 
person.  But  the  case  of  a  servant  or  a  shopkeeper  is  very  different. 
He  is  not  charged  with  the  duty  of  investing  his  employer's  stock, 
but  merely  to  buy  and  sell  at  the  counter.  The  possession  of  the 
goods  or  money  is  not  in  him,  but  in  his  master ;  so  entirely  so,  that  he 
may  be  convicted  of  stealing  them,  in  which  both  a  cepit  and  asporta- 
vit  are  constituents.  This  person  was  in  truth  guilty  of  a  felony  in 
possessing  himself  of  the  plaintiff's  eff'ects,  for  the  purpose  of  paying 
them  out  for  his  own  lucre ;  and  that  fully  rebuts  the  idea  of  convert- 
ing him  into  a  trustee.  If  that  can  be  done,  there  would  be,  at  once,  an 
end  to  punishing  thefts  by  shopmen.  If,  indeed,  the  plaintiff  could 
actually  trace  the  identical  money  taken  from  him,  into  the  hands  of 
a  person  wlio  got  it  without  paying  value,  no  doubt  he  could  recover 
it ;  for  his  title  was  not  destroyed  by  the  theft.  But  we  do  not  see 
how  a  felon  is  to  be  turned  into  a  trustee  of  property,  merely  by  show- 
ing that  he  bought  it  with  stolen  money.  If  it  were  so,  there  would 
have  been  many  a  bill  of  the  kind.  But  we  believe,  there  never  w^as 
one  before ;  and,  therefore,  we  cannot  entertain  this.  But  we  think 
the  facts  so  clearly  established,  and  the  demands  of  justice  so  strong 


526  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  (Ch.  6 

on  the  defendants  to  surrender  the  land  to  the  plaintiff,  or  to  return 
him  the  money  that  was  laid  out  in  it,  that  we  dismiss  the  bill  without 
costs.** 

Pi:r  Cl'kiam.     Decree  accordingly. 


ELTZAlurni  S.  NEWTC^X  v.  OUVKR  PORTER  et  al. 

(Court  of  Appeals  of  New  York,  1877.    G9  N.  Y.  133,  25  Am.  Hep.  152.) 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme  Court, 
in  the  Third  Judicial  Department,  affirming  a  judgment  in  favor  of 
plaintifY,  entered  upon  a  decision  of  the  court  at  Special  Term. 

The  nature  of  the  action  and  the  facts  are  set  forth  sufficiently  in 
the  opinion. 

Andrkws,  J.®  This  is  an  equitable  action  brought  to  establish  the 
right  of  the  plaintiff  to  certain  securities,  the  proceeds  of  stolen  bonds, 
and  to  compel  tlie  defendants  to  account  therefor. 

In  March,  1869,  the  plaintiff  was  the  owmer  of  $13,000  of  govern- 
ment bonds,  and  of  a  railroad  bond  for  $1,000,  negotiable  by  de- 
livery, which,  on  the  12th  of  March,  1869,  were  stolen  from  her,  and 
soon  afterw-ards  $11,500  of  the  bonds  were  sold  by  the  thief  and  his 
confederates,  and  the  proceeds  divided  between  them.  William  War- 
ner loaned  a  part  of  his  share  in  separate  loans  and  took  the  promis- 
sory notes  of  the  borrow^er  therefor.  George  Warner  invested  $2,000 
of  his  share  in  the  purchase  of  a  bond  and  mortgage,  which  was  as- 
signed to  his  wife  Cordelia  without  consideration. 

In  January,  1870,  William  Warner,  George  Warner,  Cordelia  War- 
ner, and  one  Lusk  were  arrested  upon  the  charge  of  stealing  the  bonds, 
or  as  accessories  to  the  larceny,  and  were  severally  indicted  in  the 
County  of  Cortland.  The  Warners  employed  the  defendants,  who 
are  attorneys,  to  defend  them  in  the  criminal  proceedings,  and  in  any 
civil  suits  which  might  be  instituted  against  them  in  respect  to  the 
bonds,  and  to  secure  them  for  their  services  and  expenses,  and  for  any 
liabilities  they  might  incur  in  their  behalf,  William  Warner  trans- 
ferred to  the  defendants  Miner  and  Warren  promissory  notes  taken 
on  loans  made  by  him  out  of  the  proceeds  of  the  stolen  bonds,  amount- 
ing to  v$2,250  or  thereabouts,  and  Cordelia  Warner,  for  the  same  pur- 
pose assigned  to  the  defendant  Porter  the  lx)nd  and  mortgage  above 
mentioned. 

The  learned  judge  at  Special  Term  found  that  the  defendants  had 
notice  at  the  time  they  received  the  transfer  of  the  securities,  that  they 
were  the  avails  and  proceeds  of  the  stolen  bonds,  and  directed  judg- 

8  ruscoag  Bank  v.  Hunt,  3  Edw.  Ch.  (N.  Y.)  583  (1842);  Ensley  v.  Balen- 
tine,  4  Ilvimph.  (Teiin.)  2.33  (184.3) ;  Cunningham  v.  Wood,  4  Humph.  (Tenn.) 
417  (1843) ;    Iliiwthorne  v.  Brown,  3  Sneed  (Tenn.)  4G2  (185G). 

»  A  part  of  the  ophiion  is  omitted. 


Ch.  6)  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  521 

nient  against  them  for  the  value  of  the  securities,  it  appearing  on  the 
trial  that  they  had  collected  or  disposed  of  them  and  received  the  pro- 
ceeds. 

The  doctrine  upon  which  the  judgment  in  this  case  proceeded,  viz., 
that  the  owner  of  negotiable  securities  stolen  and  afterwards  sold  by 
the  thief  may  pursue  the  proceeds  of  the  sale  in  the  hands  of  the 
felonious  taker  or  his  assignee  with  notice,  through  whatever  changes 
the  proceeds  may  have  gone,  so  long  as  the  proceeds  or  the  substitute 
therefor  can  be  distinguished  and  identified,  and  have  the  proceeds 
or  the  property  in  which  they  were  invested  subjected,  by  the  aid  of 
a  court  of  equity,  to  a  lien  and  trust  in  his  favor  for  the  purpose  of 
recompense  and  restitution,  is  founded  upon  the  plainest  principles  of 
justice  and  morality,  and  is  consistent  with  the  rule  in  analogous  cases 
acted  upon  in  courts  of  law  and  equity.  It  is  a  general  principle  of 
the  law  of  personal  property  that  the  title  of  the  owner  cannot  be  di- 
vested without  his  consent.  The  purchaser  from  a  thief,  however 
honest  and  bona  fide  the  purchase  may  have  been,  cannot  hold  the 
stolen  chattel  against  the  true  proprietor,  but  the  latter  may  follow 
and  reclaim  it  wherever  or  in  whosesoever  hands  it  may  be  found. 
The  right  of  pursuit  and  reclamation  only  ceases  when  its  identity  is 
lost  and  further  pursuit  is  hopeless ;  but  the  law  still  protects  the  in- 
terest of  the  true  owner  by  giving  him  an  action  as  for  the  conver- 
sion of  the  chattel  as  against  any  one  who  has  interfered  with  his 
dominion  over  it,  although  such  interference  may  have  been  innocent 
in  intention  and  under  a  claim  of  right,  and  in  reliance  upon  the  title 
of  the  felonious  taker.  The  extent  to  which  the  common  law  goes  to 
protect  the  title  of  the  tnte  owner  has  a  striking  illustration  in  those 
cases  in  which  it  is  held  that  where  a  wilful  trespasser  converts  a  chat- 
tel into  a  different  species,  as  for  example,  timber  into  shingles,  wood 
into  coal,  or  corn  into  whiskey,  the  product  in  its  improved  and  chang- 
ed condition  belongs  to  the  owner  of  the  original  material.  Silsbury  v. 
McCoon,  3  N.  Y.  380,  53  Am.  Dec.  307  and  cases  cited.  The  rule- that 
a  thief  cannot  convey  a  good  title  to  stolen  property  has  an  exception 
in  case  of  money  or  negotiable  securities  transferable  by  delivery, 
which  have  been  put  into  circulation  and  have  come  into  the  hands 
of  bona  fide  holders.  The  right  of  the  owner  to  pursue  and  reclaim 
the  money  and  securities  there  ends,  and  the  holder  is  protected  in 
his  title.  The  plaintiff  was  in  this  position.  The  bonds,  with  the  ex- 
ception stated,  had,  as  the  evidence  tends  to  show,  been  sold  to  bona 
fide  purchasers,  and  she  was  precluded  from  following  and  reclaiming 
them. 

The  right  of  the  plaintiff  in  equity  to  have  the  notes  and  mortgage 
while  they  remained  in  the  possession  of  the  felons  or  of  their  as- 
signees with  notice,  subjected  to  a  lien  and  trust  in  her  favor,  and  to 
compel  their  transfer  to  her  as  the  equitable  owner,  does  not,  we  think, 
admit  of  serious  doubt.  The  plaintiff,  by  the  sale  of  the  bonds  to 
bona  fide  purchasers,  lost  her  title  to  the  securities.     She  could  not 


528  CONSTUUCTIVE   TUUSTS.  ETC. TRACING    I'UOPEUTY.  (Ch.  6 

further  follow  them.  She  could  luaiiUain  au  action  as  for  a  con\-er- 
sion  of  the  property  aj^ainst  the  felons.  Hut  this  remedy  in  this  case 
would  be  fruitless,  as  they  are  wholly  insolvent.  Unless  she  can 
elect  to  regard  the  securities  in  which  the  bonds  were  invested  as  a 
substitute,  pro  tanto,  for  the  bonds,  she  has  no  effectual  remedy.  The 
thieves  certainly  have  no  claim  to  the  securities  in  which  the  proceeds 
of  the  bonds  were  invested  as  against  the  plaintiff.  They,  without  her 
consent,  have  disj^osed  of  her  proi)crty,  and  put  it  beyond  her  reach. 
If  the  avails  remained  in  their  hands,  in  money,  the  direct  proceeds  of 
the  sale,  can  it  be  doubted  that  she  could  reach  it?  It  is  not  neces- 
sary to  decide  that,  in  the  case  sui)posed,  she  would  have  the  legal  title 
to  the  money,  but  if  that  (juestion  was  involved  in  the  case  I  should 
have  great  hesitation  in  denying  the  ])ro])osition.  That  she  could  as- 
sert an  equitable  claim  to  the  money.  I  have  no  doubt.  And  this 
equitable  right  to  follow^  the  i)roceeds  would  continue  and  attach  to 
any  securities  or  property  in  which  the  proceeds  were  invested,  so  long 
as  they  could  be  traced  and  identified,  and  the  rights  of  bona  iide  pur- 
chasers had  not  intervened. 

In  Taylor  v.  Plumer,  3  M.  &  Sel.  562,  an  agent,  intrusted  with  a 
draft  for  money  to  buy  exchequer  bills  for  his  principal,  received  the 
money  and  misapplied  it  by  purchasing  American  stocks  and  bullion, 
intending  to  abscond  and  go  to  America,  and  absconded,  but  was  ar- 
rested before  he  quitted  England,  and  surrendered  the  securities  and 
bullion  to  his  ]:)rincii)al,  who  sold  them  and  received  the  proceeds. 
It  was  held  that  the  principal  was  entitled  to  withhold  the  proceeds 
from  the  assignee  in  bankruptcy  of  the  agent,  who  became  bankrupt 
on  the  day  he  received  and  misapplied  the  money.  Lord  EHenborough, 
in  pronouncing  the  opinion  in  that  case,  said:  "It  makes  no  difference, 
in  reason  or  law,  into  what  other  form  different  from  the  original  the 
change  may  have  been  made,  whether  it  be  into  that  of  promissory 
notes  for  the  security  of  money  produced  on  the  sale  of  the  goods  of 
the  principal  as  in  Scott  v.  Surman,  Willes,  400,  or  into  other  mer- 
chandise, as  in  Whitecomb  v.  Jacob,  Salk.  160,  for  the  produce  or  sub- 
stitute for  the  original  thing,  still  follows  the  nature  of  the  thing  it- 
self so  long  as  it  can  be  ascertained  to  be  such,  and  the  right  only 
ceases  when  the  means  of  ascertainment  fails." 

If,  in  the  case  now  under  consideration,  the  plaintiff  had  entrusted 
the  Warners  with  the  possession  of  the  bonds,  and  they  had  sold  them 
in  violation  of  their  duty,  for  the  purpose  of  embezzling  the  proceeds, 
and  invested  them  in  the  notes  and  mortgage  in  question,  the  plaintiff 
could,  within  the  authority  of  Taylor  v.  Plumer,  have  claimed  them 
while  in  their  hands,  or  in  the  hands  of  their  assignees  with  notice, 
and  would  be  adjudged  to  have  the  legal  title. 

In  the  courts  of  equity  the  doctrine  is  well  settled  and  is  uniformly 
applied  that  when  a  person,  standing  in  a  fiduciary  relation,  misap- 
plies or  converts  a  trust  fund  into  another  species  of  property,  the 
beneficiary  will  be  entitled  to  the  property  thus  acquired.     The  juris- 


Ch.  C)  COXSTIIUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  529 

diction  exercised  for  the  protection  of  a  party  defrauded  by  the  mis- 
appropriation of  property,  in  violation  of  a  duty,  owing  by  the  party 
making  the  misappropriation,  is  exceedingly  broad  and  comprehensive. 
The  doctrine  is  illustrated  and  applied  most  frequently  in  cases  of 
trusts,  where  trust  moneys  have  been,  by  the  fraud  or  violation  of 
duty  of  the  trustee,  diverted  from  the  purposes  of  the  trust,  and  con- 
verted into  other  property.  In  such  case  a  court  of  equity  will  fol- 
low the  trust  fund  into  the  property  into  which  it  has  been  converted, 
and  appropriate  it  for  the  indemnity  of  the  beneficiary.  It  is  im- 
material in  what  way  the  change  has  been  made,  whether  money  has 
been  laid  out  in  land,  or  land  has  been  turned  into  money,  or  how  the 
legal  title  to  the  converted  property  may  be  placed.  Equity  only  stops 
the  pursuit  when  the  means  of  ascertainment  fails,  or  the  rights  of  bona 
fide  purchasers  for  value  without  notice  of  the  trust,  have  inter- 
vened. The  relief  will  be  moulded  and  adapted  to  the  circumstances 
of  the  case,  so  as  to  protect  the  interests  and  rights  of  the  true  owner. 
Lane  v.  Dighton,  Ambler,  409 ;  Mansell  v.  Mansell,  2  P.  Wms.  697 ; 
Lench  V.  Lench.  10  Vesey,  511 ;  Lewis  v.  Madocks,  17  Ves.  56;  Perry 
on  Trusts,  §  829 ;  Story's  Eq.  §  1258. 

It  is  insisted  by  the  counsel  for  the  defendants  that  the  doctrine 
which  subjects  property  acquired  by  the  fraudulent  misuse  of  trust 
moneys  by  a  trustee  to  the  influence  of  the  trust,  and  converts  it  into 
trust  property  and  the  wrongdoer  into  a  trustee  at  the  election  of  the 
beneficiary,  has  no  application  to  a  case  where  money  or  property  ac- 
quired by  felony  has  been  converted  into  other  property.  There  is,  it 
is  said,  in  such  cases,  no  trust  relation  between  the  owner  of  the  stolen 
property  and  the  thief,  and  the  law  will  not  employ  one  for  the  pur- 
pose of  subjecting  the  avails  of  the  stolen  property  to  the  claim  of  the 
owner.  It  would  seem  to  be  an  anomaly  in  the  law,  if  the  owner  who 
has  been  deprived  of  his  property  by  a  larceny  should  be  less  favorably 
situated  in  a  court  of  equity,  in  respect  to  his  remedy  to  recover  it,  or 
the  property  into  which  it  has  been  converted,  than  one  who,  by  an 
abuse  of  trust,  has  been  injured  by  the  wrongful  act  of  a  trustee  to 
whom  the  possession  of  trust  property  has  been  confided.  The  law  in 
such  a  case  will  raise  a  trust  in  invitum  out  of  the  transaction,  for 
the  very  purpose  of  subjecting  the  substituted  property  for  the  pur- 
poses of  indemnity  and  recompense.  "One  of  the  most  common 
cases,"  remarks  Judge  Story,  "in  which  a  court  of  equity  acts  upon 
the  ground  of  implied  trusts  in  invitum,  is  when  a  party  receives 
money  which  he  cannot  consistently  withhold  from  another  party." 
Sto.  Eq.  Juris.  §  1255.  And  he  states  it  to  be  a  general  principle  that 
"wherever  the  property  of  a  party  has  been  wrongfully  misapplied,  or 
a  trust  fund  has  been  wrongfully  converted  into  another  species  of 
property,  if  its  identity  can  be  traced,  it  will  be  held  in  its  new  form 
liable  to  the  rights  of  the  original  owner,  or  the  cestui  que  trust. 
( Section  1258.  See,  also,  Hill  on  Trustees,  p.  222.) 
Ken.Tr.— 34 


530  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  (Cll.  G 

We  are  of  opinion  that  the  aliscnce  of  the  conventional  relation  of 
trustee  and  cestui  que  trust  between  the  plaintiff  and  the  Warners, 
is  no  obstacle  to  giving  the  plaintiff  the  benefit  of  the  notes  and 
mortgage,  or  the  proceeds  in  part  <il  the  stolen  bonds.  See  Bank  of 
America  v.  Pollock,  4  Edw.  Ch.  215. 

[The  Court  then  concluded  that  the  trial  judge  was  justified  by 
the  evidence  in  finding  that  the  defendants  had  notice  of  the  larceny 
of  the  bonds,  and  the  use  made  of  the  money  arising  from  their  sale, 
at  the  time  they  received  the  notes  and  mortgage  and  therefore  af- 
firmed the  judgment.]  ^'^ 


AMERICAN  SUGAR  REFINING  CO.  v.  CHARLES  H. 
FANCHER,  Assignee. 

(Court  of  Appeals  of  New  York,  1895.     145  N.  Y.  552,  40  N.  E.  20G,  27  L.  R.  A. 

757.) 

Appeal  from  order  of  the  General  Term  of  the  Supreme  Court  in  the 
First  Judicial  Department,  made  at  the  October  Term,  1894,  which  re- 
versed an  interlocutory  judgment  in  favor  of  plaintiff,  entered  upon 
the  report  of  a  referee  and  the  final  judgment  entered  thereon,  and 
ordered  a  new  trial. 

This  action  was  brought  by  plaintiff  against  defendant,  as  assignee, 
for  the  benefit  of  creditors  of  the  firm  of  C.  Burkhalter  &  Co.,  to  re- 
cover the  proceeds  of  the  re-sale  of  certain  goods  alleged  to  have  been 
fraudulently  purchased  from  plaintiff  by  said  firm. 

The  interlocutory  judginent  adjudged  defendant  a  trustee  of  the 
goods  mentioned  in  the  complaint,  and  of  the  proceeds  of  such  goods 
as  had  come  into  his  hands  as  assignee,  and  that  he  account  for,  trans- 
fer and  pay  over  to  plaintiff'  all  of  said  proceeds ;  a  reference  was  or- 
dered for  the  purpose  of  the  accounting.  A  stipulation  was  after- 
wards entered  into  between  the  parties  as  to  the  amount  of  the  pro- 
ceeds received  by  defendant,  and  a  final  judgment  in  plaintiff's  favor 
in  accordance  therewith  was  rendered. 

Andrf.ws,  C.  J.  This  case  presents  a  question  of  considerable  prac- 
tical importance.  It  relates  to  the  equitable  jurisdiction  of  the  court 
under  special  circumstances  to  follow  proceeds  of  personal  property 
in  the  hands  of  a  fraudulent  vendee  or  his  general  assignee  for  the 
benefit  of  creditors  at  the  suit  of  a  defrauded  vendor,  who  by  false 
pretences  was  induced  to  part  with  the  property  on  credit,  the  proceeds 
sought  to  be  reached  being  the  sums  due  from  sub-vendees  of  the  fraud- 
ulent purchaser  arising  on  re-sales  by  him  made  before  the  discovery 
by  the   plaintiff   of  the    fraud.      The    facts  upon   which    the  question 

loCattley  v.  Ldiindcs,  :U  W.  K.  i:'.!»  (188.1);  In  re  Ilulton,  39  W.  R.  303 
(1891);  s.  c.  8  .Morrell.  liankpt.  Hep.  CD;  I'irtle  v.  Price,  :?1  La.  Ann.  357 
(1879);  National  Maliaiwe  I'.ank  v.  Harry,  125  :\Iass.  20  (1878);  Nebraska 
Nat.  Bank  v.  .Johnson,  51  Neb.  54(5,  71  N.  ^y.  2!>4  (lS!t7);  Lamb  v.  Rooney, 
72  Neb.  322,   100  N.   \V.  410,  117  Am.  St.  Rep.  795  (1904). 


Ch.  6)  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  531 

arises  are  substantially  conceded  and  are  free  from  complication. 
Between  the  20th  day  of  September,  1892,  and  the  20th  day  of  Oc- 
tober following-,  the  plaintiff  sold  and  delivered  to  the  mercantile  firm 
of  C.  Burkhalter  &  Co.,  doing  business  in  the  City  of  New  York, 
sugars  of  various  qualities  on  credit  for  the  price  in  the  aggregate  of 
$19,121.41,  no  part  of  which  has  been  paid,  the  last  sale  having  been 
made  October  19th,  1892.  On  the  next  day,  the  firm  being  insolvent 
and  owing  debts  greatly  in  excess  of  its  assets,  made  a  general  assign- 
ment to  the  defendant  for  the  benefit  of  its  creditors.  Among  the  as- 
signed assets  were  a  portion  of  the  sugars  sold  by  the  plaintiff  to  the 
firm,  which  he  replevied  from  the  assignee,  but  the  firm,  prior  to  the 
assignment,  had  sold  to  numerous  persons,  customers  of  the  firm,  in  the 
ordinary  course  of  trade,  portions  of  the  sugars  on  credit,  and  claims 
held  by  the  firm  against  the  sub-vendees  arising  out  of  such  sales,  ex- 
ceeding in  the  aggregate  the  sum  of  $10,000,  were  among  the  assets 
which  passed  by  the  assignment.  These  claims  were  collected  by  the 
assignee  after  the  assignment,  and  (excepting  a  small  sum)  after  no- 
tice had  been  served  by  the  plaintiff  on  the  assignee  that  it  rescinded 
the  original  sale  for  fraud,  which  notice  was  accompanied  by  a  demand 
for  the  sugars  then  in  the  possession  of  the  assignee,  and  for  an  ac- 
counting and  the  delivery  to  the  plaintiff  of  the  outstanding  claims 
against  the  customers  of  Burkhalter  &  Co.,  in  their  hands  for  the 
sugars  sold  by  the  firm  as  above  stated.  The  assignee  declined  to 
accede  to  the  demand  made.  On  the  trial  the  parties  by  stipulation 
fixed  the  amount  of  the  claims  for  sugars  sold  which  had  come  to  the 
hands  of  the  assignee  and  which  had  been  collected  by  him. 

The  fraud  of  Burkhalter  &  Co.  was  not  controverted.  It  was  shown 
that  the  sales  were  induced  by  a  gross  misrepresentation  in  writing 
made  by  one  of  the  members  of  the  firm  to  the  plaintiff  as  to  the  sol- 
vency of  the  firm,  made  on  or  about  September  20th,  1892,  within 
thirty  days  before  the  assignment,  and  when  the  firm  was  owing  sev- 
eral hundred  thousand  dollars  more  than  the  value  of  its  whole  assets. 

The  case  presented  is  singularly  free  from  any  uncertainty  in  re- 
spect to  the  facts  upon  which  the  equitable  jurisdiction  to  follow  the 
proceeds  of  the  sugars  is  claimed.  They  are  definite  and  ascertained, 
but  it  is  insisted  that  the  court  is  impotent  to  give  relief  by  way  of 
subjecting  the  choses  in  action  or  their  proceeds,  representing  the 
sugars,  to  a  lien  in  favor  of  the  defrauded  vendor,  or  to  adjudge 
that  they  shall  be  applied  in  partial  recompense  and  restitution  for  the 
property  so  wrongfully  obtained,  because,  as  is  claimed,  such  relief  is 
not  in  any  such  case  within  the  scope  of  the  powers  of  courts  of  equity 
as  heretofore  defined  and  exercised,  and  for  the  further  reason  that 
new  rights  have  intervened  by  reason  of  the  assignment.  The  fraud 
of  Burkhalter  &  Co.  was,  as  we  have  said,  admitted.  They  are  hope- 
lessly insolvent,  and  were  so  at  the  time  they  took  the  plaintiff's  goods. 
They  disposed  of-  a  large  part  of  the  sugars  before  the  plaintiff'  be- 
came cognizant  of  the  fraud.     The  plaintiff  was  only  apprised  of  it 


532  CONSTRUCTIVE  TKUSTS,  ETC. TRACING   PROPERTY.  (Ch.  G 

after  the  assignment  was  made.  The  remedy  at  law  upon  the  contract 
against  the  fraudulent  and  insolvent  purchaser  is,  under  the  circum- 
stances, ineffectual.  The  pursuit  of  the  property,  except  the  small 
part  of  it  which  was  unsold  and  passed  to  the  assignee,  is  imprac- 
ticahle.  If  it  yet  he  found  unconsumed  and  capable  of  identification, 
the  multiplicity  of  suits  which  would  be  rendered  necessary  to  reclaim 
it  would  make  the  remedy  expensive,  burdensome  and  inadequate. 
The  identification  of  the  proceeds  sought  to  be  reached  is  complete 
and  unquestioned.  It  is  not  claimed  that  the  credits  or  the  money  into 
which  they  have  been  converted  are  not  the  very  proceeds  of  sugars  of 
which  the  plaintiff  was  defrauded. 

The  jurisdiction  of  a  court  of  equity  to  follow  the  proceeds  of  prop- 
erty taken  from  the  true  owner  by  felony,  or  misapplied  by  an  agent 
or  trustee,  and  converted  into  property  of  another  description,  and 
to  permit  the  true  owner  to  take  the  property  in  its  altered  state  as 
his  own,  or  to  hold  it  as  security  for  the  value  of  the  property  wrong- 
fully taken  or  misapplied,  or,  in  case  the  original  property  or  its  pro- 
ceeds have  been  mingled  with  that  of  the  wrongdoers  in  the  purchase 
of  other  property,  to  have  a  charge  declared  in  favor  of  the  person 
injured  to  the  extent  necessary  for  his  indemnity,  so  long  as  the  rights 
of  bona  fide  purchasers  do  not  intervene,  has  been  frequently  exerted 
and  is  a  jurisdiction  founded  upon  the  plainest  principles  of  reason 
and  justice.  Tbe  case  of  Newton  v.  Porter,  69  N.  Y.  133,  25  Am. 
Rep.  152.  is  an  illustration  of  the  application  of  this  principle  in  a 
case  of  the  larceny  of  negotiable  bonds,  sold  by  the  thieves,  in  which 
the  court  subjected  securities  in  which  they  invested  the  money,  and 
which  they  had  transferred  with  notice  to  third  persons  as  security  for 
serv'ices  to  be  rendered,  to  a  charge  in  favor  of  the  owner  of  the  stolen 
bonds.  The  cases  upon  this  head  are  very  numerous,  where  there  has 
been  a  misapplication  of  trust  funds  by  trustees,  or  persons  standing 
in  a  fiduciary  relation,  and  the  money  or  property  misapplied  has  been 
laid  out  in  land  or  converted  into  other  species  of  property.  The  court 
in  such  cases  lays  hold  of  the  substituted  property  and  follows  the 
original  fund,  through  all  the  changes  it  has  undergone,  until  the 
power  of  identification  is  lost  or  the  rights  of  bona  fide  purchasers  stop 
the  pursuit,  and  holds  it  in  its  grasp  to  indemnify  the  innocent  victim 
of  the  fraud.  And  even  in  case  of  money,  which  is  said  to  have  no 
earmark,  its  identity  will  not  be  deemed  lost,  though  it  is  mingled  with 
other  money  of  the  wrongdoer,  if  it  can  be  shown  that  it  forms  a 
part  of  the  general  mass.  Pennell  v.  Deffell,  4  De  G.,  M.  &  G.  372; 
In  re  Hallett,  13  Ch.  Div.  696;  Holmes  v.  Gilman,  138  N.  Y.  369,  34 
N.  E.  205,  20  L.  R.  A.  566,  34  Am.  St.  Rep.  463.  In  the  cases  of  stolen 
property,  or  of  misapplication  by  a  trustee  or  agent  of  the  funds  of 
the  principal  or  cestui  que  trust,  the  title  of  the  real  owner  of  the 
property  has  been  in  most  cases  lost,  without  his  consent,  and  the 
court,  by  a  species  of  equitable  substitution,  repairs,  as  far  as  prac- 
ticable, the  wrong,  and  prevents  the  wrongdoer  from  profiting  by  his 


Ch.  6)  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  533 

fraud.  And,  indeed,  courts  of  law,  borrowing  the  equitable  prin- 
ciple, in  case  of  misapplication  by  agents,  vest  in  the  principal  at  his 
election  the  legal  title  to  a  chattel  or  security  in  the  hands  of  the  agent, 
purchased  exclusively  by  the  application  of  the  embezzled  or  mis- 
applied fund.     Taylor  v.  Plumer,  3  M.  &  S.  562. 

It  is  at  this  point  that  the  controversy  in  the  present  case  com- 
mences, and  the  divergence  arises  which  has  led  to  this  litigation.  It 
is  claimed,  on  behalf  of  the  defendant,  that  courts  of  equity  in  com- 
mercial cases,  where  the  claim  of  the  plaintiff  originates  in  a  fraud 
in  the  sale  of  personal  property,  does  not  undertake  to  follow  proceeds 
in  the  hands  of  the  wrongdoer,  but  that  the  defrauded  party  having 
consented  to  part  with  his  title,  is  remitted  exclusively  to  such  legal 
remedies  as  are  given  for  the  redress  of  the  wrong.  The  jurisdiction 
of  courts  of  equity  in  cases  of  trusts  or  agency,  or  cases  of  like  char- 
acter, it  is  insisted,  is  founded  upon  the  ancient  jurisdiction  of  these 
courts  over  trusts  and  fiduciary  relations,  and  has  not  been  and  ought 
not  to  be  extended  beyond  these  cases.  It  is  very  true  that  trusts  and 
trust  relations  are  peculiarly  cognizable  in  equity,  and  have  been  so 
cognizable  from  the  earliest  period  of  equity  jurisprudence.  But  it  is 
tobe  said  that  these  are  but  branches  of  the  larger  jurisdiction  over 
frauds,  which  equity  abhors,  and  of  which  it  has  cognizance  admittedly 
in  many  cases  not  connected  with  technical  trusts  or  agency.  It  can- 
not be  denied  that  the  protection  of  cestui  que  trusts  against  frauds  of 
the  trustee  is  an  object  of  peculiar  solicitude  in  courts  of  equity. 
They,  in  many  cases,  are  incapable,  by  reason  of  age,  inexperience  or 
other  incapacity,  from  looking  out  for  themselves,  and  the  court  stands 
in  the  attitude  of  guardian  of  their  interests.  But,  as  has  been  said,  a 
court  of  equity  does  not  restrict  its  remedial  processes  to  the  aid  of 
the  helpless  or  the  ignorant.  It  embraces  within  its  view  the  general 
claims  included  within  what  are  called  (]uasi  trusts,  and  intervenes  to 
prevent  violations  of  equitable  duty  by  whomsoever  committed  or  who- 
ever may  suffer  from  the  violation.  It  goes  altogether  outside  of  trust 
relations  in  many  cases  to  prevent  fraud,  or  to  compel  a  restitution 
of  property  obtained  by  fraud.  The  exercise  of  the  jurisdiction  to  set 
aside  fraudulent  transfers  of  real  or  personal  property  made  in  fraud 
of  creditors  is  familiar.  And  the  jurisdiction  is  most  beneficially  in- 
voked in  cases  of  private  fraud  to  rescind  transfers  of  real  estate 
procured  by  fraudulent  representations,  and  to  restore  to  the  defrauded 
vendor  the  title  of  which  he  has  been  defrauded.  It  often  happens  in 
cases  of  transfers  of  real  estate  procured  by  fraud,  that  before  the  ac- 
tion is  brought  or  the  plaintiff  is  tipprised  of  the  fraud,  the  fraudulent 
vendee  has  disposed  of  the  land  in  whole  or  in  part,  or  has  created 
liens  thereon  in  favor  of  the  bona  fide  purchasers  for  value.  In  such 
cases  the  court  will  mould  the  relief  to  suit  the  circumstances,  and 
will,  at  the  election  of  the  plaintiff,  rescind  the  contract  and  compel  a 
re-conveyance  of  the  part  of  the  land  still  remaining  in  the  hands  of 
the  vendee,  and  compel  the  wrongdoer  to  account  for  the  proceeds  of 


534  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  (Cll.  6 

the  land  sold,  or  award  compensation  in  damages.  The  court  in  many 
cases  resorts  to  the  fiction  of  a  trust,  and,  by  construction,  adjudges 
that  the  proceeds  in  {\\v  hands  of  the  wrongdoer  are  held  by  him  as 
trustee  of  the  plaintitl.  This  was  the  exact  nature  of  the  relief 
granted  in  the  case  of  Trevelyan  v.  White,  1  Bcav.  589,  as  appears  by 
the  recital  of  the  decree  in  the  opinion  of  the  master  of  the  rolls, 
where  part  of  the  estate  had  been  sold  by  the  fraudulent  vendee.  In 
Cheney  v.  Gleason,  117  Mass.  557,  a  bill  was  filed  by  the  defrauded 
vendor  of  real  estate  to  reach  a  mortgage  taken  by  the  vendee  on  the 
land  on  a  re-sale  by  him,  and  the  court  sustained  the  bill  and  granted 
the  relief.  In  Hammond  v.  Pennock,  61  N.  Y.  145,  the  court  re- 
scinded, at  the  instance  of  the  plaintiff,  a  contract  for  the  exchange 
of  real  and  personal  property,  owned  by  the  plaintiff,  for  a  farm  of  the 
defendant  in  jNlichigan,  which  had  been  consummated  on  the  plain- 
tiff's part  by  a  conveyance  and  transfer,  the  contract  and  conveyance 
having  been  obtained  l)y  the  defendant  by  fraudulent  representations; 
and  the  defendant  having,  after  the  conveyance  to  him,  contracted  to 
sell  part  of  the  land  conveyed  to  him  by  the  plaintiff,  the  court  adapted 
the  relief  to  the  circumstances  and  rescinded  the  conveyance  so  far 
as  practicable,  and  adjudged  that  the  defendant  account  for  the  pro- 
ceeds of  the  personal  property  included  in  the  sale.  If  the  jurisdic- 
tion exercised  by  courts  of  equity  in  respect  to  undoing  fraudulent 
conveyances  of  real  estate  and  following  the  proceeds  in  the  hands  of 
the  fraudulent  grantee,  appertains  in  like  manner  and  degree  to  sales 
of  personalty,  it  would  seem  that  the  plaintiff  in  the  present  case  w^as 
entitled  to  relief. 

The  fact  that  before  the  action  was  brought.  P.urkhalter  &  Co.  had 
made  a  general  assignment  for  benefit  of  creditors  to  the  defendant 
is  no  obstacle  to  the  relief,  if,  except  for  the  assignment,  the  court 
would  have  interposed,  on  the  prayer  of  the  plaintiff,  its  preventive 
and  other  remedies,  to  have  enabled  the  plaintiff  to  reach  the  unpaid 
claims  against  the  sub-vendee.  As  assignee  for  creditors  he  is  not  a 
purchaser  for  value,  and  stands  in  no  other  or  better  position  than  his 
assignor  as  respects  a  remedy  to  reach  the  proceeds  of  the  sales. 
Goodwin  v.  Wertheimer,  99  N.  Y.  149,  1  N.  E.  404;  Barnard  v.  Camp- 
bell, 58  N.  Y.  76,  17  Am.-  Rep.  208;  Ratcliffe  v.  Sangston.  18  Md. 
383;  Bussing  v.  Rice.  2  Cush.  (Mass.)  48.  It  is  claimed  that  the 
general  creditors  of  the  firm  will  be  prejudiced  if  the  plaintiff  is  al- 
lowed to  prevail,  and  that  he  will  thereby  acquire  a  preference  over 
the  other  creditors  of  the  insolvent  firm.  But  general  creditors  have 
no  equity  or  right  to  have  appropriated  to  the  payment  of  their 
debts  the  property  of  the  plaintiff,  or  property  to  which  it  is  equitably 
entitled  as  between  it  and  Burkhalter  «S:  Co.  They,  so  far  as  appears, 
advanced  nothing  and  gave  no  credit  on  the  faith  of  the  firm's  pos- 
session of  the  sugars,  assuming  that  that  element  would  have  had  any 
bearing  on  the  case.  If  the  sugars  had  existed  in  specie  in  the  hands 
of  the  assignee  it  cannot  be  doubted  that  the  plaintiff  on  rescinding  the 


Ch.  6)  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  585 

sale  would  have  been  entitled  to  retake  them,  and  the  general  cred- 
itors are  in  no  worse  position,  if  the  plaintiff  is  awarded  the  proceeds, 
than  they  would  have  been  if  the  sugars  had  remained  unsold. 

Much  was  said  on  the  argument  upon  the  difference  between  a 
trespasser  taking  and  disposing  of  the  property  of  another  and  the  case 
of  a  sale  of  personal  property  to  a  vendee  induced  by  fraud.  It  is  the 
law  of  this  State,  as  in  England,  that  title  passes  on  such  a  sale  to  the 
fraudulent  vendee,  notwithstanding  that  the  crime  of  false  pretences 
is  included  in  the  statute  definition  of  a  felony,  but  which  was  not 
such  at  common  law.  Barnard  v.  Campbell,  supra ;  Wise  v.  Grant, 
140  N.  Y.  593,  35  N.  E.  1078;  Benj.  on  Sales  (6th  Ed.)  §  433;  Fas- 
sett  v.  Smith,  23  N.  Y.  252 ;  Benedict  v.  Williams,  48  Hun,  124.  But 
a  purchase  procured  by  fraud  is  in  no  sense,  as  between  the  vendor  and 
vendee,  rightful.  It  was  wrongful,  and  while  a  transfer  so  induced 
vests  a  right  of  property  in  the  vendee  until  the  sale  is  rescinded,  the 
means  and  act  by  which  it  was  procured  was  a  violation  of  both  a  legal 
and  moral  duty.  But  the  rule  is  that  a  sale  of  personal  property  in- 
duced by  fraud  is  not  void,  but  is  only  voidable  on  the  part  of  the  party 
defrauded.  "This  does  not  mean  that  the  contract  is  void  until  rati- 
fied ;  it  means  that  the  contract  is  valid  until  rescinded."  When  a 
contract  of  sale  infected  by  fraud  of  the  vendee  is  consummated  and 
the  property  delivered,  the  vendor  on  discovering  the  fraud  may  pur- 
sue one  of  several  courses.  He  may  affirm  the  contract,  and  an  omis- 
sion to  disaffirm  within  a  reasonable  time  after  notice  of  the  fraud  will 
be  deemed  a  ratification.  He  may  elect  to  rescind  it,  and  thereby  his 
title  to  the  property  is  re-instated  as  against  the  purchaser  and  all 
persons  deriving  title  from  him,  not  being  bona  fide  purchasers  for 
value,  and  a  purchaser  is  not  such  who  takes  the  property  for  an  an- 
tecedent debt  or  who  purchased  the  property  on  credit  and  has  not 
paid  the  purchase  money  or  been  placed  in  a  position  where  payment 
to  a  transferee  of  the  claim  cannot  be  resisted.  Barnard  v.  Campbell, 
supra;  Dows  v.  Kidder,  84  N.  Y.  121;  Matson  v.  Melchor,  42  Mich. 
477,  4  N.  W.  200;  Benj.  on  Sales,  p.  570,  note.  Upon  rescission  the 
vendor  may  follow  and  retake  the  property  wherever  he  can  find  it, 
except  in  the  case  mentioned,  or  he  may  sue  for  conversion. 

When  these  legal  remedies  are  available  and  adequate,  clearly  there 
is  no  ground  for  going  to  a  court  of  equity.  The  legal  remedies  in 
such  case  are  and  ought  to  be  held  exclusive.  But  in  a  case  like  the 
present,  where  there  is  no  adequate  legal  remedy,  either  on  the  contract 
of  sale  or  for  the  recovery  of  the  property  in  specie,  or  by  an  action 
of  tort,  is  the  power  of  a  court  of  equity  so  fettered  that  where  it  is 
shown  that  the  property  has  been  converted  by  the  vendee  and  the 
proceeds,  in  the  form  of  notes  or  credits,  are  identified  beyond  ques- 
tion in  his  hands,  or  in  possession  of  his  voluntary  assignee,  it  cannot 
impound  such  proceeds  for  the  benefit  of  the  defrauded  vendor?  The 
only  reason  urged  in  denial  of  this  power,  which  to  our  minds  have  any 
force,  is  based  on  the  assumption  that  it  would  be  contrary  to  public 


536  CONSTRUCTIVE   TRUSTS,  ETC. — TIIACING   PROPERTY.  (Ch.  6 

policy  to  admit  such  an  e(|uitable  principle  into  commercial  transac- 
tions. Hut  with  the  two  limitations  adverted  to,  and  which  ought 
strictly  to  be  observed,  (1)  that  it  must  appear  that  the  plaintiff  has  no 
adequate  remedy  at  law,  either  in  consequence  of  insolvency,  the  dis- 
persion of  the  property  or  other  cause,  and  (2)  that  nothing-  will  be 
adjudged  as  proceeds  except  what  can  be  specifically  identified  as  such, 
business  interests  will  have  adequate  protection.  Indeed,  the  dis- 
turbance would  be  much  less  than  is  now  permitted  in  following  prop- 
erty from  hand  to  hand  until  a  bona  fide  purchaser  is  found. 

The  case  of  Small  v.  Atwood,  Younge,  507,  is  a  very  instructive  case, 
which  involved  a  large  amount,  was  argued  by  eminent  counsel  and  re- 
ceived great  consideration.  It  supports,  we  think,  the  equitable  ju- 
risdiction invoked  in  the  present  case.  It  was  an  action  by  the  pur- 
chaser to  rescind  a  contract  for  the  sale  of  mines  and  mining  property 
induced  by  fraudulent  representations,  and  to  recover  the  purchase 
money  paid  to  the  amount  of  about  £200,000.  The  court  found  the 
fraud  and  rescinded  the  contract,  and  made  a  decree  for  an  account- 
ing. On  a  supplemental  bill  being  filed,  showing  that  the  purchase 
money  paid  had  been  invested  by  the  seller  in  public  securities  in  his 
name,  which  he  afterwards  caused  to  be  put  in  the  name  of  his  mother, 
and  that  the  purchaser  had  no  other  means  adequate  to  repay  the  pur- 
chase money,  the  Chancellor,  on  an  application  for  an  injunction  re- 
straining the  transfer  of  the  securities,  held  that  the  money  paid  could 
be  followed  into  the  stock  purchased,  and  granted  the  injunction. 
The  case  of  In  re  Cavin  v.  Gleason,  105  N.  Y.  256,  11  N.  E.  504,  w^as 
an  attempt  to  fasten  upon  the  estate  of  an  insolvent  a  preferential  lien 
for  money  put  into  his  hands  by  the  plaintiff  for  the  purchase  of  a 
mortgage  for  her,  and  which  he  applied,  without  authority,  to  the  pay- 
ment of  his  debts,  before  the  assignment,  with  the  exception  of  a  small 
sum  ($30.00)  which  went  into  the  hands  of  the  assignee.  The  court 
held  that  the  money,  which  the  insolvent  had  used  to  pay  debts  prior 
to  the  assignment,  was  not  a  preferred  debt,  but  sustained  her  right  to 
be  paid  the  small  sum  which  the  assignee  retained  belonging  to  the 
trust.  This  case  points  the  distinction.  The  character  of  the  debt 
gave  it  no  priority.  The  fund  had  been  dissipated  and  could  not  be 
traced  among  the  assigned  assets.  There  was  no  equitable  ground  of 
preference  except  for  the  small  sum  mentioned. 

Upon  the  whole  case,  we  are  of  the  opinion  that  the  judgment  on 
the  report  of  the  referee  was  correct,  and  the  order  granting  a  new 
trial  should,  therefore,  be  reversed  and  the  judgment  on  the  report 
of  the  referee  affirmed,  with  costs. ^^ 

Judgment  accordingly.     All  concur. 

11  Small  V.  Atwood.  Younso,  407,  5r^.V.^?,S  nsn2);  Tanb  v.  Mcnonand-Colt 
Co.,  10  Colo.  App.  190,  51  Pac.  1G8  (ISDT) ;  Farwoll  v.  Kloinaii,  4.")  Nt>b.  4124, 
(53  N.  W.  798  (189.J);  P.ank  of  America  v.  Pollock.  4  Edw.  Ch.  (N.  Y.)  215 
(184.3);  Converse  v.  Sickles,  14G  N.  Y.  200,  40  N.  K.  777.  48  Am.  St.  Rep.  790 
(1895);  Reynolds  v.  ^i:tna  Life  Ins.  Co.,  28  App.  Div.  591,  51  N.  Y.  Supp.  446 
(1898) ;  affd.  ICO  N.  Y.  OHH.  55  N.  E.  305  (1809) ;  Menz  v.  Beebe,  102  Wis.  342, 
77  N.  W.  913,  78  N.  W.  UOl  (1899). 


Ch.  6)  COXSTRUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  537 

HUMPHREYS  v,  BUTLER. 

(Supreme  Court  of  Arkansas,  1888.     51  Ark.  3ol,  11  S.  W.  470.) 

Appeal  from  Pulaski  Chancery  Court ;  D.  W.  Carroll,  Chancellor. 

BaTTIvE^  J.^^  Edward  Johnigan  enlisted  in  the  army  of  the  United 
States  during  the  late  war  between  the  States,  and  died  in  the  service, 
and  before  the  close  of  the  war.  At  the  time  he  enlisted  he  had  a  wife, 
Clarissa  by  name,  and  when  he  died  he  left  her  surviving-.  He  also 
had  a  brother  Jacob,  who  survived  him.  In  1871  Jacob,  without  the 
knowledge,  consent  or  authority  of  his  brother's  w'idow.  collected  from 
the  United  States  $149.52.  as  bounty  due  his  brother  Edward,  and  in- 
vested it  in  a  certain  lot  in  Little  Rock,  which  he  purchased,  and  which 
cost  him  $400.  Clarissa  married  one  Butler.  Having  discovered 
Jacob's  collection  and  investment,  they  brought  this  action  to  divest  him 
of  the  title  to  the  lot,  and  to  vest  it  in  Clarissa,  or  to  recover  a  decree 
for  the  amount  collected  in  favor  of  Clarissa,  and  to  have  it  decreed  a 
lien  on  the  lot  and  the  lot  sold  to  satisfy  the  same. 

The  amount  due  Edward  as  bounty  at  the  time  of  his  death  right- 
fully belonged  to  his  widow.  There  is  no  controversy  about  Jacob 
having  collected  it,  or  the  amount  collected;  and  we  think  that  the 
evidence  clearly  shows  that  he  invested  it  in  the  lot.  But  it  is  in- 
sisted that  he  stood  in  no  fiduciary  relation  to  Clarissa,  and  that  when 
he  collected  the  money  due  her,  and  invested  it  in  the  town  lot,  no 
trust  resulted  to  her.  It  is  true  that  he  stood  in  no  relation  of  con- 
fidence or  trust  to  her.  But  it  is  not  necessary  that  such  a  relation 
should  have  existed  to  entitle  her  to  relief  against  the  lot.  Equity 
created  a  trust  in  invitum  out  of  the  collection  and  the  investment  of 
her  money  in  the  lot.  with  the  view  of  subjecting  the  lot  to  the  pur- 
poses of  indemnity  and  recompense. 

•  "One  of  the  most  common  cases,"  says  Judge  Story,  "in  which 
a  court  of  equity  acts  upon  the  ground  of  implied  trust  in  invitum,  is 
where  a  party  receives  money  which  he  cannot  conscientiously  with- 
hold from  another  party."  And  he  states  it  to  be  a  general  principle 
that  "whenever  the  property  of  a  party  has  been  wrongfully  mis- 
applied, or  a  trust  fund  has  been  wrongfully  converted  into  another 
species  of  property,  if  its  identity  can  be  traced,  it  will  be  held  in  its 
new  form  liable  to  the  rights  of  the  original  owner,  or  the  cestui  que 
trust."     Story's  Eq.  Jur.  §§  1255,  1258. 

In  2  Pomeroy's  Equity  Jurisprudence,  the  author  says :  "In  gen- 
eral, whenever  the  legal  title  to  property,  real  or  personal,  has  been 
obtained  through  actual  fraud,  misrepresentations,  concealments  or 
through  undue  influence,  duress,  taking  advantage  of  one's  necessi- 
ties or  weakness,  or  through  any  other  similar  means  or  under  any  oth- 
er similar  circumstances,  which  render  it  unconscientious  for  the  holder 
of  the  legal  title  to  retain  and  enjoy  the  beneficial  interest,  equity  im- 

12  A  part  of  the  opinion  is  omitted. 


538  CONSTRUCTIVE   TRUSTS,  ETC. TRACINCr   PROPERTY.  (Ch.  6 

presses  a  constructive  trust  on  the  property  thus  acquired  in  favor  of 
the  one  who  is  truly  and  equitably  entitled  to  the  same,  although  he 
may  never  perhaps  have  had  any  Ici^al  estate  therein;  and  a  court  of 
equity  has  jurisdiction  to  reach  the  property  either  in  the  hands  of  the 
original  wronf^docr,  or  in  the  hands  of  any  subsequent  holder,  until  a 
purchaser  of  it  in  good  faith  and  without  notice  acquires  a  higher  right 
and  takes  the  property  relieved  from  the  trust.  The  forms  and  varie- 
ties of  these  trusts,  which  are  termed  ex  malcficio  or  ex  delicto,  arc 
practically  without  limit.  The  principle  is  applied  wherever  it  is 
necessary  for  the  obtaining  of  complete  justice,  although  the  law  may 
also  give  the  remcdv  of  damages  against  the  wrongdoer."  Section 
1053. 

It  has  been  held  that  equity  will  charge  land  paid  for  in  part  with 
the  proceeds  of  stolen  property  with  a  trust  in  favor  of  the  owner 
of  the  property  for  the  amount  so  used.  National  Mahaiwe  Bank  v. 
Barrv,  125  Mass.  20;  Newton  v.  Porter.  69  N.  Y.  133,  25  Am.  Rep. 
152;'Bank  of  America  v.  Pollock,  4  Edw.  Ch.  (N.  Y.)  215. 

There  is  no  good  reason  why  the  owner  of  property  taken  and  con- 
verted by  one  who  has  no  right  to  its  possession,  should  be  less  favor- 
ably situated  in  a  court  of  equity,  "in  respect  to  his  remedy  to  recover, 
or  the  property  into  which  it  has  been  converted,  than  one  who  by  an 
aluise  of  trust  has  been  injured  by  the  wrongful  act  of  a  trustee  to 
whom  the  possession  of  trust  property  has  been  converted."  "The 
beautiful  character,  pervading  excellence,  if  one  may  say  so,  of  equity 
jurisprudence,"  says  Judge  Story,  "is  that  it  varies  its  adjustments 
and  proportions  so  as  to  meet  the  very  form  and  pressure  of  each  par- 
ticular case,  in  all  its  complex  habitudes."  While  in  the  former  case 
no  relation  of  confidence  or  trust  exists,  it  impresses  a  constructive 
trust  upon  the  property  obtained  by  the  conversion  for  the  benefit  of 
the  party  whose  effects  have  been  used  in  obtaining  it ;  and,  when  such 
effects  or  the  proceeds  thereof,  were  a  part  of  the  price  paid,  it  makes 
the  property  so  obtained  chargeable  with  an  equitable  lien  in  favor  of 
such  party  and  entitles  him  to  a  "judgment  for  the  sale  of  the  property 
as  upon  foreclosure  in  default  of  payment  within  a  time  named." 
Bresnihan  v.  Shchan,  125  Mass.  11,  and  cases  cited;  Wallace  v.  Duf- 
field,  2  Serg.  &  R.  (Pa.)"  521,  7  Am.  Dec.  660;  Day  v.  Roth,  18  N.  Y. 

/\/\Q        *       *       * 

Appellee,  Clarissa  Butler  is  entitled  to  judgment  for  the  $149.52, 
and  six  per  cent,  per  annum  interest  thereon.  Inasmuch  as  the  evi- 
dence does  not  show  when  the  money  was  actually  received,  and  does 
show  that  it  was  invested  in  the  lot  on  the  14th  of  October,  1871,  the 
interest  should  be  computed  from  that  date.  The  $149.52  being  only 
a  part  of  the  price  paid  for  the  lot,  she  should  have  a  lien  thereon  for 
the  amount  due  her,  and  a  decree  for  the  sale  of  the  lot  to  satisfy  the 
lien  in  default  of  payment,  within  a  specified  time.  2  Perry  on  Trusts 
(3d  Ed.)  §  842;  Scale  v.  Baker,  28  Beavan,  91 ;  Price  v.  Blackmore,  6 
Beavan,  507;  Lewis  v.  Maddocks,  17  Ves.  48. 


Ch.  6)     CONSTRUCTIVE  TRUSTS,  ETC. TRACING  PROPERTY.        539 

The  decree  of  the  Chancery  Court  is  reversed,  and  the  cause  is  re- 
manded, with  an  instruction  to  the  Court  below  to  enter  a  decree  in 
conformity  with  this  opinion,  and  for  other  proceedings.^^ 


BONESTEEL  v.  BONESTEEL. 

(Supreme  Court  of  Wisconsin,   1872.     30  Wis.   'AG.) 

Appeals  from  the  Circuit  Court  for  Dodge  County. 

The  case  presents  two  cross  appeals  from  different  parts  of  one  and 
the  same  judgment.  The  plaintiff,  Belinda  R.  Bonesteel,  brought  her 
action  against  the  defendant,  Jacob  P.  Bonesteel,  upon  a  promissory 
note  executed  by  defendant  to  plaintiff.  The  answer  admitted  the 
making  of  the  note,  but  alleged  that  it  was  without  consideration,  hav- 
ing been  given  under  threats,  and  to  avoid  trouble  and  annoyance. 
The  answer  further  alleged,  by  way  of  counterclaim,  that  before  the 
making  of  the  promissory  note  in  question,  defendant,  with  one  Conk- 
lin,  was  owner  of  certain  gold  claims  of  great  value,  in  Colorado,  the 
title  to  which  was  in  one  Gorsline,  in  trust  for  defendant  and  Conklin, 
and  that  Gorsline  conveyed  the  claims  to  the  plaintiff  in  trust  for  de- 
fendant and  Conklin,  subject  to  Gorsline's  claim  for  services  in  nego- 
tiating the  sale  of  the  claims ;  that  by  the  terms  of  the  agreement,  plain- 
tiff was  to  sell  the  claims,  and  after  settling  with  Gorsline,  to  account 
to  defendant  and  Conklin  for  the  balance  of  the  proceeds  received 
on  the  sale  of  said  trust  estate;  that  plaintiff  afterwards  sold  said 
claims  and  trust  estate,  to  one  McLaughlin,  but  after  settling  with 
Gorsline,  had  withheld  from  defendant  his  share  of  the  proceeds,  and 
had  neglected  and  refused  to  account  for  the  money  received  by  her, 
out  of  said  trust  estate,  and  had  converted  the  same  to  her  own  use. 
Plaintiff,  by  her  reply,  admitted  the  ownership  of  the  gold  claims  by 
defendant  and  Conklin,  the  title  being  held  in  trust  for  them  by  Gors- 
line, and  alleged  that  her  husband  had  purchased  the  claims  of  de- 
fendant and  Conklin,  for  value,  and  at  the  time  of  such  purchase,  and 
before  plaintiff  conveyed  to  McLaughlin,  it  was  agreed  between  her 
husband,  and  the  defendant  and  Conklin,  but  without  her  knowledge 
and  consent,  that  the  conveyance  from  Gorsline  should  be  taken  in 
the  name  of  plaintiff;  that  in  pursuance  of  such  agreement,  Gorsline 
afterwards  nominally  conveyed  the  claims  to  plaintiff,  but  without  her 
knowledge,  consent  or  privity ;  that  she  never  accepted  of  any  trust  in 
relation  to  said  claims,  or  any  of  the  proceeds  thereof  under  the  deed. 
nor  was  the  deed  ever  delivered  to  her,  and  that  she  knew  nothing 
thereof,  until  one  year  afterward,  when  she  joined  with  her  husband  in 
conveying  to  McLaughlin,  and  that  plaintiff  never  received  any  money, 

13  La  Comit6  v.  Standard  Bank,  1  Cababe  &  Ellis,  87  (1883) ;  In  re  Woods  & 
Malone  (D.  C.)  121  Fed.  599  (1903) ;  Graves  v.  Pineliback,  47  Ark.  470,  1  S. 
W.  G82  (1886). 


540  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  (Ch.  6 

either  as  trustee  or  otherwise,  from  any  person  on  account  of  said 
claims,  but  tliat  her  husband  had  had  the  sole  control  thereof,  and  had 
received  all  the  money  therefor.  The  evidence  is  sufficiently  stated  in 
the  opinion.  The  court  found  as  facts:  1st,  that  the  note  set  forth  in 
the  coniijjaint  as  the  foundation  for  plaintiff's  cause  of  action,  was  with- 
out consideration,  and  that  nothing  was  due  plaintiff  thereon ;  2d,  that 
plaintiff  did  not  receive  the  gold  claims  in  trust,  and  was  not  liable 
to  account  therefor.  As  conclusions  of  law,  the  court  found:  1st, 
that  plaintiff'  take  nothing  by  her  comjilaint ;  2d,  that  defendant  take 
nothing  by  his  counterclaim.  Judgment  for  defendant  for  costs. 
Defendant  excepted  to  the  second  finding  of  fact  and  second  con- 
clusion of  law,  and  appealed.  Plaintiff  excepted  to  the  first  finding 
of  fact  and  first  conclusion  of  law,  and  appealed. 

CoLK,  J.^*  These  are  cross-appeals  from  different  parts  of  the 
same  judgment. 

In  respect  to  the  finding  and  judgment  of  the  court  below  against 
the  counterclaim,  set  up  in  the  defendant's  answer,  we  think  the 
evidence  was  insufficient  to  charge  the  plaintiff  as  trustee  of  those 
funds.  It  does  not  appear  that  she  had  any  knowledge  of  the  trust; 
or  accepted  it.  The  facts,  mainly  relied  on  to  show  that  she  knew 
of  the  tru>t  and  accepted  it,  are  these:  The  trust  property  was  con- 
veyed to  her  by  Judge  Gorsline  without  any  consideration  being  paid 
by  her  therefor.  She  united  with  her  husband  in  conveying  this 
same  property  to  McLaughlin.  A  large  portion  of  the  proceeds  of 
the  sale  of  the  gold  claims  was  subsequently  placed  to  her  credit, 
on  the  bank  Ijooks  of  Mr.  Baker,  which  she  drew  out  on  her  own 
checks. 

The  conveyance  by  Gorsline  was  made  in  the  absence  of  the  plain- 
tiff, and  without  her  knowledge,  at  the  instigation  of  the  defendant 
and  the  plaintiff's  husband.  She  states,  in  her  answer,  that  the  deed 
was  never  delivered  to  her,  and  testifies  in  her  deposition  that  there 
never  was  any  property  or  gold  claims  conveyed  to  her  by  Gorsline, 
in  trust  for  the  defendant  and  Conklin ;  that  she  never  accepted 
any  such  trust ;  never  sold  any  such  claims ;  nor  received  any  money 
for  them.  There  is,  really,  no  evidence  to  contradict  her  upon  these 
points.  Suppose  she  had  seen  the  conveyance  from  Gorsline  to  her. 
It  is  not  claimed  that  this  conveyance  expressed  that  the  property 
was  conveyed  in  trust  for  any  one.  She  states  that  after  the  commence- 
ment of  this  suit,  she  was  informed  that  her  husband  took  a  con- 
veyance of  these  gold  claims  in  her  name,  and  she  doubtless  sup- 
l)osed  that  they  were  his  property.  When  she  executed  the  deed  to 
McLaughlin  with  her  husband,  she  was  of  the  same  impression.  She 
was  entirely  ignorant  of  the  fact  that  the  defendant  had  any  interest 
whatever  in  the  gold  claims — if  such  was  really  the  case — and  the 
parties  conducting  the  business  seem  to  have  carefully  concealed  from 
her,  as  well  as  others,  the  real  nature  of  these  transactions.    Whether 

1*  A  part  of  the  opinion  is  omitted. 


Ch.  6)  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  541 

this  concealment  was  resorted  to  for  a  fraudulent  purpose,  to  place 
these  claims  beyond  the  reach  of  creditors,  we  need  not  inquire.  But 
certain  it  is,  that  the  plaintiff  did  not  know,  and  had  no  means  of 
finding  out,  that  these  claims  had  been  conveyed  to  her  in  trust,  and 
therefore  the  fact  that  she  united  with  her  husband,  in  conveying 
them  to  McLaughlin,  is  not  such  an  act  as  ought,  under  the  circum- 
stances, to  charge  her  with  the  trust,  for  she  doubtless  supposed  that 
the  claims  belonged  to  her  husband,  and  that  the  money  which  was 
received  from  the  sale  of  this  property  was  likewise  his.  In  this 
case,  if  there  was  any  evidence  from  which  it  could  be  assumed  that 
the  plaintiff  knew  that  the  property  was  conveyed  to  her  by  Gorsline, 
in  trust ;  or,  that  the  proceeds  of  the  sale  belonged  to  the  defendant, 
there  would  be  some  ground  for  holding  her  liable  in  this  action  as 
trustee.  But  there  is  no  such  evidence,  and  nothing  whatever  to  in- 
form her,  that  these  moneys  belonged  to  the  defendant.  We,  therefore, 
fully  agree  with  the  court  below,  in  the  conclusion  that  she  never 
received  these  moneys  mentioned  in  the  counterclaim  in  trust,  and  is 
not  liable  to  account  therefor.  *  *  * 
Judgment  affirmed. 


MAST   &  CO.  v.   HENRY  et  al. 
(Supreme  Court  of  Iowa,  1884.    65  Iowa,  19.3,  21  N.  W.  5.59.) 

Action  in  equity  to  subject  real  estate  to  payment  of  certain  judg- 
ments recovered  by  the  plaintiff  against  the  defendant,  G.  W.  Henry, 
which  real  estate,  the  plaintiff  claims,  Henry  conveyed  to  his  daughter 
and  co-defendant,  M.  E.  Henry,  for  the  purpose  of  defrauding  his 
creditors.  The  court  found  for  the  defendant  and  entered  a  decree 
accordingly.    The  plaintiff  appeals. 

Seevers,  J.  In  1874  Fiske  &  Co.  recovered  a  judgment  against 
both  of  the  defendants,  and  Hapgood  &  Co.  recovered  a  judgment 
about  the  same  time  against  G.  W.  Henry  alone.  G.  W.  Bassett  was 
attorney  for  the  judgment  plaintiffs.  The  evidence  warrants  the 
conclusion  that  M.  E.  Henry  was  the  principal  debtor  on  the  Fiske 
judgment.  At  that  time  G.  W.  Henry  was  the  owner  of  Lot  I,  in 
Block  15  in  Fort  Dodge,  and  he  conveyed  the  same  to  M.  E.  Henry 
on  the  1st  day  of  September,  1874.  No  consideration  was  paid  by 
M.  E.  Henry  for  such  conveyance.  In  the  same  month,  but  after- 
wards, Fiske  &  Co.  sold  said  lot  under  execution  issued  on  their  judg- 
ment. It  was  sold  in  subdivisions  1,  2,  3  and  4,  and  D.  B.  Fiske  be- 
came the  purchaser,  and  received  a  certificate  of  purchase.  In  June, 
1875,  Hapgood  &  Co.  redeemed  sub-lot  4  from  said  sale,  and  the 
certificate  of  purchase  was  assigned  to  said  firm.  Afterwards,  Hap- 
good &  Co.  assigned  the  certificate  of  purchase  to  M.  E.  Henry,  and 
the  sheriff  conveyed  sub-lot  4  to  her  in  October,  1875,  and  sub-lots 
1,  2  and  3  were  at  the  same  time  conveyed  to  D.  B.  Fiske  by  the 


542  CONSTRUCTIVE  TRUSTS,  ETC. — TRACING   PROPERTY.  (Ch.  6 

sheriff,  and  in  November  thereafter,  Fiske  conveyed  the  same  to 
Bassett.  A  few  days  thereafter  Bassett  quit-claimed  sub-lot  2  to 
M.  E.  I  lenry,  and  she  at  the  same  time  quit-claimed  sub-lots  1  and  3 
to  Bassett.  Afterwards,  in  November,  1875,  all  of  said  sub-lots  were 
sold  for  delinquent  taxes  to  Bassett,  and  in  1878  the  treasurer  con- 
veyed the  same  to  him.  Thereafter  Bassett  quit-claimed  sub-lot  4 
to  M.  E.  Henry,  and  she  quit-claimed  sub-lot  2  to  him.  Tf  these 
several  conveyances  are  rep^arded  as  valid  against  the  ])lainlill,  tlicn, 
when  this  action  was  commenced,  M.  E.  Henry  only  owned  sub-lot 
4,  and  the  question  is  whether  it  can  be  subjected  to  the  payment  of 
the  plaintiff's  judgments.  There  is  no  evidence  showing  bad  faith 
on  the  part  of  Bassett,  and  he  must  be  reg-arded  as  a  purchaser  in 
good  faith  and  for  value  of  D.  B.  Fiske.  He  held  the  title  to  sub-lots 
1,  2  and  3  under  such  conveyance,  free  from  equities  in  favor  of  the 
plaintiff.  But  the  contention  of  the  plaintiff's  counsel  is  that  M.  E. 
Henry  cannot  be  regarded  as  such  a  purchaser,  because  the  whole 
of  lot  1  was  conveyed  to  her  in  fraud  of  the  rights  of  the  plaintiff ; 
that  she  had  notice  of  the  plaintiff's  equities,  and  therefore  cannot 
be  regarded  as  a  purchaser  in  good  faith ;  and  that  she  is  not  pro- 
tected, although  she  obtained  title  from  FJassett.  who  was  a  purchaser 
in  good  faith  and  for  value.  In  support  of  this  proposition,  2  Pom. 
Eq.  §  754,  is  cited. 

Counsel  for  the  plaintiffs  reply  that  the  authority  cited  does  not 
apply,  because  no  actual  fraud  on  the  part  of  either  of  the  defendants 
in  making  such  conveyance  has  been  established.  It  is  conceded, 
however,  by  counsel  that  M.  E.  Henry  was  a  mere  volunteer,  and  that 
the  conveyance  to  her  was  void  as  to  existing  creditors.  To  such  a 
party,  however,  counsel  claim  that  the  rule  above  stated  has  no  applica- 
tion. Counsel  for  the  plaintiffs  further  contend  that  the  conveyance 
by  the  sheriff  to  AT.  E.  Henry  of  sub-lot  4  should  be  regarded  as  a 
redemi)tion  merely,  because  it  was  sold  for  her  debt,  which  she  was 
primarily  to  pay.  It  is  true  that  she  was  the  principal  debtor  on  the 
Fiske  judgment,  but  she  w-as  not  liable  on  the  Hapgood  judgment. 
To  obtain  the  certificate  of  purchase,  or  to  redeem  from  the  sale, 
whichever  it  may  be  regarded,  required  nearly  $400,  and  we  find  that 
the  required  amount  was  paid  by  M.  E.  Henry.  To  redeem  from 
the  sale  under  the  Fiske  judgment  did  not  require  more  than  $175. 
But  Hapgood  was  the  bona  fide  holder  of  the  certificate  of  purchase, 
and  to  obtain  an  assignment  thereof,  M.  E.  Henry  was  required  to 
and  did  pay,  as  we  find  from  the  evidence,  about  $225  in  addition, 
to  Hapgood,  for  which  she  in  no  respect  was  liable. 

We  are  unable  from  the  evidence  to  conclude  that  M.  E.  Henry 
received  the  conveyance  of  lot  1  from  her  father  for  the  jnirpose  of 
defrauding  his  creditors.  But  the  title,  while  it  remained  in  her, 
was  liable  to  be  divested  at  the  instance  of  existing  creditors  of  her 
father,  because  she  had  paid  no  consideration  therefor.  While  she 
held  the  legal  title  of  sub-lot  4  under  the  conveyance  from  the  sheriff, 


Cll.  6)  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   rROPEKTY.  543 

said  sub-lot  was  sold  for  delinquent  taxes  to  Bassett,  and  he  thereafter 
obtained  a  treasurer's  deed.  The  validity  of  the  tax  title  in  Bassett  is 
in  no  manner  assailed,  and  the  evidence  warrants  no  other  conclusion 
than  that  Bassett  acted,  in  procuring-  such  title,  adversely  to  the  de- 
fendants. When  the  tax  sale  was  made,  M.  E.  Henry  owned  the 
legal  title  to  both  sub-lots  2  and  4.  When  the  title  became  vested  in 
Bassett,  she  and  her  father  were  in  possession  of  sub-lot  2.  For  the 
purpose  of  getting  possession  of  the  last  named  lot  without  litigation 
Bassett  quit-claimed  all  his  interest  in  sub-lot  4  to  M.  E.  Henry. 
As  Bassett's  title  under  the  tax  deed  was  valid,  and  vested  in  him 
the  absolute  title,  we  think  he  could  convey  to  M.  E.  Henry,  and  she 
would  become  vested  with  a  good  title,  although  she  may  have  had 
notice  of  the  plaintiffs'  equities,  as  above  stated.  She  had  not  been 
guilty  of  fraud,  but,  at  most,  was  a  mere  volunteer,  with  notice.  2 
Pom.  Eq.  §  754,  and  authorities  cited  in  note  2. 


WHEELER  and  GREEN  v.  GEORGE  KIRTLAND  and  Others 

(two  cases). 

G.  W.  KIRTLAND  v.  JOHN  KIRTLAND  and  Others. 

(Court  of  Chancery  of  New  Jersey,  1872.     23  N.  J.  Eq.  13.) 

These  three  suits  were  brought  on  for  final  hearing  together,  each 
upon  bill,  answer,  replication,  and  proofs. 

Wheeler  and  Green,  the  complainants  in  the  first  two  suits,  had, 
on  the  16th  day  of  December,  1869,  recovered  judgment  in  the  Su- 
preme Court  of  the  state  against  the  defendants,  George  Kirtland  and 
John  Kirtland  (who  had  been  partners  under  the  name  of  Kirtland 
&  Co.),  for  $68,246.  By  an  execution  on  this  judgment  they  had 
levied  upon  a  lot  of  land  of  six  and  one-half  acres,  in  Orange,  known 
as  the  Halsted  Homestead,  the  title  to  wdiich  was  in  the  name  of 
Emily  G.  Kirtland,  the  wife  of  George  Kirtland;  and  on  a  tract  of 
land  and  messuage,  the  property  of  John  Kirtland,  also  in  Orange, 
encumbered  by  two  mortgages  to  George  W.  Kirtland,  one  for 
$4,000  in  his  own  right,  and  one  for  $75  to  him  as  trustee  for  Cath- 
arine Kirtland,  the  wife,  and  Jared  T.  Kirtland,  the  son  of  John 
Kirtland,  and  by  a  judgment  confessed  by  John  Kirtland  to  George 
W.  Kirtland,  in'Essex  County  Circuit  Court,  for  $16,714.42. 

The  bill  in  the  first  suit  seeks  to  have  the  judgment  of  the  com- 
plainants declared  a  lien  on  the  Halsted  Homestead  on  the  ground 
that  the  same  was  purchased  and  paid  for  by  George  Kirtland  out 
of  the  assets  of  the  firm  when  insolvent,  and  the  title  taken  in  the  name 
of  his  wife  to  protect  it  from  the  debts  of  the  firm,  and  to  hinder 
and  defraud  their  creditors. 

The  bill  in  the  second  suit  alleges  that  the  mortgage  held  by  George 
W.  Kirtland  on  the  premises  of  John,  as  trustee  for  Catharine  and 


544  CONSTRUCTIVE  TRUSTS,  ETC. TRACING   PROTERTY.  (Cll.  6 

Jared,  was  voluntary,  and  j^iven  without  consideration  when  John 
Kirtland  and  his  firm  were  insolvent,  and  seeks  to  have  it  declared 
fraudulent  and  void  as  against  the  complainants  and  their  judgment. 

The  third  suit  is  by  George  W.  Kirtland  to  foreclose  his  mortgage 
for  $4,000,  and  his  mortgage  as  trustee.  It  also  seeks  to  have  that 
mortgage  reformed  by  correcting  a  mistake  of  the  scrivener,  who.  in 
drawing  it,  had  substituted  the  word  "successors"  for  "heirs,"  after 
the  name  of  the  mortgagee,  in  the  granting  clause;  and  further,  to 
have  the  amount  due  on  his  judgment  made  out  of  the  sale  of  the 
mortgaged  premises.  The  defendants,  Wheeler  and  Oreen,  contest 
the  bona  fides  and  validity  of  both  these  mortgages,  and  of  the  judg- 
ment, and  allege  that  they  all  are  without  consideration,  and  intended 
to  delay  and  defeat  creditors. 

The  CiiANcnLLOR  [Abraham  O.  Zabriskik].  I  shall  first  con- 
sider the  question  with  Emily  G.  Kirtland,  as  to  the  Halsted  Home- 
stead.^^ She.  was  the  daughter  of  I\I.  ().  Halsted,  an  old,  respectable, 
and  wealthy  resident  of  Orange,  who  had  lived  on  this  property  for 
more  than  forty  years.  Emily  had  been  born  there,  and  had  resided 
on  it  until  she  was  married  to  George  Kirtland,  in  September,  1863, 
and  still  continues  to  reside  there.  She  continued,  after  her  marriage, 
to  reside  there  in  the  family  of  her  parents  until  March  5,  1864,  when 
the  place  was  conveyed  to  her  in  fee  by  her  father;  after  that,  she 
and  her  husband  conducted  the  establishment,  and  her  father  and 
mother  boarded  with  them.  For  some  time  before  her  marriage  her 
father  had  talked  of  selling  this  place,  and  asked  $25,000  for  it.  In 
the  winter  after  her  marriage,  and  for  some  two  months  before  the 
conveyance,  she  had  been  bargaining  with  her  father  for  the  purchase 
of  this  place,  and  concluded  the  bargain  for  the  price  of  $25,000,  of 
which  $5,000  was  to  be  paid  by  charging  it  as  an  advancement  to  her, 
and  the  $20,000  was  to  be  paid  in  cash.  This  sum  was  advanced 
by  her  husband  by  a  check  of  his  firm  for  that  sum,  intended  as  a  gift 
to  her.  She  was  the  only  remaining  daughter  or  child,  the  others 
having  been  previously  married.  Her  father  gave  her  the  furniture 
in  the  house.  Mr.  Halsted  never  drew  the  money  for  which  the  check 
was  given,  or  used  it  in  any  way.  but  handed  it  the  next  morning  to 
George  Kirtland,  who  took  it  back  to  the  firm,  giving  Mr.  Halsted 
credit  in  their  books  for  the  amount,  $20,000.  The  firm  from  time  to 
time  bought  bonds  for  Mr.  Halsted  to  that  amount,  their  business 
being  that  of  bankers  and  stock  and  exchange  brokers  in  the  City  of 
New  York.  These  bonds  were  left  with  Kirtland  &  Co.,  and  were 
used  by  them  as  collaterals  for  raising  money,  under  an  understanding 
with  Mr.  Halsted.  On  the  10th  day  of  November,  1864,  Kirtland  & 
Co.  failed,  and  stopped  payment,  and  on  the  25th  made  an  assignment 
of  their  New  York  assets  for  the  benefit  of  certain  creditors. 

On  the  24th  day  of  November,  1864,  two  weeks  after  the  failure, 
Mr.   Halsted   advanced  on   a  mortgage  of  the   Homestead  $14,000, 

15  Only  so  imich  of  the  opinion  as  deals  with  this  question  is  given. 


Ch.  6)  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  545 

which  was  handed  over  to  George  Kirtland  for  the  payment  of  the 
debts  of  the  firm,  and  on  the  4th  of  November,  1865,  he  loaned  $6,000 
more  on  a  second  mortgage  of  the  same  property,  which  was  handed 
to  George  for  the  same  purpose.  These  sums,  or  by  far  the  greater 
part  of  them,  were  used  in  paying  the  debts  of  the  firm,  part  in  pay- 
ing a  debt  for  which  $10,000  of  Mr.  Halsted's  bonds  were  pledged, 
part  in  payment  of  a  debt  for  which  $17,000  of  borrowed  Tennessee 
bonds  had  been  pledged,  and  the  rest  for  other  debts. 

Mrs.  Emily  G.  Kirtland  retained  possession  of  her  homestead,  and 
the  lands  having  risen  much  in  value,  sold  different  parcels  of  it  for 
large  prices,  and  with  these  moneys,  and  the  amount  which  came  to 
her  as  her  share  of  the  estate  of  her  father,  who  died  in  1866,  being 
about  $20,000,  she  has  nearly  paid  off  the  mortgages.  The  judgment 
of  Wheeler  and  Green  in  this  state  was  obtained  more  than  five  years 
after  the  failure,  and  after  these  sales  and  payments. 

The  above  statement  of  facts  is  the  conclusion  to  which  I  have 
arrived  from  consideration  of  the  testimony,  and  is  fully  established 
by  the  evidence. 

I  shall  assume  it  also  as  established  by  the  evidence,  that  the  firm 
of  Kirtland  &  Co.  were,  on  the  5th  of  March,  1864,  largely  insolvent, 
although  upon  this  point  there  is  contradictory  testimony.  I  shall 
also  assume  that  George  Kirtland  knew  of  the  insolvency.  He  denies, 
under  oath,  that  the  firm  was  then  insolvent,  or  that  he  thought  that 
it  was ;  and  his  ignorance  of,  and  incapacity  for  business  displayed 
in  his  testimony,  if  not  simulated,  is  so  great  that  perhaps  I  should 
credit  him  as  to  his  belief. 

It  is  shown  to  my  satisfaction  that  his  wife  Emily  and  her  father 
did  not  know  of,  or  suspect,  the  insolvency  of  the  firm  at  the  advance 
of  the  $20,000.  His  wife  supposed  he  was  wealthy  and  doing  a  good 
business.  This  is  shown  by  her  responsive  answer  and  testimony, 
and  confirmed  by  the  fact  that  the  complainants,  Wheeler  and  Green, 
and  other  dealers  who  trusted  them  with  millions,  treated  and  dealt 
with  them  as  responsible  and  wealthy.  A  young  wife  could  not  be 
supposed  to  suspect  her  husband  in  matters  as  to  which  she  saw 
experts  in  business,  not  related  by  blood  or  affinity,  trusting  him  with 
such  amounts.  There  is  no  reason  to  doubt  her  testimony.  That 
upon  the  failure,  two-thirds  of  the  advance,  and,  within  a  year  after, 
the  residue  of  it,  was  repaid  by  the  wife  to  the  firm  from  whom 
it  was  taken,  is  established  and  not  disputed. 

Wheeler  and  Green  were  creditors  of  the  firm  at  the  time  the  $20,- 
000  was  advanced.  The  firm  were  their  bankers ;  they  deposited  their 
moneys  with  them,  and  drew  from  them  as  needed.  Their  account  was 
very  active ;  the  debt  due  to  them  from  the  firm  at  its  failure  was  not 
the  same  debt  as  was  due  at  the  advance  to  Mrs.  Kirtland.  It  may  be 
that  there  was  a  time  when  their  account  was  overdrawn,  and  the  firm 
owed  them  nothing.  But  as  at  its  failure,  it  owed  them  over  $40,- 
Kex.Tr.— 35 


546  CONSTRUCTIVE  TRUSTS,  ETC. TRACING   PROPERTY.  (Cll.  6 

000,  as  the  dealing  was  continuous,  and  the  over-draft,  if  any,  ac- 
cidental, I  shall  assume  tlieir  rights  to  be  the  same  as  to  this  property, 
as  if  some  indebtedness  to  them  had  continued  from  the  advance  to 
the  failure. 

The  question  then  presented  is  this:  If  a  man  wlien  insolvent  or 
in  debt,  advances  money  as  a  gift  to  his  wife  or  his  son,  they  bemg 
at  the  time  ignorant  of  the  indebtedness  or  insolvency,  and  they  pur- 
chase property  or  enter  into  business  with  this  money,  but  afterwards, 
upon  learning  of  the  embarrassment  of  the  donor,  pay  back  in  full 
the  amount  received,  does  this  transaction  impress  the  property  pur- 
chased, or  the  profits  of  the  business  in  which  they  engaged  with  such 
an  indelible  trust  for  creditors  that  at  any  distance  of  time  afterwards 
the  creditors  can  claim  the  property  purchased  and  its  advances,  or 
the  profits  made  in  such  business,  both  before  and  after  refunding 
the  advance? 

I  am  of  opinion  that  if  the  donee  in  such  case  receives  the  money 
in  good  faith,  supposing  that  it  was  advanced  by  a  perfectly  solvent 
person,  and  that  the  gift  could  not  injure  his  creditors,  present  and 
future,  and  was  not  intended  for  such  purpose,  and  the  amount  is 
afterwards  repaid  in  full  to  the  source  from  which  it  was  received, 
there  is  no  fraud  or  other  ground  to  infer  or  create  a  trust  for  future 
or  even  existing  creditors,  in  the  profits  of  the  business  or  advance 
of  the  property  after  the  money  is  returned,  or  even  while  it  is  kept 
in  good  faith.  There  is  no  privity  or  confidence  between  the  donee 
and  the  creditor,  or  any  other  thing  out  of  which  a  trust  can  arise. 
Fraud  may  create  a  trust;  but  here  is  in  the  donee  neither  actual 
nor  legal  fraud. 

I  have  no  doubt  that  a  voluntary  conveyance  or  gift  of  property, 
made  at  this  time  by  Kirtland  to  his  wife,  even  if  received  in  perfect 
good  faith,  would  have  been  void  as  against  his  creditors.  If  the  gift 
had  been  in  money  she  could  have  been  compelled  to  repay  it ;  but  if 
it  had  been  repaid  or  refunded  before  a  creditor  obtained  a  judgment 
or  other  lien,  she  could  not  again  be  compelled  to  pay  it  to  the  creditor, 
unless  the  payment  was  made  so  as  to  aid  her  husband  in  defrauding 
creditors.  It  is  not  necessary  to  decide  whether  if  the  money  had  not 
been  repaid,  the  property  purchased  with  it  and  held  by  the  donee 
would  be  in  trust  for  creditors  beyond  the  amount  of  the  advance. 

The  rights  of  creditors  should  be  protected.  No  property  of  the 
debtor  should  be  allowed  to  be  conveyed  away  and  held  by  a  donee 
without  consideration  or  in  trust  for  the  debtor.  It  should  be  followed 
into  whosesoever's  hands  it  may  be,  except  that  of  a  bona  fide  pur- 
chaser for  value,  and  given  to  the  creditor.  Beyond  this  the  creditor 
has  no  right.  And  there  are  other  persons  who  have  rights  to  be  pro- 
tected as  well  as  creditors.  The  wife  or  son  of  one  who  has  been  un- 
fortunate or  attempted  to  defraud,  should  not,  to  gratify  a  feeling  of 
vindictiveness  against  a  wrongdoer  with  whom  they  are  so  nearly  con- 
nected, be  stripped  of  what  fairly  belongs  to  them.    When  the  creditor 


Ch.  6)  CONSTRUCTIVE  TRUSTS,  ETC. — TRACING   PROPERTY.  547 

has  his  three  thousand  ducats  he  must  not  seek  for  the  penalty  of  the 
pound  of  flesh  or  for  a  single  drop  of  blood. 

There  can  be  little  doubt,  from  the  great  rise  in  its  value  since,  that 
this  property,  in  March,  1864,  when  it  was  conveyed,  was  worth  more 
than  $25,000.  At  that  time  the  depressing  effect  of  the  first  years  of 
the  war  was  being  relieved.  The  increase  of  money  by  the  immense 
circulation  of  irredeemable  legal  tender  notes  had  raised  the  money 
value  of  land  by  reducing  the  value  of  money,  and  if  this  property  in 
1860  was  worth  $25,000,  it  was  worth  much  more  then.  The  price  of 
$5,000,  charged  by  a  father  to  a  cherished  daughter,  was  very  likely,  to 
his  knowledge,  below  its  value,  and  the  conveyance  intended  as  a  favor 
to  her.  It  would  be  gross  injustice  to  take  from  that  daughter,  anxious 
and  uniting  with  her  father  to  preserve  the  home  of  her  childhood, 
all  the  benefits,  advantages,  and  profits  of  that  purchase  above  the 
naked  $5,000,  and  hand  them  over  to  the  creditors  of  her  husband,  to 
whom  they  never,  in  law,  equity  or  right,  belonged. 

I  know  of  no  precedent  for  declaring  the  honest  recipient  of  a 
temporary  gift,  fully  returned,  a  trustee  for  the  benefit  of  creditors. 
The  only  precedent  I  find  for  declaring  such  a  trust  is  where  the  prop- 
erty was  purchased  by  the  husband  himself,  and  the  deed  taken  in  the 
name  of  his  wife — not  for  her  benefit,  but  to  be  held  in  her  name  for 
the  benefit  of  the  husband  to  defraud  his  creditors. 

A  trust  is  held  to  result  by  operation  of  law,  where  one  purchases 
land  with  his  own  money  and  takes  the  conveyance  in  the  name  of 
another;  in  such  case  the  title  is  deemed  to  be  in  trust  for  him  who 
advanced  the  money,  for  the  presumption  is  that  he  intended  to  pur- 
chase for  his  own  benefit.  So  where  one  employs  an  agent,  and 
furnishes  him  with  money  to  purchase  land,  and  the  agent  purchases 
the  land  with  this  money,  and  takes  the  title  in  his  own  name,  a  trust 
results  for  the  principal ;  but  not  if  one  employed  as  an  agent  purchas- 
es the  land  with  his  own  money.  But  if  one  purchases  land  and 
takes  the  title  in  the  name  of  his  wife  or  child,  it  will  be  held  to  be  a 
settlement  on  the  wife,  or  an  advancement  to  the  child,  unless  it  is 
shown  to  have  been  otherwise  intended,  and  no  trust  will  result.  2 
Story's  Eq.  Jur.  §§  1201-1205;  Guthrie  v.  Gardner,  19  Wend.  (N. 
Y.)  414.  But  in  such  case,  if  the  purchaser  takes  the  deed  in  the 
name  of  his  wife  or  child,  for  the  purpose  of  defrauding  or  delaying 
creditors,  and  not  for  the  purpose  of  making  a  settlement  or  advance- 
ment, a  trust  will  result  to  the  purchaser,  and  the  land  be  liable  to  his 
debts. 

In  Belford  v.  Crane,  16  N.  J.  Eq.  265,  84  Am.  Dec.  155,  this  doc- 
trine was  applied  by  Chancellor  Green,  and  a  trust  was  held  to  result 
for  the  husband,  and  the  land  held  liable  to  his  debts.  But  it  is  put 
by  the  Chancellor  on  the  ground  that  the  whole  of  the  property  of  the 
husband  was  put  in  the  name  of  his  wife  to  place  it  beyond  the  reach 
of  his  creditors.  He  says:  "The  transfer  was  not  made  by  deed  of 
settlement.     There  was  no  declaration  of  a  purpose  by  the  husband  to 


548  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  (Cll.  6 

appropriate  a  specific  jiortion  of  his  ])roperty  for  the  use  of  his  wife, 
but  the  property  from  time  to  time  was  purchased  in  the  name  of  his 
wife,  and  a  house  subsequently  erected  thereon  with  the  means  of  the 
husband."  And  in  that  case,  as  the  Chancellor  declared,  every  vestige 
of  property  that  the  husband  owned  was  in  the  name  of  his  wife; 
and  it  was  held  that  "the  land  having  Ix'cn  purchased  with  the  money 
of  the  husband,  there  is  a  resulting  trust  in  his  favor."  But  the  rea- 
son of  the  case  shows  that  had  the  land  been  purchased  with  a  specific 
sum  set  apart  for  a  settlement  upon  the  wife,  the  conclusion  would 
have  been  difYerent.  The  gift  might  have  been  declared  void  as 
against  creditors,  but  no  trust  could  have  resulted. 

In  Guthrie  v.  Gardner  the  same  doctrine  was  held  and  applied  by 
Chief  Justice  Nelson.  In  that  case  the  husband  purchased  and  paid 
for  the  land  and  took  the  deed  in  the  name  of  the  wife,  for  the  avowed 
purpose  of  keeping  the  property  from  his  creditors;  and  the  Chief 
Justice  held  that  it  Was  perfectly  clear  from  the  facts  that  the  husband 
had  no  intent  to  make  provision  for  his  wife,  and  a  resulting  trust 
arose  to  the  husband;  that  the  fee  thus  passed  to  him  and  was  sub- 
ject to  his  debts. 

But  this  is  not  a  case  of  a  purchase  made  by  a  husband  in  the  name 
of  his  wife.  It  was  a  purchase  made  by  the  wife  herself,  of  her 
father,  of  the  family  homestead  for  her  own  benefit ;  she  herself 
made  the  bargain.  I  fully  believe  her  testimony  on  this  point.  She 
got  from  her  husband  a  large  part  of  the  purchase  money  which  she 
paid  for  the  conveyance.  There  is  no  authority  for  the  creation  of  a 
resulting  trust  from  such  facts.  When  the  person  to  whom  the  con- 
veyance is  made  makes  the  bargain  for  the  purchase  for  his  own  bene- 
fit, and  obtains  part,  or  even  the  whole  of  the  purchase  money  from 
another,  who  knows  that  it  is  to  be  paid  for  a  conveyance  to  the  grantee 
for  his  own  benefit,  no  resulting  trust  can  arise.  Else  any  stranger  or 
banking  institution  that  advances  the  money  to  make  a  purchase  that 
turns  out  advantageous,  might  take  the  property  and  the  profits  of 
the  purchase  as  cestui  que  trust.  In  this  case  the  purchase  was  made 
by  Mrs.  Kirtland  for  her  own  benefit,  and  was  understood  to  be  made 
for  that  purpose  by  her  father  and  her  husband.  The  $20,000  was  ad- 
vanced by  her  husband  as  a  gift  to  her.  There  is  no  principle  or  au- 
thority on  wdiich  this  can  be  declared  to  create  a  resulting  trust  in  him 
for  the  benefit  of  his  creditors. 

There  is  another  principle  that  will  prevent  in  this  case  a  resulting 
trust.  When  the  person  to  whom  the  conveyance  is  made  pays  part 
of  the  purchase  money,  no  trust  results  to  anyone  who  advances  the 
residue,  uidess,  in  the  language  of  Justice  Hoar,  in  McGowan  v.  Mc- 
Gowan,  "the  part  of  the  purchase  money  paid  by  liini  in  whose  favor 
the  resulting  trust  is  sought  to  be  enforced,  is  shown  to  have  been 
paid  for  some  specific  part  or  distinct  interest  in  the  estate — for  some 
alicjuot  part,  as  it  is  sometimes  expressed."  He  declares  "that  a  gen- 
eral contribution  of  a  sum  of  money  toward  the  entire  purchase  money 


Ch.  6)  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  549 

is  not  sufficient."  14  Gray  (Mass.)  119,  74  Am.  Dec.  668.  To  the 
same  effect  are  the  decisions  in  Crop  v.  Norton,  2  Atk.  74;  White  v. 
Carpenter,  2  Paige  (N.  Y.)  240,  and  Sayre  v.  Townsend,  15  Wend. 
(N.  Y.)  647.  The  doctrine  is  commented  on  and  approved  in  Browne 
on  Frauds,  86. 

In  this  case  there  was  no  intention  to  purchase  in  fifths,  nor  was  the 
advance  intended  to  represent  four-fifths  or  any  other  aHquot  part  of 
the  estate;  it  was  the  intention  of  the  father  to  convey  the  whole 
estate,  upon  the  payment  of  $20,000  in  cash,  and  to  charge  her  $5,000 
only  on  the  advancement,  even  if  the  surplus  of  value  was  twice  that 
sum. 

For  these  reasons  I  am  of  opinion  that  no  trust  by  reason  of  any 
fraud  of  Mrs.  Kirtland,  and  no  resulting  trust,  did  arise  or  could 
arise,  either  for  her  husband  or  his  creditors.  And  even  if  it  was  a 
case  on  which  a  resulting  trust  might  have  arisen,  the  fact  that  the 
whole  amount  advanced  was  returned  by  her  to  her  husband,  for  his 
firm,  from  which  the  money  was  taken,  and  accepted  by  them  four 
years  before  the  complainants  acquired  any  lien  upon  the  property, 
and  while  the  partners  had  full  power  to  settle  their  own  affairs, 
w^ould  have  released  the  property  from  the  trust.  If  she  had  given 
a  mortgage  to  the  firm  for  this  $20,000,  payment  in  1864  and  1865,  if 
made  w^ithout  fraud,  would  have  discharged  it,  even  although  the 
partners  had  squandered  the  money  and  not  applied  it  to  the  payment 
of  debts. 

In  this  case  the  great  increase  of  value  has  accrued  since  the  $20,000 
was  refunded  and  accepted,  and  it  would  be  gross  injustice  to  declare 
that  creditors  of  her  husband  were  entitled  to  this,  if  the  doctrine  of 
trusts  had  required  it. 

The  view  I  have  taken  of  this  question  being  on  the  assumption 
that  Wheeler  and  Green  were  creditors  at  the  time  of  the  advance  of 
the  $20,000,  and  that  they  continued  such  until  the  failure,  relieves 
me  from  the  investigation  of  the  accounts  and  examinations  of  the 
piles  of  firm  ledgers,  and  accounts  exhibited  and  produced  to  show- 
that  the  debt  to  them  at  the  time  of  the  advance  was  paid  ofif  and  dis- 
charged long  before  the  failure,  and  that  no  part  of  their  present  claim 
is  for  any  debt  then  existing,  and  that  about  the  1st  of  July,  1864, 
the  firm  for  a  period  of  some  days  owed  them  nothing — questions  not 
without  doubt;  and  also  from  discussing  and  applying  the  question  of 
law,  whether  an  advance  made  to  a  w4fe  or  child  can  be  questioned  by 
a  subsequent  creditor,  if  all  debts  existing  at  the  time  of  the  advance- 
ment had  been  paid  and  settled,  and  there  is  no  actual  intent  by  the 
advancement  to  defraud  subsequent  creditors. 

The  bill  against  Emily  G.  Kirtland  and  others  must  be  dismissed. 


550  CONSTRUCTIVE   TRT'STS,  ETC. TRACINO    PROI'IORTT.  (Ch.  6 


TRUESDEIJ.  V.  BOURKE. 

(Supreme  Court  of  New   York,  ApiiclhUo  Division.   I'mirtli   Dcpnrtmont,  ISOS. 
29  App.  Div.  !).".,  .-)!   N.  Y.  Siipp.  4UU.) 

Appeal  by  the  plaintilT,  Julm  W.  Truesdell,  as  administrator,  etc., 
of  John  Fitzgerald,  deceased,  from  a  judgment  of  the  Supreme  Court 
in  favor  of  the  defendant,  entered  in  the  office  of  the  Clerk  of  the 
County  of  Onondaga,  on  the  27tli  day  of  February,  1896,  upon  the 
dismissal  of  the  complaint  by  direction  of  the  court,  after  a  trial  at 
the  Onondaga  Trial  Term,  with  notice  of  an  intention  to  bring  up  for 
review  upon  such  appeal  an  order  bearing  date  the  26th  day  of  Febru- 
ary, 1896,  dismissing  the  complaint. 

This  action  was  begun  March  28,  1885,  to  recover  $1,000,  with 
interest  from  March,  1882,  alleged  to  have  been  fraudulently  trans- 
ferred by  the  plaintiff's  intestate  to  Kate  Fitzgerald  to  defraud  his 
creditors,  and  by  her  transferred,  with  like  intent,  to  William  J. 
Bourke.  Plaintiff's  intestate  died  February  28,  1882,  hopelessly  in- 
solvent. April  15,  1887,  William  J.  Bourke  died  leaving  a  last  will 
and  testament,  which  was  duly  probated,  and  letters  testamentary  is- 
sued thereon  to  Hannie  L.  Bourke,  who  was  substituted  as  the  defend- 
ant herein.  In  January,  1893,  a  trial  was  held,  and  a  verdict  directed 
for  the  plaintiff,  a  judgment  entered  thereon,  which  was  reversed,  and 
a  new  trial  granted,  on  the  ground  that  there  was  a  question  of  fact 
for  the  jury.  69  Hun,  613,  25  N.  Y.  Supp.  1130.  In  1894  a  second 
trial  was  held,  which  resulted  in  a  verdict  for  $1,000,  with  interest 
from  May  28,  1885,  a  judgment  was  entered  thereon,  which  was  af- 
firmed (80  Hun,  55,  29  N.  Y.  Supp.  849),  but  was  reversed  by  the  Court 
of  Appeals  and  a  new  trial  granted.  145  N.  Y.  612,  40  N.  E.  83.  The 
third  trial  occurred  in  February,  1896,  and,  at  the  close  of  the  plain- 
tiff's evidence,  the  court  dismissed  the  complaint,  and  from  the  judg- 
ment entered  on  the  dismissal  this  appeal  is  taken. 

FoLLElT,  J.  This  action  was  begun  pursuant  to  Chapter  314  of  the 
Laws  of  1858,  which  provides  that  an  administrator  of  an  insolvent 
estate  may  treat  as  void  all  transfers  made  by  the  intestate  in  fraud 
of  the  rights  of  creditors,  and  authorizes  the  administrator  to  main- 
tain actions  for  the  recovery  of  property  so  transferred.  That  the 
estate  of  John  Fitzgerald  was  largely  insolvent,  and  had  been  for  some 
time  preceding  his  death,  is  an  undisputed  fact. 

It  has  always  been  the  rule  that  a  creditor  of  an  insolvent  decedent 
might  maintain  an  action  to  set  aside  as  fraudulent  a  voluntary  con- 
veyance or  transfer  made  in  the  lifetime  of  the  decedent.  Frazer  v. 
Western,  1  liarb.  Ch.  220,  affirmed  How.  Ct.  App.  Cas.  448;  Loomis 
V.  Tifft,  16  P.arb.  541 ;  Estes  v.  Wilcox,  67  N.  Y.  264.  The  statute 
above  referred  to  has  made  no  change  in  the  law,  except  it  confers 
the  right  upon  the  representative  to  recover  property  fraudulently 
transferred  by  his  insolvent  intestate  for  the  benefit  of  all  the  creditors, 
which  right  did  not  exist  previous  to  the  statute.     William  J.  Bourke 


Ch.  6)  CONSTRUCTIVE   TRUSTS,  ETC. TRACING  PROPERTY.  551 

testified  in  his  lifetime  that  the  $1,000  were  given  him  for  the  benefit 
of  the  Church  of  St.  John  the  Baptist  for  the  Sacred  Heart  School. 
The  transfer  being-  voluntary,  and  the  intestate  insolvent  when  it  was 
made,  and  remaining  so  until  his  death,  it  is  immaterial  whether  Wil- 
liam J.  Bourke  knew  that  the  intestate  was  insolvent  or  not,  provided 
he  had  not  transferred  the  moi:ey  to  the  Church  or  School  without 
notice  and  in  good  faith. 

In  case  a  person  makes  a  voluntary  conveyance  or  transfer  of  his 
property,  and  is  insolvent  at  the  time,  such  voluntary  conveyance  or 
transfer  is  fraudulent  as  against  his  creditors,  even  though  the  trans- 
feree was  without  knowledge  or  notice  that  the  transferer  was  in- 
solvent. Mohawk  Bank  v.  Atwater,  2  Paige,  54;  Smart  v.  Harring, 
52  How.  Prac.  505  ;  Salomon  v.  Moral,  53  How.  Prac.  342 ;  Emmerich 
v.  Hefferan,  26  J.  &  S.  217.  If  an  insolvent  debtor  makes  a  voluntary 
conveyance  or  transfer  of  his  property,  real  or  personal,  and  that  fact 
be  clearly  established,  the  inference  is  inevitable  that  the  conveyance 
is  fraudulent  as  against  creditors.  Coleman  v.  Burr,  93  N.  Y.  17,  45 
Am.  Rep.  160.  It  being  undisputed  that  John  Fitzgerald  was  insolvent 
at  the  time  when  the  $1,000  were  given  to  William  J.  Bourke,  it  fol- 
lows, as  a  matter  of  law,  that  as  against  the  creditors  of  the  former 
the  gift  or  transfer  was  fraudulent  in  law  and  invalid.  See  cases  above 
cited,  and  Wait,  Fr.  Conv.  §  208;  Bump,  Fr.  Conv.  276,  and  cases 
cited.  This  species  of  fraud  is  treated  of  in  works  on  equity  juris- 
prudence, under  the  head  of  constructive  fraud  and  voluntary  convey- 
ances and  transfers,  and  the  rule  of  law  herein  declared  has  never, 
so  far  as  I  am  aware,  been  questioned. 

The  important  question  is,  was  the  evidence  given  on  this  trial 
sufficient  to  raise  a  question  of  fact  for  the  jury,  whether  William  J. 
Bourke,  before  he  transferred  the  gift  to  the  church  or  school,  if  he 
ever  did,  had  knowledge  or  notice  that  the  intestate  was  insolvent 
when  the  gift  was  made? 

William  J.  Bourke  was  a  Catholic  priest,  and  pastor  of  the  Church 
of  St.  John  the  Baptist,  at  Syracuse,  N.  Y.,  which  maintained  a  school 
known  as  Sacred  Heart.  At  the  death  of  John  Fitzgerald,  and  for 
some  time  before,  his  money,  amounting  to  more  than  $3,000,  had  been 
kept  on  deposit  with  the  Trust  and  Deposit  Company  of  Onondaga 
in  the  name  of  "Kate  Fitzgerald,"  on  whose  passbook  was  written 
"John  Fitzgerald  may  draw."  March  14,  1882,  fourteen  days  after 
the  death  of  John  Fitzgerald,  Kate  Fitzgerald  drew  the  balance  of 
this  account,  amounting  to  $3,520.41,  and  on  the  same  day  the  State 
Bank  of  Syracuse  drew  a  draft  on  the  First  National  Bank  of  New 
York  for  $1,000  payable  to  the  order  of  Kate  Fitzgerald,  which  was 
endorsed  by  her  to  William  J.  Bourke,  and  it  also  bore  the  following 
restrictive  endorsement:  "Pay  Union  Trust  Co.  for  collection  on 
account  Syracuse  Savings  Bank."  On  the  same  day,  March  14,  1882, 
$1,000  were  credited  to  the  account  of  "Rev.  Wm.  J.  or  Hannie  L. 
Bourke"  with  the  Syracuse  Savings  Bank. 


552  cox.sTurcTivi:  tul'sts,  etc. — tuacing  property.         (Ch.  6 

Hannie  L.  Bourke  was  a  sister  of  William  J.  Bourke  and  is  now  the 
executrix  of  his  estate.  In  1882  there  was  an  account  in  the  Syracuse 
Savinn^s  Rank  kept  in  the  name  of  "Rev.  Wm.  J.  or  Hannie  L.  Bourke." 
]n  the  same  year  the  Syracuse  Savins^s  Bank  held  a  mortgage  on  the 
property  of  the  Church  of  St.  John  the  Baptist,  on  which  William  J. 
Bourke  paid,  July  8,  1882.  $1,000  by  a  check  drawn  on  the  Salt  Springs 
Bank,  as  testified  by  Reidcl,  an  employee  of  the  Syracuse  Savings 
Bank,  and  he  also  testified  that  there  was  no  withdrawal  on  that  day 
from  the  account  of  "Rev.  Wm.  J.  or  ilannie  L.  Bourke."  This  ac- 
count is  in  evidence,  and  there  were  no  withdrawals  therefrom  during 
1882,  except  two  items  of  $100  each,  one  item  of  $150,  and  another 
item  of  $200.  So  it  is  apparently  established  that  the  $1,000  paid  on 
the  mortgage  came  not  from  the  account  intcj  which  the  $1,000  belong- 
ing to  the  estate  of  the  intestate  was  traced,  but  from  some  other 
source. 

April  11,  1882,  John  W.  Truesdell  was  appointed  administrator  of 
the  estate  of  John  Fitzgerald.  George  K.  Collins,  an  attorney,  testified 
that  within  a  week,  he  thinks,  after  Truesdell's  appointment  the  claim 
agamst  Bourke  was  placed  in  his  hands,  and  he  wrote  him  requesting 
an  interview,  that  Bourke  came  to  his  office  and  he  told  Bourke  that 
the  estate  had  a  claim  of  $1,000  or  $1,100  which  he  would  better  pay, 
as  to  keep  it  back  would  injure  him.  He  told  Bourke  that  he  under- 
stood that  he  claimed  the  sum  as  a  gift,  but  that  it  was  not  good. 
He  testified  that  P.ourke  did  not  admit  that  he  had  received  the  money, 
but  said  it  would  be  time  enough  to  give  it  up  when  it  was  shown  that 
he  had  it.  James  Keefe  testified  that  he  had  a  conversation  with  Wil- 
liam J.  Bourke  about  five  or  six  months  after  the  death  of  John  Fitz- 
gerald, which  would  be  in  July  or  August,  1882,  in  wdiich  Bourke 
said:  "He  said  he  had  the  thousand  dollars  that  came  from  John 
Fitzgerald,  and  he  spoke  one  time  that  he  thought  he  could  secure  a 
judgment  from  George  Porter.  That  it  was  a  question  whether  he 
could  keep  this  money  or  not,  and  he  understood  that  George  Porter 
had  a  judgment  that  he  could  secure  for  nothing  as  an  offset  against 
this  thousand  dollars." 

October  2,  1882,  William  J.  Bourke  was  examined  in  the  Surrogate's 
Court  of  the  County  of  Onondaga,  and  testified:  "John  Fitzgerald 
gave  me  one  thousand  dollars  in  charity  for  a  school;  he  gave  it  me 
about  one  year  ago.  I  got  this  money  after  his  death  ;  T  got  the  money 
through  the  hands  of  Kate  Fitzgerald;  I  deposited  the  money  or 
check  in  the  Syracuse  Savings  Bank  in  my  own  name.  It  was  just 
one  thousand  dollars.  I  had  no  papers  or  writing  in  respect  to  this 
money  from  John  Fitzgerald.  I  knew  he  left  one  thousand  dollars 
for  me  as  agent  of  the  cluirch.  I  asked  Kate  Fitzgerald  for  this 
thousand  dollars.  She  said  John  Fitzgerald  had  spoken  to  her  about 
it  and  left  it  with  her  for  me  as  treasurer  of  the  church,  that  John 
Fitzgerald  had  left  for  that  purpose.  *  *  *  j  p^^j^  ^i-,;^  ^^^^  ^j^q^j_ 
sand  dollars  to  the  Syracuse  Savings  Bank  on  a  mortgage  the  Bank 


Ch.  6)  CONSTRUCTIVE   TRUSTS,  ETC. TUACIXO   rROPEUTY.  553 

held  ag-ainst  St.  John  the  Baptist  Church,  of  which  I  am  the  pastor." 

April  15,  1887,  about  two  years  after  this  action  was  begun,  and  be- 
fore the  first  trial,  William  J.  Bourke  made  his  last  will  and  testament, 
wdiich  after  his  death  was  duly  probated.  The  following  is  a  copy  of 
the  4th  clause  of  his  will : 

"Fourth.  There  is  also  deposited  in  the  Syracuse  Savings  Bank  the 
sum  of  one  thousand  dollars  which  belonged  to  the  Sacred  Heart 
School  under  the  supervision  of  the  Sisters  of  St.  Joseph,  unless  a 
judgment  is  rendered  against  me  or  my  estate  in  the  action  pending 
in  favor  of  John  W.  Truesdell,  as  administrator  of  the  goods,  chattels 
and  credits  of  John  Fitzgerald,  in  which  event  I  direct  said  money  to 
be  applied  in  satisfaction  of  said  judgment." 

The  evidence  referred  to  is  quite  sufficient  to  raise  an  issue  of 
fact  for  the  jury  whether  William  J.  Bourke  had  notice  when  he  paid 
the  money  over  for  the  benefit  of  the  Church,  if  he  ever  did,  that  the 
donor  was  insolvent  and  that  the  money  was  claimed  by  his  admin- 
istrator. 

The  rule  is  elementary  that  in  case  an  innocent  transferee,  acting 
as  trustee,  of  money  transferred  in  fraud  of  creditors,  pays  it  over  be- 
fore notice  of  the  fraudulent  character  of  the  transfer,  according  to 
the  terms  of  the  transfer,  he  is  not  liable,  but  in  case  he  pays  it  over 
according  to  the  terms  of  the  transfer,  after  notice  of  the  fraudulent 
character  of  the  transfer,  he  is  liable  in  an  action  brought  for  the 
benefit  of  creditors.     Bump,  Fr.  Conv.  (2d  Ed.)  c.  24,  and  cases  cited. 

It  should  be  stated  that  the  evidence  contained  in  this  record  in 
respect  to  notice  is  quite  different  from  the  evidence  contained  in  the 
record  reviewed  by  the  Court  of  Appeals. 

The  view  taken  of  this  case  renders  it  unnecessary  to  consider  the 
exceptions  to  the  rulings  on  the  admission  or  rejection  of  evidence 
which  have  been  argued. 

The  judgment  should  be  reversed  and  a  new  trial  granted,  with 
costs  to  the  appellant  to  abide  the  event. 

In  case  the  jury  finds  the  follow^ing  propositions  the  plaintiff  will 
be  entitled  to  recover:  (1)  That  the  intestate  or  his  estate  was  in- 
solvent when  the  gift  was  made.  (2)  That  William  J.  Bourke  had  not 
paid  over  to  the  church  or  school  the  money  given  him  when  this 
action  was  begun.  Or  in  case  the  jury  finds  the  first  proposition  above 
stated  and  finds  that  William  J.  Bourke  paid  the  money  to  the  church 
or  school  before  this  action  was  begun,  but  with  knowledge  or  notice 
that  the  intestate's  estate  was  insolvent,  then  the  plaintiff  will  be  en- 
titled to  recover. 
All  concurred. 

Judgment  reversed  and  a  new  trial  ordered,  with  costs  to  the  ap- 
pellant to  abide  the  event. 


554        CONSTRUCTIVE  TRUSTS,  ETC. TRACING  PROPERTY.     (Ch.  6 

GEORGE  DIXOX,  Jr.,  v.  jrDSON  \\\  CALDWELL. 

(Sui.reiue  Courl  of  Ohio,  l.S(;4.     1,5  Ohio  St.  412,  80  Am.  Dec.  487.) 

Error  to  the  District  Court  of  Ross  County. 

The  defendant  in  error,  Caldwell,  was  the  owner  of  a  military  bounty 
land  warrant,  No.  31,694,  for  160  acres,  issued  to  him  by  the  govern- 
ment of  the  United  States,  under  the  act  of  congress  of  February  11, 
1847;  and  shortly  after  he  received  the  same,  it  was  fraudulently  ob- 
tained from  him.  and  replaced  by  a  spurious  or  forged  warrant,  which, 
for  a  long  time,  he  supposed  genuine. 

Without  the  knowledge  or  consent  of  Caldwell,  the  general  war- 
rant was  sold  and  assigned  to  George  Dixon,  Jr.,  the  plaintiff  in  error, 
by  some  person  representing  Caldwell,  and  who  forged  his  name  there- 
to. 

Dixon,  being  ignorant  of  the  fraudulent  manner  in  which  the  war- 
rant had  been  obtained,  and  alike  ignorant  of  the  forged  assignment 
thereof,  on  the  seventh  day  of  February,  1849,  purchased  the  war- 
rant, and  paid  therefor  one  hundred  and  thirty  dollars,  believing  the 
assignment  to  be  the  genuine  assignment  of  Caldwell,  and  that,  by  his 
purchase,  he  was  acquiring  full  and  complete  title  to  the  warrant. 

Having  thus  in  good  faith  acquired,  as  he  supposed,  the  warrant, 
Dixon,  without  any  notice  of  the  fraudulent  manner  in  which  it  had 
been  obtained,  or  of  the  forgery,  located  the  same  upon  the  land  de- 
scribed in  the  petition,  and  obtained  a  patent  therefor  before  the  com- 
mencement of  the  orginal  suit. 

Upon  this  state  of  fact  Caldwell  sought  to  charge  Dixon,  as  his 
trustee,  for  the  land  so  located  ;  and,  in  his  petition,  prayed  for  a  con- 
veyance of  the  portion  of  the  lands  remaining  unsold ;  for  an  account 
of  the  proceeds  of  the  part  which  had  been  soldi,  and  for  a  judgment 
against  Dixon  for  the  amount  found,  with  interest;  also  for  an  ac- 
count of  the  rents  and  profits. 

In  the  court  of  common  pleas  Dixon  was  adjudged  to  be  a  trustee 
of  the  plaintiff  for  the  lands ;   and  the  relief  prayed  for  was  granted. 

This  judgment  was,  on  error,  affirmed  by  the  district  court,  and  to 
revise  this  judgment  of  affirmance  is  the  object  of  the  present  peti- 
tion in  error. 

White,  J.  The  distinction  between  legal  and  equitable  rights  exists 
in  the  subjects  to  which  they  relate,  and  is  not  affected  by  the  form 
or  mode  of  procedure  that  may  be  prescribed  for  their  enforcement. 
The  code  abolished  the  distinction  between  actions  at  law  and  suits 
in  equity,  and  substituted  in  their  place  one  form  of  action;  yet, 
the  rights  and  liabilities  of  parties,  legal  and  equitable,  as  distinguished 
from  the  mode  of  procedure,  remain  the  same  since,  as  before,  the 
adoption  of  the  code.  Dixon,  the  defendant  below,  is  the  legal  owner 
of  the  lanfl  in  controversy,  as  patentee.  This  is  conceded  by  Caldwell, 
the  plaintiff  l)elow,  but  he  claims  to  be  the  equitable  owner,  and  that 


Ch.  G)  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROrERTY.  Ooij 

Dixon  is  his  trustee,  and  as  such,  in  equity,  bound  to  account  for  the 
proceeds  of  the  portion  of  the  land  sold,  and  surrender  the  remainder. 

There  is  no  pretense  of  an  express  trust ;  nor  is  it  claimed  that  the 
defendant  acquired!  the  property  by  fraud  or  by  other  unfair  means. 
The  property,  therefore,  having  been  fairly  acquired,  before  a  con- 
structive trust  can  be  raised  in  equity,  and  fastened  upon  tlie  defend- 
ant, so  as  to  convert  him  into  a  trustee  for  the  plaintiff,  the  circum- 
stances of  the  transaction  must  appear  to  be  such  that  it  would  be  vio- 
lating some  principle  of  equity,  to  allow  the  defendant  to  retain  the 
legal  title  to  the  land  for  his  own  benefit. 

The  controversy  here  is  not  solely  in  regard  to  the  land  warrant. 
The  legal  title  to  that  was  clearly  vested  in  the  plaintiff,  and  for  its 
conversion  he  has  a  plain  legal  remedy  against  the  defendant  for  its 
value ;  and!,  before  it  was  lost  in  entering  the  land,  for  its  recovery 
in  specie. 

The  question  is,  whether,  in  the  light  of  equity,  the  measure  of  legal 
relief  is  to  be  regarded  as  inadequate;  and  the  defendant  required, 
by  a  court  of  equity,  to  surrender  the  land  to  which  he  acquired  the 
legal  title  in  good  faith,  and,  as  he  supposed,  for  his  own  benefit,  by 
the  combined  use  of  the  warrant  and  his  own  means,  industry  and 
enterprise. 

The  defendant  claims  to  be  a  bona  fide  purchaser  of  the  land  in 
controversy,  for  value,  without  notice  of  the  plaintifif's  rights;  and 
relies  for  his  defense  upon  the  rules  of  equity  for  the  protection  of 
such  purchasers. 

The  land  warrant  in  question  was  assignable  in  law,  was  in  the 
possession  and  apparent  ownership  of  the  vendor,  and  the  assignment 
was  regular  in  form.  The  defect  in  the  vendor's  title  was  not  appar- 
ent, and  there  was  no  reasonable  ground  for  suspicion  that  the  assign- 
ment had  been  forged.  The  defendant  purchased  and  paid  full  value 
for  the  warrant,  and  is  not  chargeable  with  a  want  of  reasonable  dili- 
gence in  so  doing.  Having  no  reason  to  suspect  the  existence  of  plain- 
tiff's title  to  the  warrant,  he  was  in  equity  and  good  conscience,  charge- 
able with  no  duty  toward  him  in  relation  to  its  future  use.  If  he  with- 
held it  from  entry  he  would  have  been  liable  to  return  it  to  the  plaintiff, 
or  pay  him  its  value.  The  good  faith  of  his  purchase  would  have  been 
no  answer  to  the  plaintiff's  legal  demand.  After  the  location  of  the 
warrant,  the  holder  of  the  legal  title  thereof  acquired  an  equity  in 
the  land  upon  which  the  location  was  made ;  and  before  the  defend- 
ant clothed  himself  with  the  legal  title,  and  while  the  equities  were 
open  between  the  parties,  Caldwell's  equity,  being  older  in  time,  would 
have  been  better  in  right.  But  Dixon,  unaffected  with  fraud  or  notice, 
and  upon  a  valuable  consideration  paid,  having  obtained  the  legal  title 
to  the  land  in  controversy,  brings  himself  within  the  protection  award- 
ed in  equity  to  the  holder  of  the  legal  title. 

A  court  of  equity,  says  Sugden  in  his  Treatise  on  Vendors  (vol.  3, 
side  p.  417),  acts  upon  the  conscience,  and  as  it  is  impossible  to  attach 


556  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   TROPERTY.  (Ch.  6 

any  demand  ujion  the  conscience  of  a  man  who  has  purchased  for  a 
vahiable  consideration,  bona  fide,  and  without  any  notice  of  any  claim 
on  the  estate,  such  a  man  is  entitled  to  the  peculiar  favor  and  pro- 
tection of  a  court  of  equity. 

Where  a  court  of  equity  cannot  deal  directly  with  the  thing-  which 
is  the  subfect  matter  in  controversy,  but  has  to  reach  it  through  the 
consciences  of  the  parties,  its  jurisdiction  is  necessarily  limited  to  en- 
forcing the  fulfillment  of  their  equitable  obligations,  and  cannot  extend 
to  compelling  the  relinquishment  of  any  right  or  the  abandonment  of 
any  interest  which  can  be  retained  consistently  with  equity  and  with 
conscience. 

This  principle  applies  especially  where  the  aid  of  a  court  of  chan- 
cery is  sought  to  enforce  the  surrender  of  an  estate  in  land.  As  in 
such  case,  the  court  can  only  act  on  the  land,  through  the  medium  of 
the  parties,  it  must  first  inquire  whether  the  party  against  whom  its 
assistance  is  sought,  is  conscientiously  bound  to  comply  with  the  de- 
mand urged  against  him,  for  if  he  is  not,  the  case  may  fall  without 
the  scope  of  a  jurisdiction  which  is  founded  upon  the  obligations  of 
conscience.  See  notes  of  the  American  Editor  to  Bassett  v.  Xosworthy. 
2  Lead.  Cas.  in  Eq.  pp.  67,  68,  and  the  authorities  there  cited.  Mit- 
ford's  Eq.  Plead,  side  p.  135;  Cottrell  v.  Hughes,  29  Eng.  L.  &  Eq. 
R.  358 ;  s.  c,  80  Eng.  C.  L.  R.  556 ;  Wallwvn  v.  Lee,  9  Ves.  Jr.  side 
p.  25 ;   Gibler  et  al.  v.  Trimble,  14  Ohio,  340.' 

In  Jones  v.  Powles,  3  Myl.  &  Keen,  581,  the  equitable  title  of  the  pur- 
chaser who  had  got  in  the  legal  estate,  depended  upon  a  forged  will, 
and  he  was  held  entitled  to  the  protection  of  the  court.  In  this  case  a 
person  advanced  money  upon  the  mortgage  of  an  estate,  which  the 
mortgagor  claimed  under  a  will,  which  ultimately  turned  out  to  be 
forged,  and  got  a  conveyance  of  the  legal  estate,  which  was  outstand- 
ing in  a  mortgagee  whose  debt  had  been  satisfied.  On  a  bill  filed  by 
the  heiress-at-law,  it  was  held  by  Sir  John  Leach,  M.  R.,  that  the 
mortgagee,  being  a  purchaser  without  notice  of  the  plaintiff's  title, 
could  protect  herself  by  the  legal  estate.  The  court  observed,  that  its 
impression  at  the  opening  of  the  case  was,  that  the  protection  of  the 
legal  estate  extended  only  to  cases  where  the  title  of  the  purchaser 
for  valuable  consideration  without  notice,  was  impeached  by  reason 
of  some  secret  act  or  matter  done  by  the  vendor  or  those  under  whom 
he  claimed  ;  but  upon  full  consideration  of  all  the  authorities  and  dicta  of 
judges  and  text  writers,  and  the  principles  upon  which  the  rule  is 
grounded,  the  court  was  of  opinion  that  the  protection  of  the  legal 
estate  was  to  be  extended  not  merely  to  cases  in  which  the  title  of  the 
purchaser  for  valuable  consideration  without  notice  is  impeached  by 
reason  of  some  secret  act  done,  but  also  to  cases  in  which  it  is  im- 
peached by  reason  of  the  falsehood  of  a  fact  of  title  asserted  by  the 
vendor,  or  those  under  whom  he  claims,  where  such  asserted  title 
is  clothed  with  possession,  and  the  falsehood  of  the  fact  asserted  could 
not  have  been  detected  by  reasonable  diligence.    2  Lead.  Cas.  in  Eq. 


Ch.  fi)  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  557 

side  page  7.  This  case  is  approved  by  Mr.  Sugflen  in  his  Treatise  al- 
ready cited,  page  417,  and  is  founded  upon  clear  princii:)les  of  equity; 
although  they  would  not,  here,  be  applicable  to  the  case  of  a  satis- 
fied mortgage. 

It  is  not  deemed  necessary  to  examine  in  detail,  in  this  opinion,  the 
authorities  relied  upon  by  the  counsel  of  the  defendant  in  error. 
Where  the  benefit  of  the  rule  has  been  denied,  the  party  was  found 
to  be  affected  with  notice  ;  and,  as  we  have  already  stated,  it  is  indis- 
pensable for  the  party  holding  the  legal  title,  and  seeking  protection 
in  equity,  to  show  that  he  is  a  purchaser  for  a  valuable  consideration  ; 
that  his  purchase  was  in  all  respects  fair,  and  free  from  every  kind 
of  fraud ;  and  that  at  the  time  of  his  purchase  he  was  not  chargeable 
with  notice  of  the  adverse  claim. 

The  conclusion,  therefore,  at  which  we  have  arrived,  is,  that  Dixon 
cannot  be  required  to  surrender  the  legal  title  of  the  unsold  land  to 
the  plaintiff  below,  nor  to  account  for  the  proceeds  of  the  part  sold ; 
and  that  the  court  erred  in  requiring  him  to  do  so.  But,  as  before 
stated,  he  is  under  a  clear  legal  liability  for  the  value  of  the  warrant. 
The  judgment  of  the  district  court  and  of  the  court  of  common  pleas, 
is  therefore  reversed  and  the  cause  remanded  to  the  common  pleas  for 
further  proceedings. 

Brinkerhoff^  C.  J.,  and  Scott,  Day  and  Welch,  JJ.,  concurred. 


In  re  HALLETT'S  ESTATE. 

KNATCHBULL  v.  HALLETT. 

(Court  of  Appeal,  1880.     Law  Reports,   13  Chancery  Division,  69G.) 

Sir  George  Jessel,  Master  of  the  Rolls. ^'^  This  is  an  appeal  from 
a  decision  of  Mr.  Justice  Fry,  and  the  singularity  of  the  appeal  is,  that 
it  is  an  appeal  in  favor  of  Mr.  Justice  Fry's  opinion  and  against  his 
decision  ;  the  explanation  of  that  being,  that  the  learned  Judge  con- 
ceived himself  bound  by  some  decisions  of  the  Appeal  Court  to  decide 
against  his  own  opinion ;  and  I  am  far  from  saying  that  I  dissent  from 
it  on  either  point — either  on  principle  as  to  how  he  thought  the  case 
ought  to  be  decided,  or  on  the  question  whether  a  Judge  in  his  posi- 
tion as  a  Judge  of  first  instance,  could  very  well  have  decided  otherwise. 

The  question  we  have  to  consider  depends  on  very  few  facts.  I  will 
first  state  all  those  which  I  think  material,  or  on  which  it  appears  to 
me  my  judgment  ought  to  be  based.  A  Mr.  Hallett,  a  solicitor,  was 
a  trustee  of  some  bonds.  Without  authority  and  improperly  he  sold 
them,  and  on  the  14th  of  November,  1877,  by  his  direction  the  proceeds 
of  these  bonds  were  paid  to  his  credit  at  Messrs.  Twinings'  Bank, 

16  The  statement  of  facts  and  the  concurrins;  opinion  of  Baggallay,  L.  J., 
and  the  dissenting  opinion  of  Thesiger,  L.  J.,  are  omitted. 


558  CONSTRUCTIVE   TRUSTS,  ICTC. TRACING   PROPERTY.  (Ch.  6 

and  there  mixed  witli  moneys  belonging  to  himself,  to  the  credit  of 
the  same  banking  account,  and  he  also  drew  out  by  ordinary  check 
nx)neys  from  the  banking  account,  which  he  used  for  his  own  pur- 
poses. He  died  in  February,  1878,  and  at  his  death  the  account  stood 
in  this  way ;  that  there  was  more  money  to  the  credit  of  the  account 
than  the  sum  of  trust  money  paid  into  it;  but  if  you  applied  every 
payment  made  after  Xovcmber,  1877,  to  the  first  items  on  the  credit 
side  in  order  of  date,  a  large  portion  of  the  trust  money  would  have 
been  paid  out.  The  question  really  is,  whether  or  not,  under  these 
circumstances,  the  beneficiaries — that  is,  the  persons  entitled  to  the 
trust  moneys,  who  are  the  present  appellants — are  or  are  not  entitled 
to  say  that  the  moneys  subsequently  drawn  out — that  is,  drawn  out 
by  Mr.  Hallett  subsequently  to  November  1877 — and  applied  for  his 
own  use,  are  to  be  treated  as  appropriated  to  the  repayment  of  his 
own  moneys,  or  whether  the  respondents,  the  executors,  are  right  in 
their  contention  that  they  are  to  be  treated  as  appropriated  in  the 
way  I  have  mentioned,  so  as  to  diminish  the  amount  now  ai)plicable  to 
the  repayment  of  the  trust  funds. 

I  will  first  of  all  consider  the  case  on  princii)lc,  and  then  T  will  con- 
sider how  far  we  are  bound  by  authority  to  come  to  a  decision  opposed 
to  principle.  It  may  well  be,  and  sometimes  does  so  happen,  that  we 
are  bound  to  come  to  a  decision  opposed  to  principle.  Now,  first  upon 
principle,  nothing  can  be  better  settled,  either  in  our  own  law,  or,  I 
suppose,  the  law  of  all  civilized  countries,  than  this,  that  where  a  man 
does  an  act  which  may  be  rightfully  performed,  he  cannot  say  that 
that  act  was  intentionally  and  in  fact  done  wrongfully.  A  man  who 
has  a  right  of  entry  cannot  say  that  he  committed  a  trespass  in  entering. 
A  man  who  sells  the  goods  of  another  as  agent  for  the  owner  cannot 
prevent  the  owner  adopting  the  sale,  and  deny  that  he  acted  as  agent 
for  the  owner.  It  runs  throughout  our  law,  and  we  are  familiar  with 
numerous  instances  in  the  law  of  real  property.  A  man  who  grants  a 
lease  believing  he  has  sufficient  estate  to  grant  it.  although  it  turns 
out  that  he  has  not,  but  has  a  power  which  enables  him  to  grant  it, 
is  not  allowed  to  say  he  did  not  grant  it  under  the  power.  Wherever 
it  can  be  done  rightfully,  he  is  not  allowed  to  say,  against  the  person 
entitled  to  the  property  or  the  right,  that  he  has  done  it  wrongfully. 
That  is  the  universal  law. 

When  we  come  to  apply  that  principle  to  the  case  of  a  trustee  who 
has  blended  trust  moneys  with  his  own,  it  seems  to  me  perfectly  plain 
that  he  cannot  be  heard  to  say  that  he  took  away  the  trust  money  when 
he  had  a  right  to  take  away  his  own  money.  The  simplest  case  put 
is  the  mingling  of  trust  moneys  in  a  bag  with  money  of  the  trustee's 
own.  Suppose  he  has  a  hundred  sovereigns  in  a  bag,  and  he  adds  to 
them  another  hundred  sovereigns  of  his  own,  so  that  they  are  com- 
mingled in  such  a  way  that  they  cannot  be  distinguished,  and  the  next 
day  he  draws  out  for  his  own  purposes  ilOO.,  is  it  tolerable  for  any- 
body to  allege  that  what  he  drew  out  was  the  first  £100.,  the  trust 


Ch.  G)  CONSTRUCTIVE  TRUSTS,  ETC. TRACING  rROPEUTY.  559 

money,  and  that  he  misapplied  it,  and  left  his  own  £100.  in  the  bag? 
It  is  obvious  he  must  have  taken  away  that  which  he  had  a  right  to 
take  away,  his  own  ilOO.  What  dififerencc  does  it  make  if,  instead  of 
being  in  a  bag,  he  deposits  it  with  his  banker,  and  then  pays  in  money 
of  his  own,  and  draws  out  some  money  for  his  own  purposes?  Could 
he  say  that  he  had  actually  drawn  out  anything  but  his  own  money? 
His  money  was  there,  and  he  had  a  right  to  draw  it  out,  and  why 
should  tlie  natural  act  of  simply  drawing  out  the  money  be  attributed 
to  anything  except  to  his  ownership  of  money  which  was  at  his  bankers. 

It  is  said,  no  doubt,  that  according  to  the  modern  theory  of  bank- 
ing, the  deposit  banker  is  a  debtor  for  the  money.  So  he  is,  and  not  a 
trustee  in  the  strict  sense  of  the  word.  At  the  same  time  one  must 
recollect  that  the  position  of  a  deposit  banker  is  different  from  that 
of  an  ordinary  debtor.  Still  he  is  for  some  purposes  a  debtor,  and  it 
is  said  that  if  a  debt  of  this  kind  is  paid  by  a  banker,  although  the 
total  balance  is  the  amount  owing  by  the  banker,  yet  considering  the 
repayments  and  the  sums  paid  in  by  the  depositor,  you  attribute  the 
first  sum  drawn  out  to  the  first  sum  paid  in.  That  was  a  rule  first 
established  by  Sir  William  Grant  in  Clayton's  Case,  1  Mer.  572;  a 
very  convenient  rule,  and  I  have  nothing  to  say  against  it  unless  there 
is  evidence  either  of  agreement  to  the  contrary  or  of  circumstances 
from  which  a  contrary  intention  must  be  presumed,  and  then  of  course 
that  which  is  a  mere  presumption  of  law  gives  way  to  other  considera- 
tions. Therefore,  it  does  appear  to  me  there  is  nothing  in  the  world 
laid  down  by  Sir  William  Grant  in  Clayton's  Case,  or  in  the  numerous 
cases  which'follow  it,  which  in  the  slightest  degree  affects  the  principle, 
which  I  consider  to  be  clearly  established. 

Then  I  come  to  the  great  difficulty  in  the  case,  the  difficulty  which, 
as  I  shall  show  from  an  extract  or  two  from  Mr.  Justice  Fry's  judg- 
ment, weighed  with  him.  What  he  says  is  this :  "If  the  matter  were 
unfettered  by  authority,  it  would  appear  to  me  clear  that  where  a  man 
has  a  balance  to  his  credit  consisting  in  part  of  funds  which  are  his 
own,  and  which  he  may  legally  draw  out  and  apply  for  his  own  pur- 
poses, and  in  part  of  trust  funds  which  he  cannot  lawfully  draw  out 
and  apply  for  his  own  purposes,  his  drawings  for  his  own  purposes 
ought  to  be  attributed  to  his  own  funds  and  not  to  the  trust  funds.  But 
it  appears  to  me  I  am  not  at  liberty,  in  the  existing  state  of  the  author- 
ities, to  act  according  to  the  inclination  of  my  own  mind;"  and  then 
he  refers  to  Pennell  v.  Deffell,  4  D.,  M.  &  G.  372,  and  one  or  two 
cases  that  have  followed  it.  In  a  second  judginent  in  the  same  case, 
Mr.  Justice  Fry  says  this :  "I  have  already  expressed  the  opinion  I 
should  have  been  inclined  to  act  on  if  I  had  been  at  liberty,  but  I  am 
not  at  liberty."  So  it  is  plain  that,  as  far  as  Mr.  Justice  Fry  was  con- 
cerned, he  would  have  decidied  otherwise  if  he  had  not  been  fettered 
by  authority. 

Now,  the  only  authority  worth  considering  for  this  purpose  is  that 
of  Pennell  v.  Defifell  itself.    I  will,  in  a  moment,  say  a  word  about  the 


500        COXSTUUC'TIVE  TRUSTS,  ETC. TUACIXG  rUOPKUTY.     (Cll.  6 

subsequent  decisions.  First  of  all  Peniiell  v.  Deffell,  I  must  remember, 
is  the  decision  of  a  court  of  co-ordinate  jurisdiction  with  this  Court, 
namely,  the  Court  of  Ai)peal  in  Chancery,  and  was  decided  several 
years  ag^o.  Hut,  on  the  other  hand,  we  must  remember  that  the  law  as 
contained  or  laid  down  in  the  decision  or  judgment  which  guides  a 
future  Judge  or  another  Judge  in  applying  it,  is  simply  the  expression 
of  princii:)le  which  is  to  be  ascertained  from  the  judgment.  No  doubt 
a  part  of  the  decision  in  Pennell  v.  Deffell  was  exactly  this  case,  and 
the  court  applied  the  law,  as  correctly  stated  by  Mr.  justice  Fry,  by 
applying  Clayton's  Case  even  to  such  a  case  as  this,  and  to  that  extent 
destroyed  the  claim  of  the  cestui  que  trust.  But  that  was  not  the  whole 
case  of  Pennell  v.  Deffell.  The  main  part  of  Pennell  v.  Deffell  was 
giving  effect  to  the  right  of  cestuis  que  trust  in  the  case  of  blended 
trust  mone\s,  and  upon  the  very  principle  which  T  have  endeavored  to 
explain,  and  which,  if  I  may  say  so,  was  so  clearly  explained  by  Mr. 
Justice  Fry  in  his  judgment.  If,  therefore,  we  are  to  ascertain  the 
principle  on  which  Pennell  v.  Deffell  is  decided,  we  must  look  at  the 
whole  of  the  judgment,  and  not  at  part  of  it  only.  That  being  so,  I 
have  come  to  this  conclusion,  that  the  principle  is  rightly  laid  down,  and 
it  is  rightly  applied  throughout  the  judgment  except  as  to  this  portion, 
and  that  as  to  this  portion  of  the  case  there  has  been  a  mistake,  not  in 
the  principle,  but  in  the  application  of  the  principle.  Therefore,  if 
I  am  to  be  guided  by  the  principle  as  laid  down,  I  think  the  principle 
must  prevail  without  regard  to  a  mere  slip  in  its  application. 

But  it  will  be  said  that  this  part  of  Pennell  v.  Deffell  has  been  fol- 
lowed in  subsequent  cases.  So  it  has.  As  regards  subsequent  cases 
in  the  inferior  courts,  we  need  not  trouble  ourselves  with  them.  Judges 
of  first  instance  would  not  have  overruled  the  mistaken  application 
of  principle.  As  regards  the  Court  of  Appeal,  it  seems  to  have  been 
followed  certainly  in  one,  if  not  in  two  cases,  without  question  ;  but 
although  there  are  cases  in  our  law  where  erroneous  decisions,  not 
reconcilable  even  with  the  judgment  on  which  the  decision  proceeded, 
have  created  a  rule  of  conduct,  and  as  to  which,  after  the  lapse  of 
years,  Judges  have  not  felt  themselves  at  liberty  to  review  the  decision 
even  by  the  light  of  the  judgment  on  which  the  first  decision  was 
pronounced,  yet  no  such  considerations  apply  to  this  case.  No  human 
being  ever  gave  credit  to  a  man  on  the  theory  that  he  would  mis- 
appropriate trust  money,  and  thereby  increase  his  assets.  No  human 
being  ever  gave  credit,  even  beyond  that  theory,  that  he  should  not 
oidy  misappropriate  trust  moneys  to  increase  his  assets,  but  that  he 
should  pay  the  trust  moneys  so  misappropriated  to  his  own  banking 
account  with  his  own  moneys,  and  draw  out  after  that  a  larger  sum 
than  the  first  sums  paid  in  for  the  trust  moneys.  It  never  could  have 
been  made  a  rule  of  conduct,  or  have  affected  the  transactions  of 
mankind,  and  therefore  it  does  not  come  within  tlie  line  of  cases 
which,  having  established  a  rule  of  conduct,  no  Judge  could  interfere 
with.     It  appears  to  me  we  should  not  be  deferring  to  authority  but 


Ch.  6)  CONSTUUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  5G1 

making  a  misuse  of  authority,  which  is  to  declare  the  law,  if  by  rea- 
son of  this,  which  appears  to  me  a  mere  slip  in  the  case  of  Pennell 
V.  Deffell,  and  which,  it  must  be  recollected  was  a  very  small  portion 
of  the  contest  in  that  case,  we  were  to  consider  ourselves  bound  to 
decide  against  what  is  the  settled  principle. 

Therefore,  in  my  opinion,  the  appeal  must  be  allowed 


MERCANTILE  TRUST  CO.  v.  ST.  LOUIS  &  S.  F.  RY.  CO. 

(Circuit  Court,  D.  Missouri,  E.  D.,   1900.     99  Fed.  485.) 

In  the  matter  of  the  intervening  petition  of  A.  L.  Wolff,  Receiver  of 
the  Kansas  Midland  Railway  Company. 

Adams,  District  Judge.  In  the  year  1888  the  Kansas  Midland  Rail- 
way Company  delivered  certain  of  its  bonds  to  the  St.  Louis  &  San 
Francisco  Railway  Company  in  trust  to  sell  the  same,  and  apply  the 
proceeds  of  the  sale  in  the  equipment  and  improvement  of  the  railroad 
of  the  Kansas  Midland  Railway  Company.  The  St.  Louis  &  San  Fran- 
cisco Railway  Company  (hereafter  called  the  "Frisco  Company")  sold 
the  bonds,  realized  therefor  $367,586.50,  and  expended  in  the  due  ex- 
ecution of  the  trust  $324,554.82,  leaving  a  balance  of  $43,031.68,  un- 
accounted for.  On  receipt  of  the  proceeds  of  the  sale  of  the  bonds  in 
1888,  the  Frisco  Company  deposited  the  same  in  a  general  account 
kept  by  it,  together  with  other  moneys,  and  thereafter,  from  time  to 
time,  deposited  in  that  account  its  current  and  other  receipts,  and  drew 
out,  as  occasion  required,  money  for  the  equipment  and  improvement 
of  the  road  of  the  Kansas  Midland  Railway  Company,  as  well  as  for 
the  payment  of  its  other  and  personal  obligations.  The  balance  to 
the  credit  of  the  Frisco  Company  in  this  general  account  varied  from 
time  to  time  according  to  the  deposits  in,  and  checks  against,  the  ac- 
count; at  all  times,  however,  up  to  December  23,  1893,  showing  some 
balance  on  hand.  On  November  15,  1890,  the  balance  amounted  to 
$2,265.55.  This  remained  unchanged  from  November  15  to  December 
12,  1890,  after  which  further  deposits  were  from  time  to  time  made, 
resulting  in  fluctuating  balances  until  December  23,  1893,  the  date  of 
the  appointment  of  the  receiver  for  said  Frisco  Company,  when  it 
stood  at  $36,522.28.  This  last  mentioned  sum  came  into  the  possession 
of  the  receiver.  It  appears  that  the  St.  Louis  &  San  Francisco  Rail- 
road Company,  or  the  "New  Frisco  Company,"  as  it  is  called,  which 
became  the  purchaser  of  all  the  property  of  the  old  Frisco  Company  at 
a  sale  under  a  decree  of  foreclosure  in  the  main  case,  took  its  rights 
under  and  subject  to  the  provisions  of  the  decree,  requiring  it  to  pay, 
among  other  things,  all  liabilities  incurred  by  the  old  Frisco  Company, 
which  were  prior  in  lien  to  the  consolidated  mortgage  under  which  the 
foreclosure  was  had.  The  special  master  to  whom  this  intervention 
Ken.Tr.— 36 


5G2  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  (Cll.  6 

was  referred  reports  that  the  balance  which  came  into  the  hands  of 
the  receiver,  namely  $36,522.28.  was  subject  to  the  original  trust  in 
favor  of  the  Kansas  Midland  Railway  Company,  and  should  be  now 
paid  to  the  intervener,  who  is  the  duly  appointed  receiver  of  the  Kan- 
sas Midland  Railway  Company,  by  the  New  Frisco  Company,  under 
the  provisions  of  the  decree  of  foreclosure  in  the  main  case. 

Xumerous  exceptions  are  taken  to  the  report  of  the  special  master, 
hut  two  of  them  only  were  seriously  argued,  and  involve  all  that  is 
necessary  for  a  final  disposition  of  the  case.  The  first  is  that  the 
special  master  erred  in  holding  that  the  Old  Frisco  Company  ever 
became  a  trustee  with  respect  to  the  bonds  in  question,  or  ever  became 
subject  to  the  equitable  doctrine  governing  trustees,  but  became  a  simple 
debtor  to  the  Kansas  Midland  Railway  Company  for  any  unexpended 
balance  of  the  money  received  by  it  as  proceeds  of  the  sale  of  the 
bonds  in  question.  The  second  is  that  the  special  master  erred  in  sub- 
jecting all  the  balance  found  to  the  credit  of  the  Old  Frisco  Company 
in  its  depositories  at  the  time  the  receiver  was  appointed  for  that  Com- 
pany, to  the  satisfaction  of  the  intervener's  claim. 

As  to  the  first  of  these  two  questions,  I  am  entirely  satisfied  with 
the  conclusion  reached  by  the  special  master,  and  will  content  myself 
by  the  statement  that  the  documentary  proof  in  the  case  clearly  creates 
the  relation  of  trustee  and  cestui  que  trust  between  the  Old  Frisco 
Company  and  the  Kansas  Midland  Railway  Company  with  respect  to 
the  proceeds  of  the  bonds  in  question,  and  that  as  a  result  the  defend- 
ant, as  successor  of  the  Old  Frisco  Company,  under  and  by  virtue 
f)f  the  decree  of  foreclosure  in  this  case,  must  be  held  to  an  account 
on  the  theory  of  an  original  trust  in  the  Old  Frisco  Company,  so  far  as 
the  principles  of  equity  applicable  to  the  facts  of  the  case  will  permit. 

The  second  exception  raises  the  question  whether,  under  the  facts 
as  already  stated,  the  trust  and  obligation  of  the  Old  Frisco  Com- 
pany attached  to  the  entire  $36,522.28  turned  over  to  the  receiver,  or 
only  to  the  $2,265.55,  which  is  the  minimum  balance  at  any  one  time 
of  all  the  funds  with  which  the  trust  fund  was  commingled.  Counsel 
have  called  attention  to  a  large  number  of  cases,  both  state  and  fedi- 
eral,  in  which  the  doctrine  ai)]jlicable  to  this  case  has  been  discussed ; 
and,  while  there  is  some  diversity  of  opinion  found  in  the  cases,  I  have 
reached  the  conclusion  that  the  weight  of  authority,  as  well  as  reason, 
conduces  to  the  result  that  the  intervener's  right  to  recover  the  trust 
fund  in  question  must  depend  upon  his  ability  to  trace  it,  or  the  fund 
with  which  it  was  commingled,  into  the  hands  of  the  receiver  of  the 
Old  Frisco  Company.  It  is  now  the  settled  doctrine  that  commingling 
a  trust  fund  with  the  private  funds  of  the  trustee  does  not  destroy  the 
right  of  the  cestui  que  trust  to  follow  it.  The  commingling  being 
wrong,  the  entire  fund  is  impressed  with  the  trust ;  and,  as  long  as  an 
amount  equal  to  the  trust  fund  remains  in  the  commingled  mass,  the 
same  and  all  of  it,  to  the  extent  of  the  trust  fund,  will  be  made  to  re- 
spond to  the  claim  of  the  cestui  que  trust.    This  last  mentioned  rule 


Ch.  6)  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROriORTY.  503 

is  in  perfect  correspondence  with  the  rule  first  announced,  requiring 
a  cestui  que  trust  to  show  that  his  money  or  property  is  in  the  hands 
of  the  trustee.  It  simply  enlarges  the  rule,  and  allows  recovery  when 
and  so  far  as  the  commingled  fund  in  which  the  trust  fund  has  been 
inexplicably  confused  is  found  in  the  hands  of  the  trustee.  The  fore- 
going propositions  I  believe  to  be  fully  supported  by  the  authorities,  and 
they  are  well  set  forth  in  the  able  opinion  of  Judge  Philips,  in  the 
case  of  Metropolitan  Nat.  Bank  of  Kansas  City  v.  Campbell  Com- 
mission Co.  (C.  C.)  77  Fed.  705.  A  large  number  of  cases  are  refer- 
red to  and  commented  upon  in  this  last  mentioned  case,  supporting  the 
conclusion  reached.  There  is  another  line  of  authority  announcing 
the  proposition  that  because  a  trust  fund,  when  appropriated  by  a  trus- 
tee to  his  own  use,  swells  his  assets,  the  general  estate  of  the  trustee, 
when  insolvency  supervenes,  will  be  impressed  with  a  trust  for  the  re- 
imbursement of  the  cestui  que  trust,  on  the  ground  that  such  estate 
has  been  benefited  to  an  equal  amount  by  the  trustee's  breach  of  duty. 
But  this  rule,  as  I  understand,  has  not  received  the  sanction  of  any 
federal  court,  and  of  but  few  state  courts.  The  equity,  or,  rather, 
want  of  equity  of  such  a  rule  is  well  characterized  by  the  court  of  ap- 
peals of  New  York  in  the  case  of  Cavin  v.  Gleason,  105  N.  Y.  256,  11 
N.  E.  504,  in  which  it  is  said:  "We  think  this  is  quite  too  vague  an 
equity  for  judicial  cognizance,  and  we  find  no  case  justifying  relief 
upon  such  a  circumstance.  In  a  very  general  sense,  all  creditors  of  an 
insolvent  may  be  presumed  to  have  contributed  to  the  assets  which 
constitute  the  residuum  of  his  estate." 

So  it  seems  to  me.  If  the  fact  that  the  money  or  property  trans- 
ferred to  the  trustee  has  so  increased  his  assets  as,  in  and  of  itself,  to 
entitle  the  creditor  to  a  preference,  why  will  not  all  general  creditors 
be  entitled  to  the  same  preference?  The  consideration  of  their  debts 
has  at  some  time  enhanced  the  funds  or  estate  of  the  debtor.  Following 
the  well  settled  rule  already  stated,  that  the  entire  account  with  which 
trust  funds  have  been  commingled  may  be  appropriated  for  the  satis- 
faction of  the  trust,  and  giving  the  intervener  the  full  benefit  of  that 
rule,  I  am  of  opinion  that  the  minimum  amount  found  at  any  one 
time  in  the  account  of  the  Frisco  Company  must  be  the  maximum 
amount  of  the  trust  fund  which  by  any  possibility  can  be  traced  into 
the  receiver's  hands.  Between  November  15  and  December  12,  1890, 
this  minimum  amount  stood  at  $2,265.55.  This  may  possibly  have  in- 
cluded a  part  of  the  original  trust  funds.  At  any  rate,  it  is  the  remnant 
of  the  fund  with  which  it  was  originally  commingled.  All  the  trust 
fund,  excepting  this  remnant,  had  been  before  November  15,  1890,  dis- 
sipated or  appropriated  to  the  trustee's  own  use.  The  identification  of 
the  original  trust  fund  is  here  lost,  as  to  all  thereof  except  the  renmant 
of  $2,265.5^  ;  and  certain  it  is  that  no  part  of  the  original  trust  fund 
can  be  traced  into  any  of  the  deposits  clearly  shown  to  have  been  made 
by  the  Frisco  Company  after  December  12.  1890.  It  was  conceded  at 
the  argument  that  if  in  November,  1890,  the  whole  account  had  been 


564  CONSTRUCTIVE   TRUSTS,  ETC.— TRACING   PROPERTY.  (Cll.  6 

drawn  out  bv  the  Frisco  Company,  so  that  nothing  remained,  the 
tracing  or  identification  of  the  trust  fund  would  no  longer  have  been 
possible,  and  that  no  subsequent  deposits  would  have  been  subject  to 
the  original  trust.  This  concession  was  manifestly  made  on  the  ground 
that  no  part  of  the  original  trust  fund  could  be  said  to  be  mmgled 
with  that  which  was  subseciuently  deposited.  If  that  argument  is 
sound— and  I  think  it  is— the  same  conclusion  should  folknv  as  to  all 
funds  subsequently  deposited  over  and  above  the  small  remnant  then 
on  hand — (for  it  is  clear  that  all  trace  of  the  trust  fund  was  lost,  ex- 
cept as  to  that  remnant),  and  that  this  remnant  represented  the  full 
amount  of  which,  by  any  possibility,  the  original  trust  fund  could  then 
have  formed  a  part'  It  follows  that  the  intervener  has  failed  to  prove 
that  any  of  the  money  of  the  Kansas  Midland  Railway  Company,  ei- 
ther in  its  original  or  commingled  form,  came  into  the  hands  of  the  re- 
ceiver of  the  Frisco  Company  beyond  the  sum  of  $2,265.55,  and  that 
all  trace  or  identification  of  the  balance  of  the  original  trust  fund  is 
impossible.  All  the  exceptions  to  the  report  of  the  special  master, 
made  by  both  parties,  other  than  those  relating  to  the  amount  of  re- 
covery, will  therefore  be  overruled,  and  the  exception  of  the  defend- 
ant to  such  parts  of  the  report  as  relate  to  the  amount  of  recovery  will 
be  sustained;  and,  the  case,  now  being  submitted  to  the  court,  a  de- 
cree will  be  entered  requiring  the  defendant,  the  St.  Louis  &  San 
Francisco  Railroad  Company,  to  pay  to  the  intervener  the  sum  of  $2,- 
265.55,  with  interest  thereon  from  May  15.  1897,  the  date  of  filing  the 
intervening  petition  herein,  to  the  present  time,  at  the  rate  of  6  per 
cent,  per  annum. 


MASSEY  et  al.  v.  FISHER. 

(Circuit  Court,  E.  D.  reniisylvania,  1894.     G2  Fed.  9.1S.) 

Suit  by  J.  R.  Massey  &  Son  against  Benjamin  F.  Fisher,  Receiver 
of  the  Spring  Garden  National  Bank.     Decree  for  complainants. 

BuTLKR,  District  Judge. ^'  There  is  no  controversy  about  the  facts; 
and  the  plaintiiFs  statement  may  therefore  be  adopted : 

"On  February  3,  1891,  J.  R.  Massey  &  Son,  who  were  depositors 
with  the  Spring  Garden  National  Bank,  indorsed  and  had  discounted 
by  the  Bank  a  note,  dated  February  2,  1891,  made  by  Samuel  Young 
to  the  order  of  Ephraim  Young  for  $1,225,  at  four  months,  which  had 
been  indorsed  by  the  payee  and  by  one  Edward  Phair.  This  note  fell 
due  June  5,  1891.  On  February  17,  1891,  the  Spring  Garden  National 
]5ank  deposited  the  note  with  the  clearing-house  committee  of  the 
clearing-house  association  of  the  banks  of  Philadelphia  in  substitution 
for  some  other  notes  then  matured  or  about  to  mature,  which  had  there- 
tofore been  pledged  to  secure  advances  made  to  the  bank  by  that  com- 

17  A  part  of  the  opinion  is  omitted. 


Ch.  G)  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  5G5 

mittee.  On  April  30,  1891,  Frank  H.  iMassey,  one  of  the  complainants, 
being  ignorant  that  the  bank  no  longer  held  the  Young  note,  called  at 
the  office  of  the  bank  and  stated  to  the  cashier  that  he  desired  to  pay 
it.  The  cashier  sent  a  clerk  to  fetch  the  note,  but  the  latter  returned 
without  it  and  informed  him  that  it  had  been  delivered  to  the  clearing- 
house committee.  The  cashier  then  said  to  Mr.  Massey:  'You  pay 
me  the  money,  and  the  next  time  we  send  to  the  clearing  house  we  will 
take  up  this  Young  note  and  send  it  to  you.'  Massey  thereupon  gave 
the  cashier  $1,225,  in  bank  bills,  and  was  handed  a  receipt  for  them 
in  the  following  form : 

"  'The  Spring  Garden  National  Bank, 
"  '12th  and  Spring  Garden  Streets. 

"  'Philadelphia,  Apr.  30,  1891. 
"  'Received  of  J.  R.  Massey  &  Son  twelve  hundred  and  twenty-five 
($1225)  dollars,  being  in  full  payment  of  note  signed  Edward  Phair 
for  that  amount,  due  June  5-91,  said  note  to  be  handed  Messrs.  JMassey 
upon  the  return  of  this  receipt. 

"  '[Signed]  H.  H.  Kennedy,  Cash.' 

"The  money  thus  received  by  the  cashier  was  handed  by  him  to  the 
note  clerk  of  the  bank,  and  he,  on  the  same  day,  transferred  it  to  the 
receiving  teller,  by  whom  it  was  put  into  the  drawer  with  the  other 
money  of  the  bank  in  his  possession,  and  on  the  next  morning  turned 
over  in  bulk  with  other  moneys  to  the  bank's  paying  teller.  On  the 
diary  of  the  bank,  and  on  its  book  of  bills  discounted,  credit  entries 
were  made  indicating  that  the  Young  note  had  been  paid.  The  bank, 
however,  did  not  take  up  the  note.  On  May  8,  1891,  the  Spring  Garden 
National  Bank  suspended  payment,  and  its  assets  were  taken  possession 
of  by  the  bank  examiner,  who,  on  June  1,  1891,  transferred  them  to 
Benjamin  F.  Fisher,  the  receiver  appointed  for  the  bank  by  the  comp- 
troller of  the  currency.  Among  the  other  assets  which  came  into  the 
hands  of  the  bank  examiner  on  the  failure  of  the  bank  was  the  sum 
of  $34,042.73  in  bills,  silver  dollars  and  fractional  currency,  which  sum, 
less  about  $1,000  paid  out  by  him  for  wages,  etc.  was  turned  over  to 
the  receiver.  At  no  time  between  April  29,  1891,  and  the  day  on 
which  it  closed  its  doors,  did  the  bank  have  on  hand  in  cash  less  than 
$24,000.  On  June  17,  1893,  judgment  was  entered  against  the  com- 
plainants in  favor  of  the  clearing-house  committee,  in  an  action  in- 
stituted by  the  latter  for  collection  of  this  note,  in  court  of  common 
pleas  No.  4  for  the  county  of  Philadelphia,  of  December  Term,  1892, 
No.  881,  for  the  amount  of  $1,377.50,  and  this  judgment,  wnth  interest 
and  costs,  was  paid  by  the  complainants  November  9,  1893." 

The  plaintiffs  claim  that  the  transaction  established  a  fiduciary  rela- 
tion between  the  parties,  while  the  defendant  claims  that  it  established 
the  relation  of  debtor  and  creditor  only.  If  the  question  was  new,  its 
proper  solution  might  be  open  to  doubt.  Even  in  such  case  however, 
I   would   adopt  the  plaintiff's  view.     The  money   was  delivered  and 


566  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  (Ch-  6 

received  to  extinguish  the  note.  Neither  party  contemplated  that  the 
bank  would  use  it  for  another  purpose,  leaving  the  note  outstanding. 
and  the  plaintiffs'  liability  unextinguished.  Such  application  Of  it, 
however,  would  be  a  violation  of  duty,  and  a  fraud. 

But  the  question  is  not  new :  It  arose,  and  was  decided,  in  People 
v.  City  Bank  of  Rochester,  96  N.  Y.  32.  The  facts  there  were  sub- 
stantially like  those  before  us.  It  is  true  that  the  check  in  that  case 
was  drawn  in  terms  to  pay  the  note.  This,  however,  is  an  immaterial 
difference.  It  is  as  plain  here  as  it  was  there  that  the  money  was  de- 
livered and  received  to  take  up  the  note.  In  Peak  v.  Ellicott,  30  Kan. 
156,  1  Pac.  499,  46  Am.  Rep.  90,  the  facts  were  identical  with  those 
before  us.  In  each  of  these  cases  it  was  held  that  the  transaction  es- 
tablished a  fiduciary  relation  between  the  parties. 

The  bank  having  failed  to  apply  the  money  to  the  note,  can  it  be 
recovered  from  the  receiver?  His  counsel  thinks  not,  because  the  bank 
placed  the  money  in  its  vaults  with  other  money  of  its  own,  whereby  its 
identity  was  lost.  Why  should  this  wrongful  act  defeat  the  plaintiffs' 
right?  Nobody  is  injured  by  allowing  the  plaintiffs  to  take  the  amount 
from  the  deposit.  The  receiver  and  creditors  stand  on  no  higher  plane 
than  the  bank,  and  can  no  more  assert  that  it  was  the  bank's  money 
than  the  bank  could.  It  is  true  they  are  entitlefl  to  all  the  bank's  prop- 
erty ;  but  this  was  not  its  property.  It  is  not  important  that  plaintiffs' 
money  bore  no  mark,  and  cannot  be  identified.  It  is  sufficient  to  trace 
it  into  the  bank's  vaults,  and  find  a  sum  equal  to  it  (and  presumably 
representing  it),  continuously  remained  there  until  the  receiver  took  it. 
The  modern  rules  of  equity  require  no  more.  Knatchbull  v.  Hallett, 
13  Ch.  Div.  696;  National  T.ank  v.  Insurance  Co.,  104  U.  S.  54,  26  L. 
Ed.  693;  Bank  v.  King,  37  Pa.  202,  98  Am.  Dec.  215;  Stoller  v. 
Coates,  88  Mo.  514;  McLeod  v.  Evans,  66  Wis.  401,  28  N.  W.  173, 
214,  57  Am.  Rep.  287;  People  v.  City  Bank  of  Rochester,  96  N.  Y. 
32 ;  Bank  v.  Weems,  69  Tex.  489,  6  S.  W.  802,  5  Am.  St.  Rep.  85 ; 
Harrison  v.  Smith,  83  Mo.  210,  53  .Am.  Rep.  571 ;  Beach  Eq.  Jur.  § 
285;   Fisher  v.  Knight,  9  C.  C.  A.  582,  61  Fed.  491. 

I  have  not  overlooked  Bank  v.  Dowd,  38  Fed.  172,  2  L.  R.  A.  480. 
If  that  case  can  be  distinguished  from  Knatchbull  v.  Hallett,  as  the 
judge  who  decided  it  believes,  then  it  can  as  readily  be  distinguished 
from  this.  If  it  cannot,  with  all  respect  for  that  distinguished  judge, 
I  must  disregard  it.     *     *     * 

'J'he  bill  is,  therefore,  sustained,  and  a  decree  may  be  drawn  ac- 
cordingly.^" 

iswasson  v.  Hawkins  fC.  C.)  59  Fed.  23.S  (1894);  Boone  County  Bank  v. 
Latimer  (C.  C.)  B7  Fed.  27  (ISO.^))  ;  Cleveland,  C.  C.  &  St.  Louis  Ry.  Co.  v. 
Hawkins  (C.  C.)  70  Fed.  29  (1897);  Merchants'  National  Bank  v.  School  Dist. 
No.  S,  i)4  Fed.  705,  30  C.  C.  A.  4.32  (l«!t!t)  ;  Quin  v.  Earle  (C.  C.)  h.j  Fed.  728 
(1899);    Richardson  v.  New  Orleans,  etc..  Co.,   102  Fed.  780,  42  C.  C.  A.  G19, 

52  L.  R.  A.  67  (19fX)) ;    Richardson  v.  Olivier,  105  Fed.  277,  44  C.  C.  A.  4«>8, 

53  L.  R.  A.  113  (1900);  In  re  Swift  (D.  C.)  108  Fed.  212  (1901);  Wocxlhouse 
V.  Crandall,  197  111.  104,  (M  N.  M  29ci,  58  L.  R.  A.  385  (1902);  Sherwood  v. 
Savings  Bank,  103  Mich.  109,  61  N.   W.  352  (1894);    Wallace  v.   Stone,   107 


Ch.  6)  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  507 

THE  EVANGELICAL  SYNOD  OF  NORTH  AMERICA 

V.  SCHOENEICH,  Administrator  of  S.  H.  MER- 

TEN  &  CO.,  Appellant. 

(Supreme  Court  of  Missouri,  1898.     143  Mo.    C>'>2.  4.~>  S.  W.  G47.) 

Burgess,  J.^®  This  is  a  proceeding  in  eciuity  by  which  it  is  sought 
to  charge  the  partnership  estate  of  S.  H.  Merten  &  Company  with  a 
lien  amounting  to  $3,000  and  interest,  alleged  to  have  been  plaintiff's 
money,  and  to  have  been  converted  by  said  Company. 

The  firm  of  S.  H.  Merten  &  Company  was  composed  of  Stephen  H. 
Merten,  John  F.  Hackmann  and  William  Hackmann.  The  firm  did  a 
general  milling  business  for  about  twenty  years  in  the  city  of  St. 
Charles,  and  was  dissolved  by  the  death  of  John  F.  Hackmann  on  the 
eighteenth  day  of  September.  1893.  On  the  twenty-seventh  of  Sep- 
tember, 1893,  the  defendant  Henry  J.  Schoeneich,  took  out  letters  of 
administration  on  the  partnership  estate,  and  two  days  thereafter  took 
out  letters  of  administration  on  the  individual  estate  of  said  John  F. 
Hackmann.  The  partnership  estate  proved  to  be  insolvent,  paying 
not  more  than  twenty-five  cents  on  the  dollar  of  its  indebtedness. 
Both  Stephen  H.  Merten  and  William  Hackmann  are  insolvent ;  John 
F.  Hackmann  died  insolvent.  The  plaintiff  is  a  corporation  duly  in- 
corporated under  the  laws  of  Missouri.  Ever  since  1887,  one  Rev. 
Reinhard  Wobus  who  had  charge  of  a  congregation  of  the  Evangelical 
Church  at  St.  Charles,  Missouri,  was  the  treasurer  of  said  synod  up 
to  the  time  of  his  death,  November  5,  1894;  and  as  such  was  the  cus- 
todian of  the  funds  and  moneys  belonging  to  said  corporation.  Dur- 
ing the  time  of  his  service  as  treasurer  said  Wobus  received  in  his 
capacity  as  such,  various  sums  of  money  for  said  corporation,  which  he 
deposited  with  Stephen  H.  Merten  &  Company;  this  he  did  without 
the  knowledge  of  the  president  of  the  synod  who  was  during  most  of 
the  time  a  resident  of  Burlington,  Iowa.  The  firm  knew^  that  the  funds 
deposited  by  Wobus  really  did  not  belong  to  him,  but  were  the  funds 
of  the  plaintiff,  and  were  only  held  by  him  as  its  treasurer.  Most  of 
the  money  left  by  Wobus  with  S.  H.  Merten  &  Company  consisted  of 
checks  for  small  amounts,  payable  to  him  individually  as  treasurer, 
which  said  firm  deposited  on  its  own  account  and  to  its  credit  in  the 

Mich.  190,  65  N.  W.  113  (189.5) ;  Board,  etc.,  v.  Willdnson.  119  IMich.  6r,5,  78 
N.  W.  893,  44  L.  R.  A.  493  (1899) ;  Bishop  v.  Maliouey,  TO  Miuu.  238,  73  N.  W. 
9  (1897) ;  Shields  v.  Thomas,  71  Miss.  200.  14  South.  84,  42  Am.  St.  Rep.  4.58 
(18931  ;  State  v.  Rank  of  Commerce,  54  Neb.  725.  75  N.  W.  28  (1S9S) ;  State 
V.  Banli  of  Commerce,  61  Neb.  181,  85  N.  W.  43,  52  L.  R.  A.  858  (1^)1);  City 
of  Lincoln  v.  Morrison,  64  Neb.  822,  90  N.  W.  905.  57  L.  R.  A.  885  (19()2); 
Arnot  V.  Bingham.  55  Hun,  5.53,  9  N.  Y.  Supp.  68  (1890) ;  People  v.  Mer- 
chants' Bank,  92  Hun,  159,  36  N.  Y.  Supp.  989  (1895) ;  Kimmel  v.  Dickson, 
5  S.  D.  221,  58  N.  W.  561,  25  L.  R.  A.  309,  49  Am.  St.  Rep.  869  (1894) ;  Piano 
Mfg.  Co.  V.  Auld,  14  S.  D.  512,  86  N.  W.  21,  86  Am.  St.  Rep.  769  (1901) ;  Bank 
V.  Weems,  69  Tex.  489,  6  S.  W.  802,  5  Am.  St.  Rep.  85  (1888)  ;  State  v.  Foster, 
5  Wyo.  199,  38  Pac.  926,  29  L.  R.  A.  226,  63  Am.  St.  Rep.  47  (1894). 
19  Only  a  part  of  the  opinion  is  given. 


568  CONSTUUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  (Ch.  6 

Union  Savings  Bank  of  St.  Charles.  Xo  interest  was  ever  paid  by 
the  firm  on  these  deposits,  and  whenever  Wobus  needed  the  money  it 
was  returned  to  him.  On  the  twenty-fourth  of  August,  1893,  there 
were  $3,300  in  the  hands  of  the  firm  thus  deposited,  of  which  Wobus 
on  the  fourteenth  day  of  September,  1893.  received  $300.  When, 
however,  he  demanded  the  balance  the  firm  was  unable  to  return  it 
for  the  reason  that  they  had  used  it  in  their  business. 

Without  the  knowledge  or  consent  of  the  president  or  other  ex- 
ecutive officers  of  the  German  Evangelical  Society  of  North  America, 
Mr.  Wobus,  on  November  13,  1893,  went  before  the  probate  court  of 
St.  Charles  county,  and  had  said  $3,000  allowed  in  his  own  name, 
against  the  partnership  estate  of  Stephen  H.  Merten  &  Company,  and 
$300  in  offset.  Nothing  was  ever  paid  on  this  allowance  and  as  soon 
as  the  president  of  the  synod  learned  of  it  he  denied  that  the  synod  had 
anything  to  do  with  it,  and  that  Wobus  had  any  authority  to  act  for 
it  in  respect  to  said  allowance,  and  soon  thereafter  instituted  this  suit. 
There  was  a  decree  in  favor  of  plaintiff  for  $3,000  with  interest  from 
the  time  of  the  institution  of  this  suit ;  which  was  made  a  special  lien 
upon  the  assets  of  the  firm  of  Merten  &  Company  in  the  hands  of  the 
administrator.  Defendant  in  due  time  filed  his  motion  for  a  new  trial 
which  being  over-ruled  he  saved  his  exceptions  and  brings  the  case 
here  by  appeal  for  review.     *     *     * 

II.  It  is  next  contended  by  defendant  that  the  relation  between 
Wobus,  or  the  plaintiff',  and  S.  H.  Merten  &  Company  was  that  of 
creditor  and  debtor,  general  depositor  and  depositary,  and  not  of 
cestui  que  trust  and  trustees,  or  special  depositors  and  depositary. 
Upon  the  other  hand  plaintiff  claims  that  the  relation  between  the 
plaintiff  and  S.  H.  Merten  &  Company  was  that  of  cestui  que  trust 
and  trustee.  There  can  be  no  question  under  the  facts  disclosed  by 
the  record  but  that  Wobus  received  and  held  the  moneys  and  the 
checks  upon  which  the  funds  in  question  were  collected,  as  trustee  for 
the  plaintiff,  and  not  otherwise.  He  had  no  personal  interest  in  the 
funds  and  of  this  Merten  &  Company  had  full  knowledge,  so  that 
whether  he  loaned  the  money  to  them  or  deposited  it  with  them  from 
time  to  time  for  safe  keeping,  makes  no  difference  in  this  case.  The 
administrator  of  the  partnership  estate  is  simply  the  representative  of 
the  partnership  and  occupies  precisely  the  same  position  toward  Wobus 
and  plaintiff  as  the  firm  did.  And  the  firm  of  Merten  &  Company, 
having  received  the  benefit  of  the  fund  by  unlawful  conversion,  the 
question  is,  should  the  partnership  estate  be  charged  with  the  amount 
of  the  converted  funds  as  a  preferred  demand? 

The  general  rule  is,  where  trust  funds  have  been  so  mingled  with 
other  funds  of  the  trustee  or  agent,  or  with  his  bailee  or  depositary, 
and  have  not  been  invested  in  specific  property  so  that  it  can  be  traced, 
the  cestui  que  trust  loses  his  lien,  and  can  only  come  in  and  share  w  ith 
the  general  creditors  of  the  insolvent  estate  which  wrongfully  con- 
verted the  funds.     The  rule  announced  in  Little  v.   Chad  wick,   151 


Ch.  6)  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  569 

Mass.  109,  23  N.  E.  1005,  7  L.  R.  A.  570,  is  as  follows:  "When  trust 
money  becomes  so  mixed  up  with  the  trustee's  individual  funds  that 
it  is  impossible  to  trace  and  identify  it  as  entering  into  some  specific 
property,  the  trust  ceases.  The  court  will  go  as  far  as  it  can  in  thus 
tracing  and  following  trust  money;  but  where,  as  a  matter  of  fact, 
it  cannot  be  traced,  the  equitable  right  of  the  cestui  que  trust  to  follow 
it  fails.  Under  such  circumstances,  if  the  trustee  has  become  bankrupt, 
the  court  cannot  say  that  the  trust  money  is  to  be  found  somewhere  in 
the  general  estate  of  the  trustee  that  still  remains;  he  may  have  lost 
it  with  property  of  his  own ;  and  in  such  a  case  the  cestui  que  trust 
can  only  come  in  and  share  with  the  general  creditors."  [Authorities 
cited.] 

In  the  case  at  bar  there  is  no  such  thing  as  tracing  the  money  de- 
posited by  Wobus  with  S.  H.  Merten  &  Company,  into  any  particular 
property,  nor  was  it  attempted  to  be  done.  The  most  that  can  be  said 
is  that  the  Company  had  this  money  and  other  moneys  of  their  own, 
all  of  which  were  deposited  by  them  in  the  Union  Savings  Bank  at 
St.  Charles  from  time  to  time  in  their  own  name,  and  checked  out  by 
them  for  their  own  use  and  benefit  as  occasion  might  require.  Merten 
&  Company  only  had  on  deposit  to  their  credit  in  said  Bank  at  the  time 
of  the  dissolution  of  the  firm  the  sum  of  $15.92.  In  the  Elevator  Com- 
pany Case  [3  N.  D.  26,  53  N.  W.  175],  supra,  it  was  held  that :  '"Where 
the  property  of  one  is  received  by  another,  this,  of  itself  does  not  en- 
title the  owner  to  priority  of  payment  out  of  the  general  assets  of  the 
one  receiving  the  property.  To  recover  his  property,  the  owner  must 
be  able  to  trace  and  identify  it  in  some  form.  When  it  is  mingled 
indistinguishably  with  the  mass  of  property  of  the  one  receiving  it,  or 
when,  as  in  the  case  of  money,  it  is  paid  out  by  him,  the  right  to  pursue 
it  is  lost,  because  identification  is  impossible.  Mere  enrichment  of  the 
estate  or  extinguishment  of  debts  with  the  property  received,  will  not 
make  the  owner  thereof  a  preferred  creditor."  The  case  of  Bank  v. 
Ins.  Co.  [104  U.  S.  54,  26  L.  Ed.  693],  supra,  is  regarded  as  the  lead- 
ing American  authority  on  the  question  now  under  consideration,  and 
the  rule  announced  in  that  case  is,  that  trust  property  will  be  followed 
by  a  court  of  equity  so  long  as  it  can  be  traced,  even  though  it  be  trans- 
formed, or  be  merged  in  a  mass  of  which  it  forms  a  part ;  that  the  right 
rests  upon  principles  of  equity  which  entitle  the  beneficiary  to  a  lien 
upon  the  property,  but  who,  when  seeking  to  recover  the  specific 
property,  or  to  fix  a  charge  upon  a  mass,  must  trace  it,  and  show  that 
the  specific  property  claimed  is  his  property,  or  that  his  property  has 
gone  into  it  and  remains  in  the  mass  he  seeks  to  recover.  From  the 
authorities  cited,  the  rule  seems  to  be  that  when  the  depositary  keeps 
the  trust  fund  separate  and  the  original  money  is  capable  of  being 
identified,  there  is  no  question  as  to  the  right  of  the  cestui  que  trust  to 
have  it  applied  to  his  benefit,  but  where  the  depositary  mingles  the 
trust  money  with  the  mass  of  his  own  funds,  and  uses  the  entire  fund 
indiscriminately,  as  w-as  done  in  this  case,  and  it  is  not  invested  in 


570  CONSTRUCTIVE   TIUSTS,  ETC. TRACING    PROrERTY.  (Cll.  6 

Specific  property  to  wliich  it  can  be  traced,  tlicre  is  no  possible  way 
by  wbicb  it  can  be  identified  and  the  right  to  pursue  it  is  lost. 

But  the  modern  doctrine,  and  especially  the  adjudications  by  the  ap- 
pellate courts  of  this  state  go  farther,  and  hold  that  when  a  trustee 
or  bailee  wrongfully  mixes  trust  money  with  his  own,  so  that  it  can- 
not be  distinguished  what  particular  part  is  trust  money  and  what  part 
is  private  money.  e(|uity  will  follow  the  money  by  taking  out  of  the 
insolvent  estate  the  amount  due  the  cestui  que  trust,  although  it  can- 
not be  identified  or  separated  from  other  funds  with  which  it  was 
mixed.  In  Harrison  v.  Smith.  83  Mo.  210,  53  Am.  Rep.  571,  a  bank 
in  this  State  undertook  to  make  a  loan  of  money  on  real  estate  se- 
curity here  for  a  party  who  resided  in  the  State  of  New  York,  and 
kept  a  bank  account  there,  and  the  plaintifT  sent  the  bank  making  the 
loan  a  check  for  the  sum  to  be  loaned,  payable  to  it,  which  was  to 
be  paid  to  the  borrower  when  the  terms  of  the  loan  were  complied 
with.  The  bank  credited  the  amount  received  to  plaintiff  and  sent 
the  check  to  its  own  correspondent  in  New  York  by  whom  it  was  col- 
lected and  credited  to  the  bank  here,  and  in  the  meantime  the  latter 
led  the  plaintiff  to  believe  that  the  loan  liad  been  perfected,  and  there- 
after made  an  assignment  for  the  benefit  of  its  creditors.  And  it  was 
held  that  the  relation  of  trustee  and  cestui  que  trust,  and  not  that  of 
depositor  and  depositary,  existed  between  the  bank  and  the  plaintiff. 
And  that  when  a  trustee  mixes  trust  money  with  his  own  so  that  it 
cannot  be  distinguished  what  particular  part  is  trust  money  and  what 
part  is  private  money,  equity  will  follow  the  money  by  taking  out  of 
the  assigned  estate  the  amount  due  the  cestui  que  trust.  The  same 
rule  is  announced  in  Stoller  v.  Coates,  88  Mo.  514,  in  which  it  is  held 
that  the  general  assets  of  an  insolvent  bank  having  received  the  benefit 
of  the  unlawful  conversion  of  a  trust  fund,  the  bank  was  chargeable 
with  the  amount  of  the  converted  fund  as  a  preferred  demand ;  that 
while  it  may  be  impossible  to  follow  a  fund  into  its  diverted  use,  it  is 
always  possible  to  make  it  a  charge  upon  the  estate  or  assets,  to  the 
increase  or  benefit  of  which  it  had  been  appropriated,  and  the  general 
assets  of  the  bank  having  received  the  benefit  of  the  unlawful  conver- 
sion, there  is  nothing  inequitable  in  charging  them  with  the  amount  of 
the  converted  fund,  as  a  preferred  demand.  To  the  same  effect  is 
Snorgrass  v.  Moore,  30  Mo.  App.  232 ;  Clark  v.  Bank,  57  Mo.  App. 
281 ;  Bank  v.  Sanford,  62  Mo.  App.  394;  Brick  Co.  v.  Schoeneich,  65 
Mo.  App.  283;  Leonard  v.  Latimer,  67  Mo.  App.  138;  Peak  v.  Hllicott, 
30  Kan.  156,  1  Pac.  499,  46  Am.  Rep.  90;  Thompson  v.  Bank  (N.  J.) 
8  Atl.  97;  Plow  Co.  v.  Lamp,  80  Iowa,  722,  45  N.  W.  1049,  20  Am.  St. 
Rep.  442.     See,  also,  Phillips  v.  Overfield,   100  Mo.  466,  13   S.  W. 

yrjr  2  0      *      *      * 

Judgment  affirmed. 

Gantt,  p.  J.,  and  Sherw^ood,  J.,  concur. 

20  Banks  &  Bros.  v.  Rice,  8  Colo.  App.  217,  45  Pac.  515  (ISOPA;    Hopkins  v. 
Burr,  24  Colo.  502,  52  Pac.  (J70,  t;5  Am.  St.  Rep.  238  (1898);    Davenport  Plow 


Ch.  6)  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  571 

THE  DROVERS'  &  MECHAXICvS'  NATIONAL  BANK 
V.  D.  &  W.  ROLLER. 

(Court  of  Appeals  of  Maryland,  1897.    85  Aid.  49.1,  'M  Atl.  30,  30  L.  R.  A.  767, 

60  Am.  St.  Kep.  344.) 

Appeal  from  an  order  of  the  Circuit  Court  of  Baltimore  City  (Den- 
nis, J.),  over-ruling  exceptions  to  an  Auditor's  report  and  finally  rati- 
fying same. 

McSherry,  C.  J.,  delivered  the  opinion  of  the  court. -^ 
There  are  two  questions  to  be  disposed  of  on  this  appeal,  and  they 
both  arise  upon  exceptions  to  an  Auditor's  report.  One  involves 
quite  an  interesting  question  of  law,  the  other  chiefly  a  question  of 
fact.  The  circumstances  out  of  which  the  first  arose  are  these:  The 
firm  or  copartnership  of  Sheeler  &  Ripple  had  for  a  number  of  years 
been  engaged  in  the  live  stock  commission  business  in  Baltimore.  On 
the  seventeenth  day  of  January,  1895,  D.  &  W.  Roller  of  Tennessee, 
consigned  to  Sheeler  &  Ripple  for  sale  a  quantity  of  live  hogs  which 
when  received  by  the  consignees  on  the  twenty-first,  were  sold  in  sev- 
eral lots  for  the  consignors ;  and  on  January  the  twenty-fourth  an  ac- 
count of  sales,  together  with  a  check  for  the  net  amount  of  the  pro- 
ceeds after  deducting  commissions  and  freight  charges  was  mailed  to 
the  consignors.  On  the  thirty-first  of  January,  Sheeler  &  Ripple,  be- 
ing then  and  apparently  having  been  for  some  months  anterior  thereto 
hopelessly  insolvent,  executed  a  deed  of  trust  for  the  benefit  of  their 
creditors,  and  when  the  check  given  to  D.  &  W.  Roller  reached  in  due 
course  on  the  second  of  February  the  Drovers'  &  ^Mechanics'  National 
l)ank  upon  which  it  had  been  drawn,  there  were  no  funds  in  bank  to 
the  credit  of  the  drawers — they  having  previously  overchecked  their 
account — and  the  check  was  dishonored.  The  funds  actually  received 
by  Sheeler  &  Ripple  for  the  hogs  sold  had  been  paid  out  on  other 
checks  given  for  other  demands.  Most  of  the  hogs  were  sold  for  cash 
and  the  proceeds,  without  earmark  or  identification,  were  placed  to 
the  credit  of  Sheeler  &  Ripple  intermingled  with  funds  of  their  own 
in  the  Drovers'  &  Mechanics'  National  Bank  where  the  partnership  ac- 
count was  kept ;  but  a  portion  of  the  hogs  had  not  been  paid  for  by  the 
purchasers  of  them  when  the  deed  of  trust  was  made,  and  aftenvards 
the  trustees  collected  and  now  have  in  their  hands  these  particular 
proceeds  of  sales.  D.  &  W.  Roller  filed  their  claim  in  the  trust  estate 
for  the  whole  tiet  proceeds  of  sale  and  insist  that  they  are  entitled  to 
a  priority  over  other  creditors  to  the  extent  of  the  whole  net  proceeds 

Co.  V.  Lamp.  SO  Iowa,  722.  45  N.  W.  1049.  20  Am.  St.  Rep.  442  (1890) ;  Peak 
V.  Ellieott,  30  Kan.  156,  1  Pac.  499,  46  Am.  Rep.  90  (18S3) :  Reeves  v.  Pierce, 
(>4  Kan.  502,  67  Pac.  1108  (1902) ;  Carley  v.  Graves,  85  Micb.  48.3,  48  N.  \V. 
710,  24  Am.  St.  Rep.  99  (1S91)  ;  Harris<in  v.  Smith,  83  Mo.  210.  53  Am.  Rep. 
571(1884);  Stoller  v.  Coates.  88  Mo.  514  (1885);  Pundmann  v.  Sclioenich,  144 
Mo.  149,  45  S.  W.  1112  (1898). 

21  Only  so  mueli  of  the  opinion  as  deals  with  the  first  question  is  giveo. 


572  CONSTRUCTIVE   TUUSTS,  ETC. TRACING   PROPERTY.  (Cll.  6 

of  the  sales  of  their  ho^^s.  The  assets  in  the  hands  of  the  trustees 
consist  of  collections  made  by  them,  but  except  as  just  stated,  do  not 
represent  the  proceeds  of  the  sales  of  Roller's  consigned  hos^s,  or  the 
proceeds  of  the  sale  of  any  other  property  in  which  the  proceeds  of  the 
sales  of  those  hogs  had  been  invested.  The  first  question  is:  Are  D. 
&  W.  Roller  entitled,  under  these  circumstances,  to  a  preferential  lien 
upon  the  general  assets  of  Sheeler  and  Roller  in  the  hands  of  the  trus- 
tees, for  the  full  amount  of  the  claim  they  have  against  the  insolvent 
firm  for  the  proceeds  of  the  sale  of  the  consigned  hogs? 

With  respect  to  the  proceeds  of  sale  which  actually  went  into  the 
hands  of  the  trustees  after  their  appointment  there  can  be  and  there  is 
no  difficulty  whatever.  When  goods  or  chattels  are  consigned  to  a 
commission  merchant  or  broker  for  sale,  the  title  does  not  vest  in  the 
latter,  but  remains  in  the  consignor  and  the  money  arising  from  a  sale 
of  them  is  the  money,  not  of  the  agent,  but  of  the  owner  of  the  con- 
signed property.  Hence,  whenever  the  money  can  be  traced  it  may 
be  claimed  by  its  owner,  and  upon  an  assignment  being  made  for  the 
benefit  of  creditors,  the  trustee  can  have  no  greater  right  to  the  money 
than  his  grantor,  the  consignee,  possessed.  The  proceeds  of  the  sales 
of  Rollers'  hogs  that  have  actually  gone  into  the  possession  of  the  trus- 
tee and  which  are  capable  of  identification,  belonged  to  the  Rollers  and 
must  be  paid  over  to  them ;  but  quite  another  and  a  different  condition 
exists  in  regard  to  the  proceeds  received  by  the  insolvent  firm  and 
spent  or  dissipated  by  them  before  the  trustees  were  appointed. 

The  general  doctrine  in  relation  to  the  right  of  the  owner  of  prop- 
erty or  the  cestui  que  trust  to  follow  and  reclaim  his  property  is,  we 
think,  thoroughly  settled.  The  early  English  cases  only  went  to  the 
extent  of  holding  that  the  owner  of  property  intrusted  to  an  agent, 
factor  or  trustee  could  follow  and  re-take  his  property  from  the  pos- 
session of  such  agent,  factor  or  trustees  or  others  in  privity  with  him, 
whether  such  property  remained  in  its  original,  or  had  been  changed 
into  some  different  or  substituted  form,  so  long  as  it  could  be  ascer- 
tained to  be  the  same  property  or  the  product  or  proceeds  thereof  un- 
less the  superior  rights  of  bona  fide  purchasers  for  value  and  with- 
out notice  had  intervened ;  but  that  such  right  of  reclamation  ceased 
when  the  means  of  ascertainment  failed,  as  when  the  subject  of  the 
trust  was  money  or  had  been  converted  into  money  and  then  mixed  and 
confounded  in  a  general  mass  of  the  same  description,  so  as  to  be  no 
longer  divisible  or  distinguishable.  The  more  recent  rule,  however, 
in  England  as  to  following  trust  moneys  is  broader  and  goes  to  the 
extent  of  holding  that  if  money  held  by  a  person  in  a  fiduciary  char- 
acter has  been  paid  by  him  to  his  account  at  his  bankers,  the  person 
for  whom  he  held  the  money  can  follow  it  and  has  a  charge  on  the  bal- 
ance in  the  bankers'  hands ;  and  that  if  a  person  who  holds  money  in 
a  fiduciary  character  pays  it  to  his  account  at  his  bankers'  and  mixes 
it  with  his  own  money,  and  afterwards  draws  out  sums  by  checks  in 
the  ordinary  manner,  the  drawer  must  be  taken  to  have  drawn  out  his 


Ch.  6)  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   TROPERTY.  573 

own  money  in  preference  to  the  trust  money.  Knatchbull  v.  Hallett, 
13  Ch.  Div.  696.  This  court  in  Englar  v.  Offutt,  70  Md.  78,  16  Atl. 
497,  14  Am.  St.  Rep.  332,  following  closely  the  Supreme  Court  of  the 
United  States  in  Central  National  Bank  v.  Connecticut  Ins.  Co.,  104 
U.  S.  54,  26  L.  Ed.  693,  has  announced  the  same  principles.  But  it  is 
now  insisted  that  the  doctrine  has  been  expanded  and  amplified,  and 
that  though  the  funds  cannot  be  traced  or  identified,  a  lien  still  exists 
upon  the  debtor's  general  assets  in  the  hands  of  his  trustee,  in  favor 
of  the  owner  or  cestui  que  trust  whose  property  or  money  has  been 
mingled  with  that  of  the  fiduciary,  and  has  been  used  by  him  in  liqui- 
dating other  claims  against  himself ;  and  that  this  lien  is  a  preferential 
one  over  other  creditors  of  the  debtor.  The  theory  upon  which  this 
supposed  enlarged  doctrine  rests,  is  that  inasmuch  as  the  wrongful 
application  of  the  trust  funds  reduces  the  general  indebtedness  of  the 
fiduciary,  his  assets,  swelled  to  the  extent  of  that  reduction,  ought  to 
be  impressed  with  a  trust  or  lien  in  favor  of  the  person  whose  money 
or  property  has  been  improperly  employed  and  used  to  discharge  the 
individual  indebtedness.  There  are  some  cases  which  support  this 
view.  People  v.  City  Bank,  96  N.  Y.  32 ;  McLeod  v.  Evans,  66  Wis. 
401,  28  N.  W.  173,  214,  57  Am.  Rep.  287;  Francis  v.  Evans,  69  Wis. 
115,  33  N.  W.  93;  Bowers  v.  Evans,  71  Wis.  133,  36  N.  W.  629;  Har- 
rison V.  Smith,  83  Mo.  210,  53  Am.  Rep.  571,  and  some  others.  But  it 
is  obvious,  even  if  these  cases  were  not  opposed  to  the  general  prin- 
ciples already  alluded  to,  and  even  if  they  had  not  been  questioned 
and  some  of  them  flatly  overruled,  that  they  proceed  upon  a  wholly 
fallacious  and  untenable  theory.  They  are  founded  upon  the  assump- 
tion that  the  misapplication  of  the  trust  funds  by  the  fiduciary  to  the 
payment  of  his  own  debts  actually  swells  the  volume  of  his  assets. 
This  is  the  introduction  of  a  new  and  unsound  principle  into  an  old 
and  well  known  doctrine  of  equity.  But  instead  of  such  a  misappro- 
priation swelling  the  volume  of  the  debtor's  assets,  it  would  merely 
diminish  the  amount  of  his  indebtedness,  and  this  would  benefit  the 
estate  only  to  the  extent  that  it  increased  the  percentage  that  the 
other  creditors  would  receive  provided  the  amount  of  the  misappro- 
priation were  not  deducted  as  a  preferred  demand.  The  case  of  People 
V.  City  Bank,  96  N.  Y.  32,  which  was  followed  in  McLeod  v.  Evans, 
66  Wis.  401,  28  N.  W.  173,  214,  57  Am.  Rep.  287,  if  it  can  be  held  to 
support  this  new  doctrine  (for  it  is  a  brief  opinion  resting  on  no  well 
defined  principle),  is  in  conflict  with  a  more  recent  case  of  Cavin  v. 
Gleason,  105  N.  Y.  256,  11  N.  E.  504,  wherein  it  was  expressly  decided 
in  disposing  of  this  very  contention,  that  it  was  "quite  too  vague  an 
equity  for  judicial  cognizance,"  and  that  there  was  "no  case  justifying 
relief  on  such  a  circumstance."  McLeod  v.  Evans,  supra ;  Francis  v. 
Evans,  supra;  Bowers  v.  Evans,  supra;  determined  by  a  bare  ma- 
jority of  the  court,  were  subsequently  over-ruled  in  Nonotuck  Silk  Co. 
v.  Flanders,  87  Wis.  237,  58  N.  W.  383,  the  opinion  of  the  court  being 
delivered  by  one  of  the  Judges  who  dissented  in  McLeod  v.  Evans, 


574  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROPERTY.  (Cll.  () 

and  those  cases  are  consequently  no  longer  authority  even  in  the  State 
of  Wisconsin.  In  Slater  v.  Oriental  Mills,  18  R.  I.  352,  27  Atl.  443; 
Shields  v.  Thomas,  71  Miss.  260,  14  South.  84,  42  Am.  St.  Rep.  458; 
Ferchen  v.  Arndt,  26  Or.  121.  37  Pac.  161,  29  L.  R.  A.  664,  46  Am.  St. 
Rep.  603;  Philadelphia  National  Bk.  v.  Dowd,  Receiver  (C.  C.)  38 
Fed.  172,  2  L.  R.  A.  480;  Little,  Trustee,  v.  Chadwick  et  al.,  151  Mass. 
109,  23  N.  E.  1005,  7  L.  R.  A.  570,  the  doctrine  of  the  Wisconsin, 
Iowa,  Kansas,  Missouri  and  Texas  cases  is  criticized  and  repudiated. 
The  distinction  between  the  two  conditions  that  are  presented  when, 
first,  trust  funds  remain  in  the  insolvent  estate  and  go  to  swell  it,  and 
when,  secondly,  trust  funds  have  been  dissipated  or  spent  and  used  in 
the  payment  of  debts  due  by  the  fiduciary,  and,  therefore,  no  longer 
constitute  a  part  of  his  estate,  is  a  perfectly  manifest  one ;  and  the 
fundamental  error  underlying-  the  cases  we  have  been  reviewing  con- 
sists in  confusing  or  confounding  these  essentially  dissimilar  condi- 
tions, and  a  consequent  failure  to  distinguish  between  property  which 
may  be  either  specifically  identified  as  belonging  to  the  claimant,  or 
money  traced  to  and  remaining  in  the  hands  of  the  factor  or  trustee, 
on  the  one  hand ;  and,  on  the  other  hand,  money  arising  from  the  sale 
of  property  confessedly  never  owned  by  the  claimant  or  cestui  que 
trust,  or  confessedly  not  purchased  with  money  belonging  to  him. 
Creditors  have  no  right  to  share  in  that  which  is  showm  not  to  belong 
to  the  debtor,  and,  conversely,  a  claimant  has  no  right  to  take  from 
creditors  that  which  he  cannot  show  to  be  equitably  his  own.  But  just 
here  comes  the  argument  that  it  is  equitably  his  own,  because  the 
debtor  has  taken  the  claimant's  money  and  mingled  it  with  his  estate, 
whereby  the  estate  is  swelled  precisely  that  much.  But  obviously,  as 
applicable  to  all  cases,  the  argument  is  unsound.  Where  the  property 
or  its  equivalent  remains  there  can  be  no  contention  that  the  claim  is 
just  and  enforceable;  but  where  it  has  been  dissipated  and  is  gone, 
the  appropriation  of  some  other  property  in  its  stead  simply  takes  from 
creditors  that  which  clearly  belongs  to  them.  In  one  of  the  cases 
the  illustration  was  used  by  Knight  Bruce  of  a  debtor  mingling  trust 
funds  with  his  own  in  a  chest ;  and  in  another  Sir  George  Jessel  likened 
the  situation  to  that  of  a  debtor  who  had  mingled  trust  funds  with  his 
own  in  a  bag.  Though  the  particular  money  cannot  be  identified,  the 
amount  is  swelled  just  so  much  and  the  amount  added  belongs  to  the 
cestui  que  trust.  But  where  all  the  money  has  been  spent — where 
Knight  Bruce's  chest  and  Jessel's  bag  is  empty — there  is  no  swelling 
of  the  estate  at  all ;  and  in  such  a  contingency  it  comes  to  this,  that  a 
court  of  e(|uity  is  asked  to  order  a  like  amount  to  be  taken  out  of  some 
other  chest  or  bag,  or  out  of  the  debtor's  general  estate,  not  because 
the  creditors  who  are  entitled  to  be  paid  out  of  that  general  estate  have 
done  any  wrong,  but  because  the  debtor  has  been  guilty  of  misconduct 
as  a  trustee.-  It  comes  down  to  the  ordinary  case  of  misfortune  on  the 
part  of  the  claimant  or  cestui  que  trust  whose  confidence  in  a  trustee 
has  been  abused.     Slater  v.  Oriental  Mills,  supra. 


Ch.  6)  CONSTRUCTIVE   TRUSTS,  ETC. TRACING    PROPERTY.  575 

But  the  case  of  Englar  v.  Offutt,  70  Aid.  78,  16  Atl.  497,  14  Am.  St. 
Rep.  332,  affords,  in  our  judgment,  a  complete  answer  to  the  conten- 
tion of  D.  &  W.  Roller  as  respects  that  portion  of  their  claim  now 
under  consideration.  In  that  case  it  appeared  that  John  P.  Shriner 
had  been  engaged  in  business  as  a  merchant  and  manufacturer  under 
the  name  and  style  of  John  P.  Shriner  &  Company.  In  ]\Iay,  1883,  he 
was  apjiointed  guardian  of  two  infants  and  received  something  over 
ten  thousand  dollars  belonging  to  them.  On  the  day  he  received  this 
money  he  deposited  nearly  all  of  it  in  the  Howard  Bank  to  his  own 
credit  in  an  account  kept  in  the  name  of  John  P.  Shriner  &  Company. 
Against  this  and  all  other  credits,  aggregating  considerably  more  than 
double  the  guardianship  fund,  he  checked  and  drew  out.  as  he  needed 
the  money,  the  whole  amount  of  his  deposits,  except  the  trifling  sum 
of  forty-eight  dollars  and  forty-nine  cents.  In  December,  1885,  Ed- 
ward C.  Shriner  became  a  partner  of  his  brother  John  P.  Shriner. 
In  November.  1886.  the  firm  made  a  deed  of  assignment  for  the  benefit 
of  creditors,  and  the  trustees  sold  all  the  assets  of  the  firm  and  these 
realized  about  nine  thousand  five  hundred  dollars.  Thereupon  the  in- 
fants whose  money  had  gone  into  the  business  of  John  P.  Shriner  filed 
a  petition  in  the  trust  estate  claiming  a  priority  over  the  other  creditors 
of  the  firm  in  the  distribution  of  the  net  proceeds  of  the  sales  of  the 
firm's  assets.  After  stating  the  general  rule  as  we  have  heretofore 
announced  it,  we  said :  "The  sole  question  therefore  in  every  case 
where  trust  property  is  attempted  to  be  traced  is,  whether  it  can  or  can- 
not be  identified  either  in  the  original  or  altered  form."  Then  after 
discussing  the  evidence  and  showing  that  the  whole  trust  fund  had 
been  drawn  out,  and  that  there  was  nothing  in  the  testimony  tending 
to  show  that  the  stock  which  went  into  the  hands  of  the  trustees  had 
been  purchased  with  the  trust  funds,  the  opinion  proceeds :  "And 
such  being  the  case,  the  claim  of  the  appellants  upon  the  fund  for  dis- 
tribution is  altogether  too  indefinite.  At  most  it  is  but  matter  of  con- 
jecture, for  it  is  impossible  to  say,  as  this  case  is  presented,  and  after 
the  great  lapse  of  time  that  has  occurred,  whether  any,  or,  if  any, 
what  portion  of  the  stock  of  goods  that  passed  into  the  hands  of  the 
assignee,  under  the  general  assignment  for  benefit  of  creditors,  was  the 
proceeds  of  the  trust  fund  belonging  to  the  appellants.  *  *  *  It  is 
clear,  therefore,  that  the  fund  now  in  court  for  distribution  cannot  be 
identified  as  the  product  of  any  investment  of  the  original  trust  fund 
belonging  to  the  appellants,"  who  were  the  infants.  And  because  this 
could  not  be  done,  the  relief  w^as  denied,  though,  had  the  doctrine  of 
the  Wisconsin  and  other  cases  heretofore  cited,  been  considered  the 
law,  the  fund,  notwithstanding  the  trust  money  had  not  been  traced 
into  the  purchase  of  the  firm's  assets,  could  have  been  impressed  with 
a  preferential  trust  and  the  ward's  claim  would  have  prevailed  over  the 
debts  due  to  the  general  creditors  of  the  firm. 

In  our  opinion,  then,  so  much  of  the  claim  of  D.  &  W.  Roller  as  the 
firm  of  Sheeler  &  Ripple  actually  collected  before  the  appointment  of 


576  CONSTRUCTIVE   TRUSTS,  ETC. TRACING   PROrERTY.  (Cll.  6 

the  trustees,  is  not  entitled  to  a  priority  because  the  funds  had  been 
spent  or  dissipated  and  did  not  in  any  form  go  into  the  hands  of  the 
trustees,  and,  therefore,  as  to  that  portion  of  their  claim  they  are  simply 
general  creditors  standing-  on  the  same  footing  with  other  general  cred- 
itors of  Shceler  &  Ripple;  though  as  to  so  much  of  the  proceeds  of  the 
sales  of  the  consigned  hogs  as  the  trustees  have  collected  and  which, 
consequently,  is  capable  of  identification,  the  Rollers  are  entitled  to  a 
priority.-^     *     *     ♦ 

22Multnomali  County  v.  Oregon  Nat.  Bank  (C.  C.)  61  Fed.  912  (1894); 
Spokane  County  v.  First  Nat.  Bank,  68  Fed.  979,  16  C.  C.  A.  81  (1895); 
Citv  P.ank  v.  lilackmore,  75  Fed.  771,  21  C.  0.  A.  514  (1S96) ;  Metropolitan 
Nat.  Bank  v.  Canipbell  Oominission  Co.  (O.  C.)  77  Fed.  705  (ISOG)  ;  St. 
Louis  Brewing  Association  v.  Austin,  Receiver,  100  Ala.  31.3,  13  South.  908 
(1893)  ;  Bank  of  Florence  v.  United  States  Savings  &  Loan  Co.,  104  Ala.  297, 
16  South.  110  (1893);  Winston  v.  Miller,  139  Ala.  259,  35  South.  8.53  (1903); 
Ober  Co.  v.  Cochran,  118  Ga.  .396,  45  S.  E.  382,  98  Am.  St.  Rep.  118  (1903); 
Lanternian  v.  Travous,  174  111.  459,  51  N.  K.  805  (1898);  Estate  of  Seiter 
V.  Mowe.  182  111.  351,  55  N.  E.  526  (1899);  Windstanley  v.  Second  Nat.  Bank, 
13  Intl.  App.  544,  41  N.  E.  956  (1895);  McComas  v.  Long,  85  Ind.  .549  (1882); 
Pearce  v.  Dill.  149  Ind.  136,  48  N.  E.  788  (1897);  Robinson  v.  Woodward,  48 
S.  W.  1082,  20  Kv.  Law  Rep.  1142  (1899);  Englar  v.  Offutt,  70  Md.  78,  16 
Atl.  497.  14  Am.  St.  Rep.  .3.32  (1889) ;  Little  v.  Cliadwick,  151  Mass.  109,  23 
N.  E.  1005,  7  L.  R.  A.  570  (1890)  ;  Bishop  v.  Mahoney,  70  Minn.  238,  73  N. 
W.  6  (1897)  ;  Twohv  Mercantile  Co.  v.  Melbye,  78  Minn.  357,  81  N.  W.  20 
(1899) ;  Shields  v.  Thomas,  71  Miss.  260,  14  South.  84,  42  Am.  St.  Rep.  458 
(1892);  City  of  Lincoln  v.  Morrison,  (54  Neb.  822,  90  N.  W.  905,  57  L.  R.  A. 
885  (1902);  Perth  Anibov  Light  Co.  v.  Middlesex  County  Bank,  60  N.  J.  Eq. 
84,  45  Atl.  704  (1900) ;  Ellicott  v.  Kuhl,  60  N.  J.  Eq.  333,  46  Atl.  945  (1900) ; 
O'Callaghan's  Case,  64  N.  J.  Kq.  2.S7,  51  Atl.  64  (1902);  Matter  of  Cavin  v. 
Gleason,  105  N.  Y.  256,  11  N.  E.  504  (1887)  ;  Atkinson  v.  Rochester  Printing 
Co.,  114  N.  Y.  168,  21  N.  E.  178  (1889) ;  Matter  of  North  River  Bank,  60  Hun, 
91,  14  N.  Y.  Supp.  2()1  (1891) ;  People  v.  American  Loan  &  Trust  Co.,  2  App. 
Div.  193,  37  N.  Y.  Supp.  780  (1896);  Cole  v.  Cole,  54  App.  Div.  37,  66  N.  Y. 
Supp.  314  (1900) ;  Matter  of  Hicks,  170  N.  Y.  195,  63  N.  E.  276  (1902) ;  North 
Dakota  Elev.  Co.  v.  Clark,  3  N.  D.  26,  .53  N.  W.  175  (1892);  Ferchen  v. 
Arndt  26  Or.  121,  37  Pac.  161,  29  L.  R.  A.  664.  46  Am.  St.  Rep.  603  (1894) ; 
Muhlenberg  v.  Loan  &  I'rust  Co.,  26  Or.  132,  38  Pac.  932,  29  L.  R.  A.  667 
(18;>4);  Re  Assignment  liank  of  Oregon,  .32  Or.  84,  51  Pac.  87  (1897);  Frei- 
berg V.  Stoddard,  161  I'a.  2.59,  28  Atl.  1111  (1894)  ;  Bank's  Assigned  Estate, 
166  Pa.  622.  31  Atl.  .334  (189.5) ;  Slater  v.  Oriental  Mills,  18  It.  I.  352,  27 
Atl.  443  (1893) ;  Arbuckle  Bros.  v.  Kirkpatrick,  98  Tenn.  221,  39  S.  W.  3,  36 
L.  R.  A.  285,  60  Am.  St.  Rep.  8.54  (1896);  Nonotuck  Silk  Co.  v.  Flanders,  87 
Wis.  237,  58  N.  W.  383  (1894)  ;  Burnham  v.  P.arth,  89  Wis.  362,  62  N.  W.  96 
(189.5);  Thuemmler  v.  Barth,  89  Wis.  381,  62  N.  W.  94  (1895);  ITenika  v. 
Ileinemann,  90  Wis.  478,  63  N.  AV.  1047  (189.5)  ;  Gianella  v.  Momsen,  90  Wis. 
47(),  63  N.  W.  1018  (189,5);  Stevens  v.  Williams.  91  Wis.  58,  64  N.  W.  422 
(1895);  Dowle  v.  Humphrey,  91  Wis.  98,  04  N.  W.  315  (1895);  Hyland  v.  Roe, 
111  Wis.  361,  87  N.  W.  2.52,  87  Am.  St.  Rep.  873  (1901) ;  State  v.  Foster,  5 
Wyo.  199,  38  Pac.  926,  29  L.  R.  A.  226,  63  Am.  St.  Rep.  47  (1895). 


Ch.  7)       CONSTUUCTIVE   TUUSTS   AND   THE   STATUTE   OF   FRAUDS.  577 

CHAPTER  VII. 
CONSTRUCTIVE  TRUSTS  AND  THE  STATUTE  OF  FRAUDS. 


BURT  ct  al.  V.  BOWLES  et  al. 
(Supreme  Court  of  Indiana,  1S79.     CO  Ind.  1.) 

From  the  Orange  Circuit  Court. 

BiDDLK,  J.'  Complaint  in  four  paragraphs  by  the  appellants  against 
the  appellees.  The  substantial  facts  averred  in  the  first  paragraph 
are  as  follows : 

That  the  plaintiffs  were  possessed  in  their  own  right  of  a  consider- 
able estate  in  moneys ;  that  the  defendant,  Julia  Bowles  is  the  widow 
of  William  A.  Bowles,  deceased,  and  the  said  defendants  William  A. 
Dill  and  Mary  Mac.  Dill  are  the  grandchildren  and  heirs-at-law  of 
William  A.  Bowles;  that  said  Bowles  became  the  guardian  of  the 
persons  and  property  of  the  plaintiffs,  and  became  possessed  of  the 
property,  as  such  guardian,  during  their  minority,  and,  after  their  ma- 
jority, as  their  friend  and  agent,  had  the  control  and  management  there- 
of until  his  death,  on  the  28th  of  March,  1873;  that,  by  the  death  of 
an  aunt,  Evaline  Burt,  the  plaintiffs  became  possessed  of  an  additional 
estate  of  great  value;  that  said  Evaline,  in  contemplation  of  death,  and 
reposing  great  faith,  confidence  and  trust  in  said  Bowles,  who  pretended 
great  interest  and  friendship  for  the  plaintiffs,  and  who  was  reputed  a 
man  of  great  wisdom,  financial  skill  and  acumen,  committed  to  his 
charge  the  custody,  care  and  control  of  the  plaintiffs  and  their  inter- 
est in  her  said  estate,  enjoining  upon  these  plaintiffs,  who  were  then 
of  full  age,  that  they  should  allow  the  said  Bowles  to  control  their 
said  affairs,  which,  in  deference  to  the  wish  of  their  dying  relation, 
they  agreed  to  do,  themselves  believing  that  he  was,  and  would  con- 
tinue to  be,  their  friend  and  faithful  adviser;  that  said  Bowles  ac- 
cepted said  trust,  and  promised  the  said  Evaline  and  these  plaintiffs 
that  he  would  guard  and  protect  their  interest  and  manage  their  af- 
fairs ;  that  certain  lands,  the  title  to  which  was  then  in  the  said  Bowles, 
but  the  inn-chase  money  of  which  was  paid  out  of  the  moneys  belonging 
.  to  the  plaintiffs,  should  be  conveyed  to  the  plaintiffs,  and  improved  for 
their  future  home ;  that  said  Bowles  did  convey  to  the  plaintiffs,  as  ten- 
ants in  common,  in  the  year  1867,  the  said  lands,  to  wit:  (Here  the 
lands  are  described) ;  that,  in  the  year  1868,  the  said  Bowles,  pretending 
great  affection  for  the  plaintiffs,  and  being  involved  in  domestic  trou- 
bles, and  being  old,  and  plaintiffs  feeling  a  great  regard  for  him,  in- 

1  A  part  of  the  opinion  is  omitted. 
Ken.Tk.— 37 


578      CONSTRUCTIVE  TRUSTS  AND  THE  STATUTE  OF  FRAUDS.   (Ch.  7 

duced  the  plaintififs  to  move  upon  said  lands,  and  did  thereafter  for  a 
period  of  years  furnish  him  a  home,  nursing  and  caring-  for  hnn  in 
sickness  and  in  health;  that  said  Bowles,  with  the  money  and  means 
of  the  plaintiffs,  made  valuable  and  lasting  improvements  on  the  said 
land,  at  the  cost  of  five  thousand  dollars ;  that,  in  the  year  1868,  the 
then  wife  of  Bowles,  from  whom  he  had  separated,  in  an  action  for 
divorce,  obtained  a  decree  for  alimony  in  the  amount  of  twenty-five 
thousand  dollars,  which,  being  still  unpaid,  amounts  in  the  aggregate 
to  the  sum  of  thirty-five  thoiisand  dollars ;  that  by  reason  of  said  de- 
cree, and  other  judgments,  he  became  and  was  greatly  embarrassed 
financially,  during  all  which  time  he  continued  to  act  as  agent  of  the 
plaintiffs,  and  manager  of  their  moneys  and  estate— the  plaintiffs  being 
ignorant  of  these  facts— he  falsely  and  fraudulently  pretending  to  be 
able  to  pay  off  all  said  liens  upon  his  land,  and  account  to  them;  that 
having  the  full  confidence  of  the  plaintiffs,   and  knowing  that  they 
were  ignorant  of  his  financial  condition,  and  intending  to  cheat  them, 
as  hereinafter  set  forth,  he  entered  into  a  matrimonial  alliance  with  the 
said  Julia ;  that  immediately  after  his  marriage  with  Juha,  they  began 
to  conspire  together  to  cheat,  wrong  and  rob  the  plaintiffs  of  their 
moneys  and  lands ;  that,  pretending  to  set  their  hearts  upon  said  lands 
and  house  of  plaintiffs  for  a  home  for  themselves,  the  said  Bowles, 
with  the  connivance  and  procurement  of  said  Julia,  did,  on  the  8th  day 
of  July,  1872,  and  in  divers  times  thereafter,  represent  to  the  plain- 
tiffs that  he  was  old,  that  said  land  and  house  suited  him,  that  he  had 
other  lands  which  would  better  suit  them,  and  that,  in  view  of  his 
kindness  to  them,  they  ought  to  convey  to  him  their  said  house  and 
place  heretofore  mentioned,  and  fraudulently  represented  to  them  that, 
if  they  would  do  so,  he  would,  with  his  said  wife,  convey  to  Rachel 
Burt,  for  her  interest  therein,  certain  lands  described,  by  a  deed  of  war- 
ranty, and  that,  before  doing  so,  he  would  discharge  said  lands  of  all 
liens  and  incumbrances,  so  that  the  plaintiffs  should  have  a  good  title 
thereto;  that,   still   confiding  in   said    Bowles,   and   believing  that   he 
could  and  would  do  as  he  promised,  they  did,  on  the  3d  day  of  July, 
1872,  convey,  by  deed  of  warranty,  to  the  said  Bowles,  the  said  lands 
hereinbefore  first  described,  which  were  wholly  unincumbered  and  of 
the  value  of  ten  thousand  dollars,  and  that  they  put  said  Bowles  and 
said  Julia  in  possession  thereof ;  that,  at  the  time  the  said  Bowles  and 
Julia  well  knew  that  said  Bowles  could  not  and  did  not  intend  to  dis- 
charge said  lands  of  their  liens,  which  were  greater  than  the  value  of 
the  lands  ;  that  said  Bowles  knew  that  these  plaintiffs  were  ignorant  of 
the  fact  that  without  a  writing  the  said  promise  to  convey  by  the  said 
Bowles  could  not  be  enforced,  and  that  they  were  ignorant  that  the  said 
Julia  could  not  be  compelled  to  join  in  said  conveyance,  which  facts  he 
suppressed  and  kept  from  them,  though  he  well  knew  that  they  relied 
upon  him  for  the  protection  of  their  rights  and  interests  ;  that,  at  the 
time,  said  Bowles  well  knew  these  facts,  and  that  said  Julia  would  not 
and  did  not  intend  to  join  in  making  said  conveyance  to  said  plaintiffs. 


Ch.  7)       CONSTRUCTIVE   TRUSTS   AND   THE   STATUTE   OF   FRAUDS,  570 

and  well  knew  that  he  was  not  able  and  could  not  and  did  not  intend 
to  discharge  said  liens  nor  make  such  conveyance,  but  so  fraudulently 
pretended  and  represented,  to  cheat  and  wrongs  these  plaintiffs;  that 
Bowles  never  paid  any  part  of  said  liens,  but  afterwards  died,  at  the 
date  before  stated,  intestate,  leaving  Julia  his  widow,  and  these  plain- 
tiffs his  grandchildren,  and  sole  heirs  at  law,  as  aforesaid;  that  the 
assets  of  his  estate  are  not  sufficient  to  pay  off  said  liens  on  said  lands, 
and  there  is  no  person  of  whom  they  can  obtain  title  thereto.  Prayer 
that  this  conveyance  to  Bowles  be  set  aside,  cancelled  and  held  for 
naught,  and  that  the  title  to  said  lands  be  quieted  and  the  possession 
thereof  given  to  them  and  for  damages  in  one  thousand  dollars. 

The  second  paragraph  of  the  complaint  is  not  substantially  dif- 
ferent from  the  first ;  but  the  averments  are  not  as  fully  made,  and 
it  prays  for  a  rescission  of  the  contract,  for  the  recovery  of  rents,  and 
that  the  title  may  be  quieted  in  the  plaintiffs,  etc. 

The  third  paragraph  of  the  complaint  is  in  the  following  words : 

"And,  for  a  further  and  third  paragraph  herein,  said  plaintiffs  say 
that  they  are  the  owners  by  complete  equitable  title,  and  entitled  to  the 
possession,  of  a  tract  of  land,  to  wit :  The  west  half  of  the  north-east 
quarter  of  section  3,  in  township  1  north,  of  range  2  west,  lying  and 
being  in  said  county  and  State ;  and  that  defendants  now  hold  pos- 
session of  the  land  without  right,  and  for  three  years  last  past  have 
unlawfully  kept  plaintiffs  out  of  possession  of  the  same.  Wherefore 
they  demand  judgment  for  the  recovery  of  the  land  and  the  legal 
title  thereto,  and  two  thousand  dollars  for  being  kept  out  of  the  pos- 
session, and  for  other  proper  relief." 

The  fourth  paragraph  of  the  complaint  contains  a  brief  and  imper- 
fect statement  of  the  facts  averred  in  the  first,  with  a  similar  prayer. 

A  separate  demurrer,  alleging  a  want  of  sufficient  facts  to  constitute 
a  cause  of  action,  was  sustained  to  each  paragraph  of  the  complaint, 
upon  which,  the  plaintiffs  refusing  to  amend,  the  court  rendered  judg- 
ment for  the  defendants. 

These  rulings  are  assigned  as  error  in  this  court,  and  present  the 
only  questions  reserved  in  the  record  for  our  consideration. 

The  appellants  have  presented  us  with  a  careful  and  elaborate  brief, 
but  the  appellees  have  not  favored  us  with  any  argument. 

It  will  be  observed,  upon  the  face  of  this  complaint,  that  the  repre- 
sentations alleged  to  be  false  are  not  concerning  facts  existing  at  the 
time  they  were  made,  except  as  to  the  fact  of  the  great  confidence  the 
plaintiff's  reposed  in  \\"illiam  A.  Bowles.  The  representations  touching 
the  alleged  exchange  of  lands  which  Bowles  sought  to  effect  were, 
that  he  would  pay  off  the  incumbrances  on  the  lands  which  he  proposed 
to  convey  to  the  plaintiffs  in  exchange  for  the  lands  which  the  plaintiff's 
conveyed  to  him.  and  he  would  convey  the  said  lands  to  the  plaintiffs, 
and  that  his  wife,  Julia,  should  join  in  the  deed.  These  representations 
are  not  of  facts  existing  at  the  time  he  is  alleged  to  have  made  them, 
but  were  promises  to  be  performed  at  a  future  time.     It  is  well  set- 


580  CONSTRUCTIVE   TRUSTS   AND   THE   STATUTE   OF   FRAUDS.       (Cll.  7 

tied  that  representations,  to  be  fraudulent,  must  be  made  concerning 
existing  facts,  and  that  promises  made  to  be  performed  in  the  future, 
though  fraudulently  made  and  afterward  broken,  do  not  constitute 
fraud.  The  authorities  upon  this  point  are  numerous.  We  cite  some 
of  the  latest.  Fouty  v.  Fouty,  34  Ind.  433 ;  President  and  Trustees 
of  Hartsville  University  v.  Hamilton,*  34  Ind.  506 ;  Bacon  v.  Markley, 
46  Ind.  116;  Jagers  v.  Jagers,  49  Ind.  428;  Welshbillig  v.  Dicnhart, 
65  Ind.  94. 

The  other  false  representations,  or  rather  suppressions  of  the  truth, 
are  that  Bowles  suppressed  and  kept  from  the  plaintiffs  the  fact,  wdiich 
he  well  knew,  that  his  promise  to  convey  the  lands  which  he  agreed  to 
give  the  plaintiffs  in  exchange  for  the  land  conveyed  to  him  by  them 
could  not  be  enforced  unless  it  was  made  in  writing,  and  that  his  wife 
Julia  could  not  be  compelled  to  join  her  husband  in  the  conveyance  of 
them,  which  fact  Bowles  also  well  knew  and  concealed  from  the  plain- 
tiffs. These  facts  are  concerning  the  law,  upon  which  fraud  cannot 
be  predicated,  however  false  and  fraudulent  they  may  be,  and  whether 
they  are  suppressions  of  truth  or  representations  of  falsehood.  Every 
I)erson  is  bound  to  know  the  law,  and  not  to  be  deceived  by  its  suppres- 
sion or  false  representation.  This  is  a  necessary  maxim,  lying  at  the 
foundation  of  government  and  jurisprudence,  and  without  which  nei- 
ther government  nor  jurisprudence  could  exist  as  a  system. 

If  the  alleged  representations  of  Bowles  had  been  made  affirmatively, 
that  his  promise  to  convey  the  lands  could  be  enforced  without  being 
in  writing,  and  that  his  wife,  Julia,  could  be  compelled  by  law  to  join 
him  in  the  conveyance,  however  fraudulently  made,  they  would  not 
amount  to  a  legal  fraud.  Piatt  v.  Scott,  6  Blackf.  389,  39  Am.  Dec. 
436;  Mears  v.  Graham,  8  Blackf.  144;  Dickerson  v.  Board  of  Commis- 
sioners of  Ripley  County,  6  Ind.  128,  63  Am.  Dec.  373;  Clem  v.  New- 
castle &  Danville  Railroad  Co.,  9  Ind.  488,  68  Am.  Dec.  653;  Reed  v. 
Sidener,  32  Ind.  373;  Boland  v.  Whitman,  33  Ind.  64;  President,  etc., 
of  Hartsville  University  v.  Hamilton,  34  Ind.  506;  Smither  v.  Calvert, 
44  Ind.  242;  City  of  Lafayette  v.  State  ex  rel.  Jenks,  69  Ind.  218. 

But,  because  there  was  no  legal  fraud  committed  on  the  appellants 
by  Bowles,  and  because  the  statute  of  frautls  stands  in  the  way  of 
the  enforcement  of  the  contract  against  Bowles,  it  does  not  follow  that 
the  facts  stated  in  the  first  paragraph  do  not  constitute  a  cause  of 
action.  It  is  a  familiar  principle  that  money  paid,  or  personal  property 
delivered,  or  real  estate  conveyed,  under  a  void  contract  or  a  contract 
which  cannot  be  enforced,  may  be  recovered  back  or  compensation  re- 
covered therefor.  In  the  case  before  us,  as  the  alleged  express  con- 
tract of  Bowles  cannot  be  enforced,  the  implied  contract  arises  at  once 
that  he  will  return  the  property  obtained  under  it,  or  render  compen- 
sation therefor ;  and  we  do  not  see  why  the  contract  may  not  be  re- 
scinded as  between  the  representatives  of  Bowles  and  the  appellants, 
unless  other  rights  have  intervened  to  prevent  a  rescission.  As,  by  the 
allegations,  the  appellants  received  nothing  under  the  contract,  they 


Ch.  7)       CONSTRUCTIVE  TRUSTS   AND   THE   STATUTE   OF   FRAUDS.  581 

have  nothing-  to  restore  before  asking-  a  rescission.  And,  as  between 
the  parties,  they  can  be  placed  in  statu  quo." 

We  think  the  demurrer  to  the  first  paragraph  should  have  been 
over-ruled.     *     *     * 

The  judgment  is  reversed,  at  the  costs  of  the  appellees,  and  the 
cause  remanded  with  instructions  to  over-rule  the  demurrers  to  the 
complaint,  and  for  further  proceedings. - 


HAIGH  V.  KAYE. 

(Court  of  Appeal  in  Chancery,  3872.     Law  Reports  7  Chancery  Appeal  Cases, 

4G9.) 

This  was  an  appeal  from  a  decree  of  the  Master  of  the  Rolls. 

On  the  8th  of  December,  1860,  the  plaintifif,  G.  A.  Haigh,  conveyed 
a  freehold  estate,  called  the  Thorncliffe  estate  to  the  defendant,  Robert 
Kaye,  in  consideration  of  the  sum  of  £850. 

Although  that  sum  was  expressed  in  the  deed  to  be  paid  by  the  de- 
fendant to  the  plaintifif,  the  money  was  in  fact  the  plaintifif's  money, 
and  he  handed  it  to  the  defendant  in  order  that  it  might  be  repaid  as 
the  nominal  consideration  for  the  conveyance.  Under  these  circum- 
stances the  plaintifif  alleged  that  the  estate  was  conveyed  to  the  de- 
fendant as  a  trustee  for  him. 

On  the  23rd  of  November,  1867,  disputes  having  arisen  between 
the  plaintifif  and  defendant,  an  agreement  was  signed  by  them  to  refer 
all  matters  in  dispute  respecting  the  transfer  of  the  Thornclifife  estate 
and  other  money  transactions  to  arbitration ;  but  the  defendant  subse- 
quently withdrew  from  the  arbitration  and  no  award  was  made. 

The  plaintifif  having  applied  to  the  defendant  to  re-convey  the  es- 
tate, and  the  defendant  having  refused,  the  plaintifif  filed  his  bill  pray- 
ing that  the  defendant  might  be  declared  to  be  a  trustee  for  the  plain- 
tifif of  the  Thorncliffe  estate,  and  might  be  directed  to  convey  it  to  him. 

Defendant  in  his  answer  said  as  follows : 

"Near  the  end  of  the  year  1860  the  plaintifif.  who  is  my  brother-in- 
law,  being  a  party  to  the  suit  of  Haigh  v.  Haigh.  then  pending  in  this 
Honorable  Court,  and  fearing  an  adverse  decision  in  such  suit,  made 
overtures  to  me  for  the  sale  of  the  said  estate ;  but  I  was  unable  at  that 
time  to  withdraw  from  my  business  the  money  required  to  pay  for 
the  purchase  thereof.  The  plaintifif  had  previously,  as  I  believe,  at- 
tempted to  sell  the  said  estate  to  another  person,  who,  however,  de- 
clined to  give  more  than  £600.  for  it.  The  plaintifif  then,  being  de- 
sirous to  sell  the  said  estate  for  the  reasons  above  referred  to,  and 
being  also  desirous  that  I  should  purchase  such  estate,  and  that  the 

2  Raniey  v.  Slone,  C,2  S.  W.  879,  23  Ky.  Law  Rep.  301  (1901) ;  Dickerson  v. 
Mays,  60  Miss.  388  (1SS2),  supra,  p.  14. 


582     CONSTRUCTIVK  TRUSTS  AND  THE  STATUTE  OF  FRAUDS.   (Ch.  7 

same  should  be  vested  in  nie  (but  not,  save  as  aijpears  by  this  my  an- 
swer to  the  statements  contained  in  other  parts  of  it  to  which  I  refer, 
as  trustee  for  the  phiintiff),  inchiced  me  to  take  a  conveyance  thereof, 
it  being  understood  that  I  should  account  to  the  plaintiff  for  the  rents 
and  profits  until  such  time  as  I  could  make  arrangements  for  purchas- 
ing or  paying  the  purchase  money  for  the  property;  and,  in  fact,  by 
a  deed  bearing  date  about  the  8th  day  of  December,  and  in  considera- 
tion of  the  sum  of  £850.  therein  expressed  to  have  been  paid  by  me 
to  the  plaintiff,  the  plaintiff  did  convey  the  said  estate  to  me,  my  heirs 
and  assigns.  *  *  *  I  admit  that  it  was  intended  that  I  should  con- 
vey the  estate  to  the  plaintiff  when  he  should  desire  me  to  do  so,  un- 
less arrangements  were  com]-)leted  for  the  purchase  or  payment  of  the 
purchase  money  by  me,  and  that  in  the  meantime  I  should,  imtil  such 
arrangements  were  finally  made,  account  to  the  plaintiff  for  the  rents 
and  profits  of  the  property." 

The  defendant  also  stated  as  follows: 

"The  rents  and  profits  of  the  said  Thorncliffe  estate  have  been  re- 
ceived by  me  since  the  date  of  the  said  conveyance,  and  I  have  ac- 
counted to  the  plaintiff  for  the  same,  or  at  all  events  for  the  amount 
thereof  ui)  to  the  3rd  of  February,  1863,  when  the  arrangements  for 
purchasing  the  property  and  paying  the  purchase  money  therefor  were 
finally  settled." 

The  defendant  also  alleged  that  he  had  expended  several  hundred 
pounds  of  his  own  money  on  repairs  and  improvements  on  the  prop- 
erty. He  now  claimed  to  hold  the  estate  as  his  own,  discharged  from 
any  trust  for  the  plaintiff;  and  he  claimed  the  benefit  of  the  Statute 
of  Frauds. 

In  his  affidavit  in  su]:)port  of  his  case  the  defendant  said:  "On  the 
3rd  of  February,  1863,  the  arrangement  for  my  purchasing  the  Tliorn- 
clifife  estate  was  completed  by  my  agreeing  to  pay,  and  by  the  plaintiff 
agreeing  to  accept,  the  sum  of  £800.  for  such  estate.  It  was  arranged 
between  us  that  this  sum  should  be  paid  by  instalments,  as  I  could 
spare  the  money  from  my  business.  I  paid  the  full  amount  of  such 
purchase  money  by  instalments,  between  the  11th  of  February,  1863, 
and  the  29th  of  January,  1867.  I  also  paid  divers  sums  of  money  to 
various  persons  by  the  order  and  direction  of  the  plaintiff;  and  for 
other  moneys  due  to  me  on  the  settlement  of  account  with  the  plain- 
tifif  I  take  credit." 

The  Master  of  the  Rolls  declared  that  the  defendant  was  a  trustee 
of  the  ThornclifTe  estate  for  the  plaintiff,  and  ordered  an  inquiry  what 
sums  had  been  received  by  the  defendant  on  account  of  the  rents  and 
profits,  and  of  his  application  thereof,  and  also  what  sums  had  been 
properly  expended  by  him  in  permanent  improvements  on  the  estate, 
or  in  the  management  thereof,  and  declared  that  the  defendant  had  a 
charge  on  the  estate  for  the  amount  (if  any)  which  was  due  to  him; 
and  he  ordered  that,  without  ])rejudice  to  the  lien,  the  defendant 
should  convey  the  estate  to  the  plaintiff. 


Ch.  7)       CONSTRUCTIVE   TRUSTS   AND   THE   STATUTE   OF   FRAUDS.  583 

The  defendant  appealed  from  this  decree.  After  the  institution 
of  the  suit  the  plaintiff,  G.  A.  Haigh,  died,  and  the  suit  was  revived  by 
his  son,  the  present  plaintiff. 

Sir  Wm.  James,  L.  J.  I  am  of  opinion  that  the  decree  of  the  Mas- 
ter of  the  Rolls  must  stand. 

The  defendant  admits  that  there  was  a  conveyance  given  to  him 
purporting  to  be  executed  in  consideration  of  £850.  paid  by  him  to 
the  original  plaintiff,  G.  A.  Haigh,  by  which  he  became,  by  purchase, 
owner  of  the  estate.  He  admits  that  there  was  no  such  transaction 
in  fact  as  any  sale  to  him,  but  that  the  payment  of  the  £850.  was  a 
mere  form,  and  that  the  plaintiff  paid  the  expenses  of  the  conveyance 
to  him,  or  gave  him  the  money  to  pay  them.  That  being  so,  he  goes 
on  to  admit  that  he  was  to  hold  the  estate  upon  trust  to  pay  the  rents 
and  profits  to  the  plaintiff'  and  when  the  plaintiff  called  upon  him  for  a 
re-conveyance  he  was  to  re-convey  it.  The  plaintiff  has  called  upon 
him  to  re-convey  the  estate,  and  he  suggests  by  way  of  answer  to  that, 
first  of  all  vaguely  and  faintly,  that  this  transaction  was  not  altogether 
a  straightforward  transaction;  that  this  transaction  w^as  entered  into 
with  a  view  to  defraud  somebody  else.  The  defendant  says  in  ef- 
fect, "I  am  to  remain  in  possession  of  the  estate,  because  we  were 
both  of  us  engaged  in  a  transaction  contrary  to  the  law^  and  you  will 
not  take  it  away  from  me  to  give  it  to  a  man  who  was  as  bad  as  I  was 
in  the  matter;  in  fact  it  was  an  illegal  and  fraudulent  transaction 
against  somebody  else,  and  where  there  is  an  equal  crime  the  court 
ought  to  hold  that  in  pari  delicto  melior  est  conditio  possidentis." 
However  the  defendant  has  not  raised  that  defense  in  the  way  in 
which,  according  to  my  judgment,  such  a  defense  ought  to  be  raised. 
H  the  defendant  means  to  say  that  he  claims  to  hold  property  given  to 
him  for  an  immoral  purpose,  in  violation  of  all  honor  and  honesty, 
he  must  say  so  in  plain  terms,  and  must  clearly  put  forth  his  own 
scoundrelism  if  he  means  to  reap  the  benefit  of  it.  Here  he  has  simply 
said  that  the  plaintiff,  fearing  an  adverse  decision  in  the  suit  of  Haigh 
V.  Haigh,  conveyed  the  property  to  him.  I  think  that  is  not  suffi- 
cient. 

The  next  objection  taken  was  upon  the  Statute  of  Frauds.  The  de- 
fendant admits  that  he  took  the  estate  upon  the  most  positive  agree- 
ment to  return  it;  but  in  another  part  of  his  answer  he  sets  up  the 
Statute  of  Frauds,  and  claims  the  estate  as  a  right.  Now  the  Statute 
of  Frauds  no  doubt  says,  that  a  person  claiming  under  any  declaration 
of  trust  or  confidence  must  show  that  in  writing;  but  the  statute  goes 
on  to  say  that  no  resulting  trust,  and  no  trust  arising  from  operation 
of  law,  is  within  that  enactment.  I  apprehend  that  it  is  clear  that  the 
Statute  of  Frauds  was  never  intended  to  prevent  the  court  of  equity 
from  giving  relief  in  a  case  of  a  plain,  clear  and  deliberate  fraud. 
The  words  of  Lord  Justice  Turner,  in  the  case  of  Lincoln  v.  Wright 
[4  De  G.  &  J.  16],  where  he  said,  "The  principle  of  this  court  is  that 
the  Statute  of  Frauds  was  not  made  to  cover  fraud,"  express  a  prin- 


584  CONSTUUCTIVE   TRUSTS   AND   TIIK   STATUTE   OF   FRAUDS.       (Ch.  7 

ciple  upon  which  this  court  has  acted  in  numerous  instances,  where  the 
court  has  refused  to  allow  a  man  to  take  advantage  of  the  Statute  of 
Frauds  to  keep  another  man's  jM-operlv  which  he  has  obtained  through 
fraud.  It  is  difficult  to  distinguish  this  case  from  that  of  Childers 
V.  Childers  [1  De  G.  &  J.  482j.  It  is  consistent  entirely  with  Davies 
V.  Otty  \35  r>ca.v.  208],  which  does  not  seem  to  me  to  carry  the  mat- 
ter at  all  further  than  the  decision  of  Lord  Justice  Turner  in  Lincoln 
V.  Wright,  where  the  Statute  of  Frauds  was  attempted  to  be  set  up  in 
the  same  way  by  a  man  who  claimed  to  take  under  an  absolute  con- 
veyance instead  of  a  mortgage. 

That  being  so,  the  Statute  of  Frauds  and  the  ground  of  supposed 
illegality  of  the  whole  transaction  being  set  aside,  the  defendant  comes 
into  possession  of  this  property  as  a  trustee  for  the  plaintiff.  Then  he 
says  that  although  he  was  made  a  trustee  there  was  a  talk  about  his 
being  the  purchaser.  He  does  not  pretend  to  say  that  at  that  time 
there  was  any  bargain,  but  he  says  that  it  was  understood,  before  he 
was  called  upon  to  re-convey  the  property,  that  if  he  could  make  an 
arrangement  to  purchase  it  he  was  to  have  it. 

[His  Lordship  then  referred  to  the  statements  in  the  defendant's 
answer,  and  to  the  evidence  on  this  subject,  and  continued:] 

There  is  no  direct  evidence  in  writing  in  support  of  the  defendant's 
contention,  and  it  appears  to  me  that  the  correspondence  which  passed 
between  the  plaintiff  and  defendant  with  reference  to  the  arbitration 
is  inconsistent  with  the  existence  of  any  such  agreement.  I  am  of 
opinion  that  defendant  has  failed  to  prove  his  case,  and  therefore 
that  the  decree  is  quite  right  in  declaring  that  he  is  to  be  treated  as  a 
trustee  of  the  property,  and  must  re-convey  it  to  the  representatives 
of  the  original  plaintiff. 

Sir  G.  MuLLisii,  L.  J.     I  am  of  the  same  opinion.* 


FAIRCHILD  V.  RASDALL. 

(Supreme  Court  of  Wisconsin.  IS.IO.     9  Wis.  379.) 

By  the  Court,  Paine,  J.*  This  suit  was  brought  by  the  plaintiffs 
as  administrator  and  administratrix  of  the  estate  of  Abel  Rasdall,  de- 
ceased, to  enjoin  the  defendant  from  proceeding  in  a  suit  to  recover 
possession  of  certain  real  estate  in  the  city  of  Madison,  and  to  compel 
a   conveyance   by  him  to  the  plaintiffs.     The  grounds  set   forth  for 

M)avios  V.  otty,  .'',.">  Reav.  20S  (ISGr)) ;  Booth  v.  Tonrle,  L.  R.  10  Eq.  182 
(lS7o)  ;  Davis  v.  Whitehead,  L.  R.  2  Ch.  i;!;{  (1S94)  ;  Rochefoncauld  v.  Bou- 
stead,  L.  R.  (1S97)  1  Ch.  390  (1890);  Clarke  v.  Eby,  VA  Grant's  Chy.  Rep. 
(Upper  Canada)  .'571  (1867);  Catalini  v.  Catalani,  124  Ind.  54,  24  N.  E.  375, 
19  Am.  St.  Rep.  73  (1889)  ;  Ryan  v.  O'Connor,  41  Ohio  St.  308  (1884) ;  Pea- 
cock V.  Nelson,  50  Mo.  250  (1872). 

*The  statement  of  facts  and  part  of  the  opinion  are  omitted. 


Ch.  7)       CONSTRUCTIVE  TRUSTS  AND   THE   STATUTE   OF   FRAUDS.  585 

relief  are  that  the  plaintiffs'  intestate,  having  in  a  personal  encounter 
in  1843,  dangerously  wounded  a  man  named  Smith,  and  being  appre- 
hensive of  arrest  and  prosecution,  and  desirous  to  so  arrange  his  af- 
fairs that  he  might  escape  from  the  country,  conveyed  the  property  in 
question  to  the  defendant,  who  was  his  brother ;  and  that  although  the 
deed  was  absolute  on  its  face,  and  purported  to  be  for  the  sum  of 
$2,000,  yet  that  it  was  without  consideration,  and  that  the  defendant 
agreed  to  hold  the  property  in  trust,  for  the  use  and  benefit  of  the 
deceased  and  his  heirs.     *     *     * 

We  have  no  doubt,  from  the  evidence  presented,  that  the  convey- 
ance was  made  by  the  deceased  under  the  circumstances,  and  with  the 
understanding  set  forth  in  the  bill,  though  this  is  denied  by  the  answer. 
And  were  this  evidence  proper  to  be  received,  it  would  fully  sustain 
the  decision  of  the  court  below.  But  it  was  parol  evidence,  it  was  all 
objected  to  by  the  defendant's  counsel,  and  the  objection  is  fatal. 

It  is  one  of  those  cases  where  the  real  merits  and  justice  of  the 
matter  create  a  strong  desire  to  escape  from  the  application  of  the 
stern  rule  of  law,  which  prohibits  an  inquiry  by  means  of  parol  evi- 
dence. But  the  barrier  is  too  strong  to  be  broken  over ;  and  while  it 
restrains  us,  furnishes  its  own  justification  in  the  fact,  that  though, 
in  individual  instances  like  the  present,  it  may  work  hardship,  yet  in 
the  main  it  promotes  private  security  and  the  general  good. 

We  do  not  feel  called  upon  to  cite  authorities,  to  show  that  in  the 
absence  of  fraud,  accident,  or  mistake,  parol  evidence  cannot  be  re- 
ceived to  prove  that  a  deed,  absolute  on  its  face,  was  given  in  trust 
for  the  benefit  of  the  grantor ;  and  we  have  not  been  able  to  find  any- 
thing in  this  case  to  make  it  an  exception.  We  cannot  see  why,  if 
this  evidence  is  to  be  received  to  establish  this  trust,  every  other  deed 
in  the  state  cannot  be  shown  by  parol  to  have  been  given  on  trust,  and 
the  statute  of  frauds  be  entirely  annulled. 

But  the  counsel  for  the  complainants,  seeming  conscious  of  the  dif- 
ficulty of  sustaining  the  admissibility  of  this  evidence  for  the  purpose 
of  establishing  the  trust,  yet  contended  that  though  inadmissible  for 
that  purpose  directly,  it  should  be  admitted,  and  relief  granted,  on 
the  ground  of  fraud.  This  presents  a  question  of  very  great  im- 
portance, and  in  view  of  the  authorities  on  the  subject,  of  no  little  dif- 
ficulty. There  is  no  doubt  that  if  any  fraud  had  been  alleged,  by 
means  of  which  the  defendant  procured  the  conveyance  from  his 
brother  to  himself,  or  any  mistake,  by  which  the  instrument  was  made 
absolute,  instead  of  expressing  the  trust  intended,  parol  evidence  would 
have  been  admissible  to  show  such  fraud  or  mistake.  This  convey- 
ance would  thus  stand  upon  the  same  footing  with  all  other  contracts, 
and  come  within  the  conceded  power  of  courts  of  equity  to  inquire, 
by  parol  evidence,  into  frauds  or  mistakes  in  their  procurement  or  ex- 
ecution. 

But  no  such  fraud  or  mistake  is  alleged  here.  On  the  contrary,  it 
appears  from  the  whole  tenor  of  the  complaint,  that  the  conveyance 


586  CONSTRUCTIVE   TRUSTS   AND   THE   STATUTE   OF   FRAUDS.       (Cll.  7 

was  made  by  Abel  Rasdall  upon  his  own  motion,  and  w^ithout  any 
solicitation  or  instigation  of  the  defendant,  and  that  it  was  intended 
to  be,  as  it  is,  absolute  on  its  face. 

The  only  fraud  alleged,  therefore,  is  that  of  the  defendant's  now 
claiming-  the  property  in  violation  of  the  parol  trust,  and  whether 
that  constitutes  such  a  fraud,  as  will  justify  a  court  of  equity  in  over- 
turning the  written  contract  of  the  parties,  upon  parol  evidence,  is 
the  question  presented. 

It  cannot  be  denied  that  if  the  court  can,  by  any  legal  means,  arrive 
at  the  existence  of  the  parol  trust,  then  the  violation  of  it  by  the  de- 
fendant, in  wresting  their  inheritance  from  the  family  of  his  deceased 
brother,  is  most  grossly  fraudulent.  And  to  avoid  such  injustice, 
courts  of  equity  have  frequently  seir^ed  upon  the  slightest  circumstances 
connected  with  the  procurement  of  the  conveyance  to  avoid  the  opera- 
tion of  the  statute  of  frauds.  And  there  are  cases,  the  principle  of 
which  would  w^arrant  the  assertion  that  the  attempt  by  the  defendant  to 
claim  the  rights  which  this  deed,  on  its  face,  gives  him,  contrary  to 
the  parol  trust,  is  such  a  fraud  as  would  justify  the  relief  upon  parol 
evidence.  But  I  confess  my  inability  to  see  liow.  upon  principle,  this 
]iosition  can  be  sustained,  consistently  with  a  due  observance  of  the 
statute.  Placing  the  relief  in  such  cases  upon  the  ground  of  fraud, 
is  implied  by  admitting  that  the  parol  evidence  cannot  be  admitted  to 
establish  the  trust,  for  the  purpose  of  enforcing  it,  directly  as  a  trust. 
And  this  is  also  expressly  admitted.  But  it  seems  apparent  to  my 
mind  that  to  say,  in  such  a  case,  it  shall  be  admitted  to  establish  the 
fraud,  is  equally  a  violation  of  the  statute.  Because  the  fraud  con- 
sists only  in  the  refusal  to  execute  the  trust.  The  court,  therefore, 
cannot  say  that  there  is  a  fraud,  without  first  saying  that  there  is  a 
trust.  And  the  parol  evidence,  if  admitted,  must  be  admitted  to  es- 
tablish the  trust,  in  order  that  the  court  may  charge  the  party  with 
fraud  in  setting  up  his  claim  against  it.  Conceding  then,  that  they 
cannot  execute  the  trust  directly  in  such  case,  because  it  cannot  be 
proved  by  parol,  is  it  not  a  mere  evasion  of  the  statute  to  say,  that 
they  will  allow  it  to  be  proved  by  parol  for  the  purpose  of  enforcing 
it  indirectly,  by  charging  the  party  with  fraud  and  for  refusing  to  ex- 
ecute it?  Such  a  course  does  not  relieve  the  court  from  the  charge  of 
violating  the  statute,  but  subjects  it  to  the  odium  of  an  attempted,  but 
unsuccessful  evasion. 

It  may  be  said  that  fraud  ought  not  to  be  tolerated.  That  is  very 
true,  but  that  is  not  the  question.  The  question  is,  whether  the  court, 
without  violating  the  law,  can  get  at  the  fraud.  There  is  no  doubt  that 
trusts  ought  to  be  enforced ;  but  that  is  not  a  sufficient  reason  for  ad- 
mitting parol  evidence  to  establish  it.  When  the  party  offers  this,  the 
court  says  no ;  the  law  forbids  it. 

So,  however  desirable  it  is  to  prevent  fraud,  if  the  fraud  cannot  be 
established,  except  by  first  showing  a  trust  by  parol,  is  not  the  same 
answer  equally  applicable?     If  not,  it  is  difficult  to  see  that  the  statute 


Ch.  7)       CONSTRUCTIVE   TRUSTS   AND   THE   STATUTE   OF   FRAUDS.  GST 

of  frauds  is  to  have  any  practical  effect;  for  although  trusts  and 
agreements  contrary  to  the  written  contracts  of  parties,  cannot  be 
proved  by  parol  so  as  to  be  enforced  as  such,  yet  they  may  be  proved 
and  held  of  sufficient  force  to  charq-e  the  party  with  fraud  in  not  ol> 
serving  them.  And  the  result  is  practically  the  same.  It  is  for  courts 
to  say  to  the  parties,  "These  agreements  are  not  valid,  not  binding; 
we  cannot  compel  you  to  observe  them;  yet  if  you  do  not  observe  them 
without  being  compelled,  we  will  hold  that  to  be  a  fraud  on  your  part, 
and  for  the  fraud,  will  compel  you  to  execute  them." 

It  is  impossible  to  reconcile  with  principle  very  many  of  the  ad- 
judications upon  the  statute  of  frauds.  Courts  seem  to  have  been  so 
intent  upon  administering  justice  in  the  particular  case,  that  they  have 
frequently  lost  sight  of  its  provision,  and  their  action  has  often 
amounted  to  little  less  than  the  exercise  of  the  right  to  appeal,  or  sus- 
]iend  its  operation  whenever  they  deem  that  the  real  justice  of  the 
case  required  it.  But  the  progress  of  adjudication  upon  the  subject 
has  been  marked  by  many  strong  protests  against  the  wide  departure 
from  principle,  and  the  regrets  expressed  by  courts  that  it  had  ever 
obtained.  And  the  current  of  modern  authority  is  in  favor  of  return- 
ing to  the  due  observance  of  the  provisions  of  this  law,  according  to 
their  obvious  intent. 

But  the  distinction  between  fraud  in  procuring  a  conveyance,  and 
that  which  arises  only  from  the  refusal  to  execute  a  parol  trust  or 
agreement,  connected  with  a  conveyance  obtained  without  fraud,  is 
not  only  clear  upon  principle,  but  is  not  without  sanction. 

In  Whitton  v.  Russell,  1  Atk.  448,  a  testator  was  about  to  alter  his 
will,  so  as  to  give  one  of  the  legatees  fourteen  pounds  per  annum  more 
than  he  had  already  given  him.  It  was  suggested  by  the  attorney,  that 
if  the  other  legatees  would  give  a  bond  to  pay  the  amount,  it  would 
be  sufficient,  and  one  of  the  others  being  present,  promised  that  they 
would  do  it,  and  the  will  was  not  altered.  The  bill  was  filed  to  en- 
force the  promise,  but  the  Chancellor  held  it  to  be  "against  the  stat- 
ute of  frauds."  and  he  adds,  "neither  is  there  any  ground  for  relief 
on  the  head  of  accident  or  fraud.  Every  breach  of  promise  is  not  a 
fraud,  nor  does  it  appear  that  the  testator  was  drawn  in  by  this 
promise  not  to  add  the  legacy  to  this  codicil."  The  inference  pro- 
duced by  the  statement  of  facts  in  that  case,  is  that  the  promise  did 
induce  the  testator  not  to  alter  his  will,  in  which  case  it  would  have 
been  a  fraud  in  procuring  the  will ;  but  assuming  it  to  be  otherwise, 
as  stated  by  the  Chancellor,  it  was  then  the  refusal  by  one  having  the 
legal  title  without  fraud,  to  execute  a  trust  which  the  testator  had  by 
parol  declared,  and  which  the  devisee  had  promised  to  execute.  And 
■this  the  Chancellor  held  was  not  a  fraud.  He  could  only  have  meant 
that  it  was  not  such  a  fraud  as  to  be  relieved  against,  because  in  morals 
it  was  certainly  a  fraud. 

In  the  case  of  Hoge  v.  Hoge,  1  Watts  (Pa.)  163.  26  Am.  Dec._  52, 
this  very  point  was  decided.     The  question  arose  as  to  the  admissibility 


5S8  CONSTRUCTIVE   TRUSTS   AND   Til  10   STATUTE   OF   FRAUDS.       (Cll.  7 

of  parol  evidence  to  show  that  a  devise  of  land  Avas  in  trust,  and  it 
was  conceded  on  all  hands  tliat  it' could  not  be  admitted,  except  on  the 
ground  of  fraud ;  and  the  (jucstion  then  occurred  whether  the  mere 
refusal  to  perform  the  trust,  was  such  a  fraud  as  would  justify  its 
admission.  Upon  this  point  the  court  says :  "The  question  has  been 
as  to  the  circumstances  which  constitute  such  a  fraud  as  will  be  made 
the  foundation  of  a  decree.  A  mere  refusal  to  perform  the  trust  is 
undoubtedly  not  enouf:;h,  else  the  statute,  which  requires  a  will  of  land 
to  be  in  writing,  would  be  altogether  inoperative,  and  it  seems  to  be 
requisite  that  there  should  have  been  an  agency,  active  or  passive,  on 
the  part  of  the  devisee,  in  procuring  the  devise."  And  having  found 
as  a  matter  of  fact  that  there  was  such  agency  in  that  case,  they 
granted  relief  on  the  ground  of  fraud.  And  all  the  authorities  refer- 
red to  in  the  opinion,  are  cases  in  which  there  was  some  promise  on 
the  part  of  the  defendant,  by  which  the  property  was  procured  by 
himself,  or  by  which  he  prevented  a  different  disposition  of  it.  The 
same  distinction  is  recognized  in  Pinnock  v.  Clough,  16  Vt.  500,  42 
Am.  Dec.  521. 

In  the  cases  of  Dean  v.  Dean  et  al.,  6  Conn.  285,  Bandor  v.  Snyder, 
5  Barb.  (N.  Y.)  63,  I.athrop  v.  Iloyt,  7  Barb.  (N.  Y.)  59,  and  other 
similar  cases  which  might  be  cited,  the  hardship  of  enforcing  the 
statute  was  equally  great  as  in  this  case,  and  in  some  of  them  the 
courts  expressed  their  willingness  to  escape  from  its  application  if  pos- 
sible. But  there  was  no  suggestion  that  the  mere  refusal  of  the  de- 
fendants to  execute  the  parol  trusts,  was  such  a  fraud  as  would  take 
the  case  out  of  its  provisions. 

But  the  strongest  support  that  seems  to  exist  for  the  opposite  view, 
may  perhaps  be  derived  from  the  cause  of  decision  admitting  parol 
evidence  to  show  that  a  deed  absolute  on  its  face  was  given  as  se- 
curity, and  thereby  converting  it  into  a  mortgage.  It  is  true,  there 
are  some  cases  which  have  denied  its  admissibility  for  that  purpose,  as 
in  Streator  v.  Jones,  5  N.  C.  449,  and  in  Thompson  v.  Patton,  5  Litt. 
(Ky.)  74,  15  Am.  Dec.  44,  which  also  both  sustain  the  position  that  the 
fraud  which  justifies  the  admissibility  of  parol  evidence,  must  be  such 
as  affects  the  transfer  or  disposition  of  the  property.  But  there  is  a 
very  long  list  of  cases  which  have  held  parol  evidence  admissible  thus 
to  convert  a  deed  into  a  mortgage.  Some  of  them  however  recognize 
the  distinction  we  have  asserted,  as  in  Thomas  v.  IMcCormack,  9  Dana 
(Ky.)  109.  But  many  others  have  gone  to  the  extent  of  saying  that 
while  there  was  no  fraud  or  mistake  in  procuring  or  executing  the 
deed,  yet  that  the  mere  attempt  to  use  the  deed  as  absolute,  is  such  a 
fraud  as  justifies  the  admissibility  of  parol  evidence  and  the  relief  upon 
it.  See  Alclntyre  v.  Humphreys,  1  Hoft'.  Ch.  34,  where  the  Vice- 
Chancellor  says  it  is  "too  late"  to  dispute  the  general  doctrine,  and 
that  "the  restriction  of  the  rule  adopted  in  some  cases,  that  it  must 
be  shown  that  a  defeasance  was  not  made  through  accident,  fraud  or 
mistake,  does  not  prevail"  in  New  York. 


Ch.  7)       CONSTRUCTIVE   TRUSTS   AND   THE   STATUTE   OF   FRAUDS.  5S9 

The  question  is  discussed  to  some  extent  in  Ro^an  v.  Walker  et  al., 
1  Wis.  527,  decided  by  Justice  Smith  on  stipulation.  In  that  case 
there  was  a  condition  in  the  deed  itself,  and  a  bond  was  given  by  the 
complainant,  which  alone  justifies  the  decision  made;  and  so  the 
learned  judge  held.  But  he  then  proceeded  to  show  that  even  if  there 
had  been  no  such  written  evidence,  parol  evidence  would  have  been 
admissible  on  the  ground  of  fraud,  and  that  the  attempt  to  use  a 
deed  given  as  security,  as  absolute,  was  a  sufficient  fraud  for  the  pur- 
pose. He  cites  manv  authorities  which  undoubtedly  sustain  the  posi- 
tion, but  in  commenting  on  the  cases  heretofore  cited  from  Barbour's 
Reports  he  held  them  not  applicable,  because  they  were  cases  of  "ex- 
press trusts"  sought  to  be  proved  by  parol,  and  says :  "The  court  very 
properly  decided  that  the  statute  of  frauds  was  an  insurmountable  bar- 
rier." The  ground  of  distinction  suggested  is,  that  the  equity  of  re- 
demption arises  out  of  the  transactions  of  the  parties,  and  not  out  of 
the  parol  agreement.  This  distinction  may  be  material  in  determining 
whether  the  admissibility  of  parol  evidence  is  to  be  determined  by  the 
statute  of  frauds,  or  by  the  general  rule  prohibiting  such  evidence  to 
contradict  the  written  contracts  of  the  parties. 

It  is  conceded  that  fraud  may  take  a  case  out  of  either  the  statute 
or  the  rule.  But  I  suppose  it  would  not  be  contended  that  in  the  ab- 
sence of  fraud  there  is  anything  in  the  peculiar  nature  of  the  equity 
of  redemption  that  can  have  that  efifect.  On  the  contrary,  justifying 
its  admission  on  the  ground  of  fraud,  which  is  the  ground  upon  which 
it  is  placed  by  all  these  cases,  is  admitting  that  the  case  could  not  other- 
wise be  taken  out  of  the  rule. 

The  question  under  consideration  therefore  was,  what  was  a  suffi- 
cient fraud  for  the  purpose?  And  in  determining  this  question,  I  can 
see  no  distinction  between  an  express  trust  and  a  parol  agreement  mak- 
ing a  deed  a  mortgage.  If  the  refusal  to  abide  by  the  latter  is  to  be 
held  on  principle,  to  be  such  a  fraud  as  takes  the  case  out  of  the  rule, 
and  justifies  parol  evidence,  I  can  see  no  reason  why  a  refusal  to  exe- 
cute an  express  trust,  evidenced  only  by  parol,  should  not  be  so  held. 
The  injustice,  the  wrong  and  the  fraud  are  not  only  as  great,  but 
greater  in  the  latter  case  than  in  the  former.  For  in  the  former  the 
party  would  only  get  the  land  for  the  money  he  had  loaned,  while  in 
the  latter  he  would  get  it  for  nothing.  And  if  these  cases  are  to  be 
held  correct  upon  principle,  we  can  see  no  reason  why  the  refusal  by 
any  party  to  perform  a  parol  agreement,  within  the  statute  of  frauds, 
should  not  be  held  such  a  fraud  as  would  take  the  case  out  of  the  stat- 
ute whenever  such  a  refusal  would  work  hardship  and  injustice  upon 
the  opposite  party.  But  we  must  say  that  we  think  these  decisions 
cannot  be  sustained  upon  principle,  and  that,  if  established  by  authority 
too  firmly  to  be  shaken,  it  must  be  regarded  as  an  invasion  upon  the 
statute  which  cannot  justify  still  further  encroachment.  And  it  is 
p-^rhaps  not  so  settled  on  authority  as  to  be  beyond  question. 


590  CONSTRUCTIVE   TRUSTS   AND   THE   STATUTE   OF   FRAUDS.       (Ch.  7 

In  Stevens  v.  Cooper.  1  John.  Ch.  (N.  Y.)  425,  7  Am.  Dec.  499, 
the  question  was,  wlicther  the  effect  of  a  mortgag;e  could  be  varied  by 
parol  evidence,  and  Chancellor  Kent,  after  referring  to  the  general 
rule  prohibiting  such  evidence  as  settled  beyond  discussion,  adds:  "Nor 
docs  this  case  come  within  any  exception  admitted  here  to  the  opera- 
tion of  the  rule;  for  there  is  no  allegation  of  fraud,  mistake  or  sur- 
prise in  making  or  executing  the  mortgage,  and  those  I  believe,  are 
the  only  cases  in  which  parol  evidence  is  admissible  in  this  court 
against  a  contract  in  writing." 

It  seems  impossible  upon  principle  to  distinguish  this  case  from  that 
of  the  admissibility  of  parol  evidence  to  vary  the  efifect  of  a  deed.  And 
in  Webb  v.  Rice,  6  Hill  (N.  Y.)  219,  it  is  decided  that  such  evidence 
is  inadmissible  in  a  court  of  law.  and  it  is  intimated  that  it  could  not 
be  received  in  equity  except  to  show  fraud  or  mistake  in  the  execution 
of  the  instruincnt.  The  dissenting  opinions  of  Justice  Bronson  in 
Webb  v.  Rice.  1  Hill  ( N.  Y.)  606,  and  Swart  v.  Service,  21  Wend. 
(N.  Y.)  36.  34  Am.  Dec.  211,  show  clearly  that  he  confines  the  fraud, 
which  is  to  justify  the  admission  of  parol  evidence,  to  such  as  affected 
the  execution  of  the  instrument.  And  Mr.  Justice  Cowen,  who  de- 
livered the  opinion  of  the  court  in  the  latter  case,  rested  it  entirely  on 
previous  decisions  in  that  state,  by  which  they  felt  bound.  But  in 
si)eaking  of  these  decisions  he  says:  "For  one,  I  was  always  at  a 
loss  to  see  on  what  principle  the  doctrine  could  be  rested  either  at 
law  or  in  equity,  unless  fraud  or  mistake  were  shown  in  obtaining  an 
absolute  deed,  where  it  should  have  been  a  mortgage."  "Short  of  that 
the  evidence  is  in  direct  contradiction  of  the  deed;  and  I  am  not  aware 
that  it  has  ever  been  allowed  in  any  other  courts  of  equity  or  law." 

We  will  not  pursue  this  part  of  the  subject  further.  We  do  not  of 
course  purpose  to  pass  upon  the  question,  whether  in  the  absence  of 
fraud  or  mistake  in  its  execution,  an  absolute  deed  can  be  converted 
into  a  mortgage.  That  question  is  not  before  us,  but  it  is  so  nearly 
allied  to  the  one  before  us,  that  we  could  not  well  determine  the  latter, 
without  inquiring  how  it  was  affected  by  the  decisions  to  which  we 
have  alluded.  And  as  we  think  the  rule  they  have  established  does 
not  rest  upon  principle,  however  it  may  be  determined  upon  au- 
thority, we  do  not  feel  warranted  in  following  the  rule  which  they 
would  by  analogy  suggest.  And  we  must  hold  that  as  the  deed  was 
made  absolute  to  the  defendant  without  any  mistake,  or  fraud  on  his 
part,  his  mere  refusal  to  perform  the  trust,  is  not  such  a  fraud  as 
will  justify  the  admission  of  the  parol  evidence,  and  the  enforcement 
of  the  trust.  The  reason  is,  that  the  law  forbids  us  to  be  informed 
that  there  was  a  trust  by  that  kind  of  evidence.  It  may  and  does  un- 
doubtedly work  hardship  in  this  case,  and  that  we  regret ;  but  if  par- 
ties will,  in  face  of  the  positive  provisions  of  the  statute,  risk  their 
interests  upon  the  honor  or  justice  of  others,  and  the  security  fails 
them,  they  have  no  right  to  ask  courts  to  violate  the  law  to  furnish  re- 
lief. 


Ch.  7)       CONSTRUCTIVE   TRUSTS   AND   THE   STATUTE   OF   FRAUDS.  591 

The  counsel  for  the  complainants  contended  that  if  we  should  be 
of  the  opinion  that  the  trust  could  not  be  established,  then  it  appearing 
that  the  consideration  was  not  paid,  they  should  be  entitled  to  a  ven- 
dor's lien  for  the  amount  expressed  in  the  deed.  The  case  of  Lcman 
V.  Whitley,  4  Russ.  423,  is  relied  on,  and  would  seem  to  sustain  the 
position.  The  bill  was  filed  to  establish  a  trust  and  obtain  a  re-convey- 
ance. The  court  held  parol  evidence  inadmissible,  but  decreed  a  ven- 
dor's lien  for  the  consideration,  under  the  prayer  for  general  relief.  We 
have  felt  a  strong-  desire  to  follow  this  case,  but  upon  a  careful  ex- 
amination of  the  whole  subject,  have  come  to  the  conclusion  that  we 
cannot  do  so.  The  bill  does  not  claim  a  vendor's  lien.  It  proceeds 
upon  an  entirely  different  hypothesis.  It  alleges,  it  is  true,  that  the 
consideration  never  was  paid ;  but  not  for  the  purpose  of  recovering  it, 
but  because  it  was  never  intended  or  agreed  to  be  paid.  There  is  noth- 
ing in  the  bill  to  indicate  to  the  defendant  that  he  was  to  resist  the 
claim  for  a  vendor's  lien,  and  we  cannot  but  see  that  it  would  work  a 
surprise  upon  him  to  grant  such  relief  upon  this  bill.  Rathbun  v. 
Rathbun.  6  Barb.  (N.  Y.)  98;  and  Philbrook  v.  Delano,  29  Me.  410; 
and  Dean  v.  Dean,  6  Conn.  285.  all  hold  that  such  relief  could  not  be 
granted  upon  a  bill  filed  to  establish  the  trust,  without  indicating  in 
any  way  an  intent  to  proceed  for  a  lien.  And  we  think  this  the  only 
just  rule  upon  the  subject. 

We  are  compelled  therefore  upon  the  whole  case,  to  reverse  the 
judgment  of  the  court  below,  and  direct  a  decree  to  be  entered  dismiss- 
ing the  complaint.  At  the  same  time  we  may  express  the  hope  that 
the  defendant's  conscience,  to  which  his  brother  has  trusted,  may  not 
suffer  him  so  far  to  violate  that  trust  as  to  detain  their  just  inheritance 
from  his  wife  and  children.^ 


ALEXANDER  CAMPBELL  v.  JOHN  B.  DEARBORN. 

(Supreme  Judicial  Court  of  Massachusetts,  1872.     109  Mass.  130,  12  Am.  Rep. 

G71.) 

Bill  in  equity,  filed  July  12.  1869,  to  compel  a  re-conveyance  of  land 
by  the  defendant  to  the  plaintiff,  on  the  ground  that  the  plaintift"s  con- 
veyance of  it  to  the  defendant,  although  in  form  absolute,  was  in  sub- 
stance a  mortgage.  The  bill  alleged  that  the  plaintiff  on  June  11,  1866, 
agreed  with  Artemas  Tirrill  for  the  purchase  by  him  from  said  Tirrill 
of  a  parcel  of  land  in  Charlestown,  and  at  the  same  time  Tirrill  gave 
him  a  bond  to  convey  the  land  at  any  time  within  three  years  from 
said  June  11,  upon  the  payment  to  him  of  $5,500,  the  plaintiff  to  pay  all 
assessments  on  the  land  in  the  meanwhile ;  that  since  taking  the  bond 
the  plaintiff"  has  occupied  the  land;   that  in  the  early  part  of  June  1869 

5  Wolford  V.  Faruham.  44  Minn.  159,  40  N.  W.  29.5  (1890) :  Marvel  v.  Marvel, 
70  Neb.  498,  97  N.  W.  G40,  113  Am.  St.  Hep.  792  (1903) ;  Stuilevaut  v.  Sturte- 
vaut,  20  N.  Y.  39,  75  Am.  Dec.  371  (1859). 


593     CONSTRUCTIVE  TRUSTS  AND  THE  STATUTE  OF  FRAT'DS.   (Cll.  7 

lie  made  arrangements  to  borrow  the  sinn  of  $5,500  from  Charles  J. 
Walker,  in  order  to  tender  the  same  to  Tirrill,  and  secure  performance 
of  his  obligation  to  convey,  within  the  time  fixed  in  the  bond  ;  that 
on  June  11,  1869.  being-  disappointed  in  finding  Walker,  he  met  the 
defendant ;  that  the  defendant  expressed  regret  that  the  plaintiff  should 
be  obliged  to  lose  fulfilment  of  the  bond  through  not  having  in  time  the 
money  required,  and  voluntarily  offered  to  lend  to  the  plaintifif  the 
required  amount,  and  the  jjlaintiff  accepted  the  offer  as  an  act  of 
friendship,  as  he  supposed;  that  the  defendant  and  the  plaintiff  went 
immediately  to  Tirrill  and  tendered  to  him  said  sum  of  $5,500,  and 
Tirrill  thereupon  delivered  to  the  plaintiff  his  deed  of  the  land  in  fee 
simple,  in  compliance  with  the  bond,  which  deed  was  dated  May  21, 
and  was  acknowledged  before  the  defendant  as  a  justice  of  the  peace 
on  said  June  11,  1869;  that  upon  leaving  Tirrill  the  defendant  said 
to  the  plaintiff  that  he  ought  to  be  secured  for  his  loan  in  some  way, 
and  proposed  that  they  should  go  to  the  defendant's  attorney,  to  have 
the  necessary  papers  prepared  ;  that  they  thereupon  went  to  the  at- 
torney's office,  where  the  defendant  and  the  attorney  consulted  together 
privately,  and,  without  consulting  the  plaintiff,  an  instrument  was 
drawn,  and  handed  to  him  to  sign,  which  upon  reading  he  found  to  be 
drawn  to  convey  the  land  in  fee  simple  to  the  defendant ;  that  the  plain- 
tiff objected  to  this  form  of  conveyance,  and  desired  to  have  a  mort- 
gage drawn  instead,  but  was  assured  by  both  the  attorney  and  the 
defendant  that  the  instrument  prepared  would  have  the  same  ef- 
fect ;  that,  being  ignorant  of  the  legal  eft'ect  of  said  instrument  made 
under  such  circumstances,  and  relying  on  the  statements  of  the  attor- 
ney and  the  defendant,  he  on  said  Jime  11  executed  and  delivered 
said  deed  to  the  defendant;  and  that  it  was  recorded  in  the  registry  of 
deeds  at  the  same  time  with  Tirrill's  deed. 

The  bill  also  alleged  that  the  plaintiff  believed,  and,  from  the  manner 
and  declarations  of  the  defendant  at  the  time,  had  every  reason  to  be- 
lieve, that  the  loan  was  prompted  by  the  kindness  of  a  friend,  and  was 
a  gratuitous  loan,  and  one  which  he  was  to  immediately  repay,  and 
he  accepted  it  accordingly;  that  on  the  same  day  he  asked  the  defend- 
ant how  soon  the  money  must  be  repaid,  and  the  defendant  replied, 
"In  a  few  days  ;"  that  the  plaintiff  at  the  same  time  said  to  the  de- 
fendant that  lie  had  arranged  for  a  permanent  loan  on  the  land  and 
that  the  matter  could  be  settled  on  the  next  day,  June  12 ;  that  on  said 
June  12  Charles  J.  Walker,  who  had  agreed  to  loan  the  plaintiff  $5,000 
upon  a  mortgage  on  the  land,  was  not  ready  to  do  so,  as  his  attorney 
desired  more  time  to  examine  the  title,  and  the  plaintiff  went  to  the 
defendant  and  stated  the  occasion  of  delay,  and  asked  him  to  be  ready 
to  receive  the  money  advanced  and  execute  a  deed  conveying  the  land 
back  to  the  plaintiff  the  next  Monday;  that  the  defendant  replied  that 
he  was  going  to  Philadelphia  on  that  day,  but  would  settle  the  matter 
upon  his  return,  which  would  l)e  about  June  17;  and  that  at  this  in- 
terview, the  plaintiff',  feeling  very  grateful  to  the  defendant  for  what 


Ch.  7)       CONSTRUCTIVE  TRUSTS  AND  THE   STATUTE   OF   FRAUDS.  593 

he  had  done,  sugj^estcd  that  he  was  cHsposed  to  pay  him  for  his  trouble 
in  the  premises,  but  the  defendant  rcpHed,  "Never  mind  now,  we  will 
make  that  all  right,"  from  which  the  plaintiff  inferred  that  the  defend- 
ant would  make  no  charge  for  the  loan. 

The  bill  further  alleged  that  on  the  17th,  18th  and  19th  of  June 
the  plaintiff  endeavored  to  find  the  defendant  and  repay  his  loan  and 
obtain  his  deed,  but  was  unable  to  find  him;  that  on  the  21st  of  June 
the  plaintiff  saw  the  said  attorney  of  the  defendant,  who  hadi  told  him 
that  the  attorney  was  authorized  to  settle  the  matter,  and  said  attorney 
informed  the  plaintiff  that  the  defendant  would  not  re-convey  the  land 
unless  l;e  was  paid  the  sum  advanced  and  $500  besides  for  the  use 
of  the  money,  whereat  the  plaintiff  was  greatly  astonished  and  so 
stated  to  the  attorney ;  that  the  plaintiff  afterwards  saw  the  defendant, 
and  objected  to  the  charge,  and  gave  him  to  understand  that  he  sup- 
posed the  loan  to  be  gratuitous,  but  rather  than  have  any  ill  feeling  he 
would  pay  $250 ;  that  the  defendant  refused  to  accept  that  sum ;  and 
that  the  plaintiff  has  been  desirous  of  obtaining  a  re-conveyance  of  the 
land,  and  has  tendered  the  defendant  the  said  sum  of  $5,500,  with  legal 
interest  from  the  time  of  the  loan,  and  has  also  tendered  a  deed  recon- 
veying  the  land  to  the  plaintiff,  to  be  executed  by  the  defendant ;  but 
that  the  defendant  refused  to  accept  the  tender  and  to  execute  the  deed. 

The  prayer  was  "that  the  plaintiff  may  have  proper  relief  in  the 
premises ;  that  an  account  may  be  taken  of  what,  if  anything,  is  due 
to  the  defendant  for  principal  and  interest  on  said  loan ;  that  the  plain- 
tiff may  be  permitted  to  redeem  the  land,  he  being  ready  and  willing, 
and  hereby  offering,  to  pay  what,  if  anything,  shall  appear  to  be  due 
in  respect  of  said  loan  and  interest  accrued ;  and  that  the  defendant 
may  be  decreed  to  convey  the  land  to  the  plaintiff  in  fee,  free  from  all 
incumbrances  made  by  him  or  any  person  claiming  under  him,  and 
may  be  restrained  from  making  any  sale  or  conveyance  thereof  to  any 
person  or  persons  pending  this  bill." 

The  defendant,  in  his  answer,  denied  that  he  ever  made  or  oft'ered 
to  make  any  loan  to  the  plaintiff ;  alleged  that,  on  the  contrary,  he 
refused!  a  request  of  the  plaintiff  for  a  loan ;  and  further  alleged  that 
"the  defendant  agreed  to  pay  Tirrill  the  said  sum  of  $5,500  for  the 
premises  described  in  the  bill,  provided  the  title  to  said  premises  should 
stand  in  the  defendant's  name,"  and  the  plaintiff  agreed  that  immedi- 
ately on  payment  of  the  sum  to  Tirrill  the  land  should  be  conveyed 
in  fee  simple  to  the  defendant,  "and  the  plaintiff  should  not  have  any 
interest  or  title  thereto ;"  that  thereupon  the  defendant  paid  the  $5,500 
to  Tirrill,  and  Tirrill  executed  and  delivered  to  the  plaintiff  a  deed 
of  the  land;  that  the  plaintiff  did  not  have  any  title  or  interest  in  the 
purchase  money  or  any  part  thereof,  but  the  whole  of  it  was  prop- 
erty of  the  defendant;  that  the  land  was  not  purchased  of  Tirrill 
for  the  benefit  of  the  plaintiff,  "neither  did  the  defendant  agree  to  pur- 
chase it  for  the  benefit  of  the  plaintiff',  but  for  the  use  and  benefit  of  the 
Ken.Tr.— 38 


594     CONSTRUCTIVE  TRUSTS  AND  THE  STATUTE  OF  FRAUDS.   (Ch.  7 

defendant;"  that  by  said  purchase  the  equitable  title  to  the  land  was 
vested  in  the  defendant ;  and  that  the  plaintiff,  in  pursuance  of  his  said 
agreement,  did  convey  the  land  to  the  defendant  in  fee  simple,  "for  the 
purpose  of  vesting  both  the  legal  and  equitable  title  in  the  defendant;" 
that  the  agreement  between  the  plaintiff  and  the  defendant  that  the 
plaintiff  should  make  such  an  absolute  conveyance,  and  no  other,  was 
fair  and  distinct ;  that  "before  and  at  the  time  of  said  payment  to  said 
Tirrill"  the  defendant  refused  "to  lend  the  plaintiff  said  money,  and  to 
allow  the  plaintiff  to  have  any  interest  in  said  money  or  the  premises 
purchased  therewith ;"  and  that  the  plaintiff's  deed  was  read  in  his 
presence  and  hearing  before  he  executed  it,  and  he  was  then  andl  there 
informed  that  it  was  an  absolute  conveyance  and  that  he  thereby 
ceased  to  have  any  interest  whatever  in  the  land. 

The  answer  also  alleged  that  afterwards,  and  as  an  independent 
transaction,  the  defendant  at  the  plaintiff's  request  orally  agreed  to 
re-convey  the  land  to  him  for  the  consideration  of  $6,000  to  be  paid  on 
June  18,  1869,  together  with  such  charges  as  the  defendant  should 
make  for  his  expenses  incident  to  the  several  conveyances  ;  that  al- 
though the  defendant  then  well  knew,  and  still  insists,  that  this  agree- 
ment had  no  legal  force  or  effect,  for  the  reason  that  it  was  not  in 
writing,  yet  on  the  day  named  he  was  ready  and  willing  to  perform  his 
part  of  it,  but  the  plaintiff  neglected  and  refused  to  perform  his  own 
part  or  pay  any  sum  whatever,  and  thereupon  the  defendant  consider- 
ed himself  released  from  all  obligations  to  the  plaintiff;  that  on  June 
19,  1869,  he  made  another  oral  agreement  with  the  plaintiff  to  re-con- 
vey the  land  to  him  for  the  sum  of  $6,000,  together  with  such  expenses 
as  the  defendant  had  incurred  by  reason  of  said  conveyances,  provided 
the  agreement  should  be  carried  into  effect  forthwith,  and  the  plaintiff 
then  and  there  agreed  to  pay  said  sum;  that  the  defendant  on  the 
same  day  executed  a  quit  claim  dfeed,  with  the  usual  covenants,  con- 
veying the  land  to  the  plaintiff  in  pursuance  of  this  agreement,  and 
has  repeatedly  tendered  this  deed  to  the  plaintiff;  but  that  the  plaintiff 
refused  to  comply  with  the  agreement,  and  to  pay  the  expenses  incurred 
by  the  defendant  in  the  premises  ;  and  that  the  defendant  "now  and 
always  has  denied  that  the  plaintiff  had  any  right  to  or  interest  in  said 
premises,  except  such  as  he  may  have  acquired  under  said  parol  agree- 
ments made  subsequently  to  and  independently  of  the  conveyance"' 
from  the  plaintiff  to  the  defendant. 

The  answer  then  denied  "that  the  defendant,  or  anyone  in  his  behalf, 
or  at  his  request,  or  with  his  knowledge,  ever  made  any  representations 
or  intimation  to  the  plaintiff'  that  the  conveyance  of  the  plaintiff  to 
the  defendant  was  or  had  the  effect  of  anything  but  an  absolute  can- 
veyance  in  fee  simple ;"  alleged  "that  the  plaintiff'  well  knew  the  con- 
tents and  the  legal  effect  thereof,  and  the  same  was  fully  explained  to 
and  understood  by  the  plaintiff  before  the  execution  thereof,  and  no 
assurances  or  intimations  were  made,  at  or  before  the  execution  or 
delivery  thereof,  that  the  land  would  be  re-conveyed;"    denied  "that 


Ch.  7)       CONSTRUCTIVE   TRT-RTS   AND   THE   STATUTE   OF   FRAUDS.  595 

the  plaintiff  had  ever  tendered  to  tlie  defendant  the  amount  paid  by 
him  and  interest  thereon,  or  any  other  sum  as  alleged ;"  set  up  the 
statute  of  frauds  "in  answer  to  the  several  averments  of  contracts, 
agreements,  promises  and  trusts  concerning  the  premises  with,  to  or 
for  the  benefit  of  the  plaintiff  in  the  bill  contained,  and  to  so  much  of 
the  bill  as  sets  forth  any  pretended  contract,  agreement,  trust  or  con- 
fidence between  the  plaintiff  and  the  defendant,  or  as  seeks  any  relief 
or  discovery  of  the  defendant,  of  or  concerning  any  pretended  contract, 
agreement,  trust  or  confidence  between  the  plaintiff  and  the  defendant 
touching  the  land  or  premises  mentioned  in  the  bill  or  any  part 
thereof ;"  denied  "that  the  defendant,  or  any  person  thereunto  by  him 
lawfully  authorized,  did  ever  make  or  sign  any  writing  whatsoever, 
of  or  containing  any  such  contract,  promise,  agreement,  grant  or  dec- 
laration with,  to  or  for  the  benefit  of  the  plaintiff  touching  the  said 
land,  or  creating  any  estate  or  interest  therein,  or  creating  or  declaring 
any  trust  respecting  the  same,  in  or  for  the  benefit  of  the  plaintiff"; 
and  finally  denied  all  the  plaintiff's  allegations  which  were  not  above 
expressly  admitted. 

The  plaintiff  filed  a  general  replication,  and  the  case  was  heard  by 
Colt,  J.,  who  made  the  following  report  thereof : 

"The  plaintiff  was  the  only  w^itness  in  support  of  his  case,  and 
testified  substantially  to  the  facts  contained  in  the  bill.  The  defend- 
ant testified  in  substance  to  the  facts  stated  in  his  answer,  and  was 
confirmed  in  the  main  part  of  his  evidence  by  the  testimony  of  the 
attornev  who  prepared  the  deed  from  the  plaintiff  to  him,  but  who  also 
testified  more  fully  to  what  was  said  between  the  parties  at  his  office 
at  the  time  the  deed  was  executed.  The  witnesses  appeared  to  me  to 
be  equally  entitled  to  credit. 

"I  find  as  a  fact,  that  the  deed  to  the  defendant  was  executed  by 
the  plaintiff  intelligently,  and  not  by  accident  or  mistake;  and  that  no 
fraud  was  practiced  to  procure  its  execution,  other  than  may  be  in- 
ferred, if  any,  from  the  facts  testified  to  and  here  found  by  me.  I  find, 
from  all  the  circumstances  surrounding  the  transaction,  and  from  the 
acts  and  declarations  of  the  parties  at  the  time,  that  the  plaintiff  believ- 
ed, and  had  reason  to  believe,  that  the  payment  made  to  Tirrill  was 
made  to  prevent  a  forfeiture  of  the  plaintiff's  rights  under  the  contract, 
as  a  friendly  act  on  the  part  of  the  defendant,  with  a  view  to  give  him 
further  time  to  raise  the  money  due  thereon,  and  that  the  defendant 
would  within  a  few  days,  on  being  repaid  the  purchase  money  and  a 
compensation  for  his  trouble,  re-convey  the  same  to  him.  It  appeared 
that  no  definite  time  was  named  for  the  re-payment,  and  no  definite 
amount  was  fixed  as  compensation ;  and  that  the  defendant  refused  to 
take  a  mortgage  instead  of  an  absolute  deed,  insisting  upon  the  owner- 
ship of  the  property,  and  the  right  to  charge  what  he  had  a  mind  to 
for  his  services,  in  case  he  should  re-convey. 

"I  report  the  case  for  the  consideration  of  the  full  court,  such  order 
or  decree  to  be  entered  as  law  and  justice  may  require." 


596     CONSTRrCTIVE  TRUSTS  AND  THE  STATUTE  OF  FRAUDS.   (Cll.  7 

WivLLS,  J.^  Reg-anlin.^  the  money  paid  to  Tirrill  for  the  land  as 
the  money  of  the  plaintiff,  by  loan  from  the  defendant,  there  is  still 
no  resulting  trust  in  favor  of  the  plaintiff  arising  from  the  whole  trans- 
action. A  deed  was  taken  to  the  plaintiff,  according  to  his  equitable 
interest ;  and  he  thereupon  conveyed  to  the  defendant  by  his  own  deed. 
The  recitals  and  covenants  of  that  deed  preclude  him  from  setting  up 
any  trusts  by  implication,  against  its  express  terms.  Blodgett  v.  Hil- 
d'reth,  103  Mass.  484.  His  agreement  with  the  defendant  for  a  re-con- 
veyance cannot  be  enforced  as  a  contract  for  an  interest  in  lands.  Gen. 
St.  c.  105,  §  1 ;  nor  will  it  create  an  express  trust,  Gen.  St.  c.  100,  § 
19.  The  question  then  is.  Can  the  deed  be  converted  into  a  mortgage, 
or  impeached  and  set  aside,  or  its  operation  restricted,  upon  any  ground 
properly  cognizable  in  a  court  of  chancery? 

This  question  was  somewhat  discussed,  though  not  decided,  in  New- 
ton V.  Fay,  10  Allen  (Mass.)  505.  Some  suggestions  were  made  as  to 
the  bearing  of  the  statute  of  frauds  upon  it  in  Glass  v.  Hulbert,  102 
Mass.  24,  3  Am.  Rep.  418.  For  the  reasons  there  suggested,  we  do 
not  regard)  the  statute  of  frauds  as  interposing  any  insuperable  ob- 
stacle to  the  granting  of  relief  in  such  a  case;  because  relief,  if 
granted,  is  attained  by  setting  aside  the  deed ;  and  parol  evidence  is 
availed  of  to  establish  the  equitable  grounds  for  impeaching  that 
mstrument,  and  not  for  the  purpose  of  setting  up  some  other  or  differ- 
ent contract  to  be  substituted  in  its  place.  If  proper  grounds  exist 
and  are  shown  for  defeating  the  deed,  the  equities  between  the  parties 
will  be  adjusted  according  to  the  nature  of  the  transactions  and  the 
facts  and  circumstances  of  the  case;  among  which  may  be  included 
the  real  agreement.  It  does  not  violate  the  statute  of  frauds,  to  admit 
parol  evidence  of  the  real  agreement,  as  an  element  in  the  proof  of 
fraud  or  other  vice  in  the  transaction,  which  is  relied  on  to  defeat  the 
written  instrument. 

What  will  justify  a  court  of  chancery  in  setting  aside  a  formal 
deed,  and  giving  the  grantor  an  opportunity  to  redeem  the  land,  on 
the  ground  that  it  was  conveyedl  only  for  security,  although  no  de- 
feasance was  taken,  is  a  question  of  great  difficulty,  and  one  upon 
which  there  exists  a  considerable  diversity  of  adjudication,  as  well  as. 
of  opinion.  In  Story,  Rq.  §  1018,  it  is  stated  in  general  terms  to  be 
"fraud,  accident  and  mistake."  In  4  Kent,  Com.  (6th  Ed.)  142,  143, 
it  is  laid  down  that  "parol  evidence  is  admissible  in  equity,  to  show 
that  an  absolute  deed  was  intendedl  as  a  mortgage,  and  that  the  defea- 
sance was  omitted  or  destroyed  by  fraud,  surprise  or  mistake." 

"It  is  determined,  on  the  statute  of  frauds,  that,  if  a  mortgage  is 
intended  by  an  absolute  conveyance  in  one  deed  and  a  defeasance  ren- 
dering it  redeemable  in  another,  the  first  is  executed,  and  the  party 
goes  away  with  the  defeasance,  that  is  not  within  the  statute  of 
frauds."    Dixon  v.  Parker,  2  Ves.  Sen.  219,  225.     Similar  declarations 

•  A  part  of  the  opinion  has  been  omitted. 


Ch.  7)   CONSTRUCTIVE  TRUSTS  AND  THE  STATUTE  OF  FRAUDS. 


597 


are  to  be  found  in  Walker  v.  Walker,  2  Atk.  98,  Joyncs  v.  Stathem,  3 
Atk.  388,  and  Maxwell  v.  Montacute,  Prec.  Chy.  526;  and  adjudica- 
tions in  Washburn  v.  Merrills,  1  Day  (Conn.)  139,  2  Am.  Dec.  59, 
Daniels  v.  Alvord,  2  Root  (Conn.)  196,  and  Erainerd  v.  Brainerd,  15 
Conn.  575 ;  and  see  Story,  Eq.  §  768. 

This  indeed  is  only  one  form  of  application  of  the  general  rule  of 
equity,  that  one,  who  has  induced  another  to  act  upon  the  supposition 
that  a  writing  had  been  or  would  be  given,  shall  not  take  advantage 
of  that  act,  or  escape  responsibility  himself,  by  pleading  the  statute 
of  frauds  on  account  of  the  absence  of  such  writing,  which  has  been 
caused  by  his  own  fault.  Besides  the  cases  cited  in  Glass  v.  Hulbert, 
102  Mass.  24,  3  Am.  Rep.  418,  see  Bartlett  v.  Pickersgill,  1  Eden,  515 ; 
s.  c.  1  Cox  Ch.  15 ;  Browne  on  St.  of  Frauds,  §  94.  But  this  principle 
will  not  help  the  plaintiff  here,  because  he  does  not  allege  that  any 
defeasance  was  intended  or  expected;  and  it  is  found  by  the  report 
that  the  deed  "was  executed  by  the  plaintiff  intelligently,  and  not  by 
accident  or  mistake,  and  that  no  fraud  was  practiced  to  procure  its 
execution,  other  than  may  be  inferred"  from  the  facts  stated. 

From  those  facts  and  from  the  bill  and  answer,  we  think  that  these 
points  must  be  taken  to  be  established,  to  wit,  1st,  that  the  plaintiff  had 
purchased  the  parcel  of  land  in  controversy  and  held  a  contract  from 
Tirrill  for  its  conveyance  to  himself  upon  payment  of  the  sum  of 
$5,500;  2d,  that  the  money  was  paid  to  Tirrill,  and  the  land  conveyed 
by  Tirrill  to  the  plaintiff,  in  fulfilment  of  that  contract;  3d,  that  the 
money  was  advanced  by  the  defendant  to  the  plaintiff  as  a  loan,  and 
the  deed  from  the  plaintiff  to  the  defendant  was  given  by  way  of  se- 
curity therefor.  The  report  finds,  "from  all  the  circumstances  sur- 
rounding the  transaction,  and  from  the  acts  and  declarations  of  the 
parties  at  the  time,  that  the  plaintiff  believed  and  had  reason  to  be- 
lieve" this  to  be  the  case. 

The  defendant,  in  his  answer,  does  not  pretend  that  he  ever  made 
any  contract,  either  with  Tirrill  or  the  plaintiff,  by  which  a  price  was 
agreed  upon  to  be  paid  by  him  as  and  for  the  purchase  of  the  prem- 
ises for  himself.  His  only  allegation  to  this  point  is,  at  most,  in- 
direct and  equivocal.  He  denies  that  said  estate  was  purchased  of 
Tirrill  for  the  plaintiff's  benefit,  "neither  did  this  defendant  agree  to 
purchase  it  for  the  benefit  of  the  plaintiff,  but  for  the  use  and  benefit 
of  the  defendant."  This  is  followed  by  an  argumentative  assertion 
of  equitable  title  acquired  as  a  resulting  trust  from  payment  of  the 
purchase  money,  and  that  the  deed  from  the  plaintiff  was  given  "for 
the  purpose  of  vesting  both  the  legal  and  equitable  title  in  the  defend- 
ant." He  does  allege  that  he  "agreed  to  pay  Tirrill  the  said  sum 
of  $5,500  for  the  premises  described  in  the  bill,  provided  the  title  to 
said  premises  should  stand  in  the  defendant's  name."  He  alleges,  with 
sufficient  fulness  and  minuteness,  that  he  refused  to  make  a  loan  of 
the  money  to  the  plaintiff  both  "before  and  at  the  time  of  said  pay- 
ment to  said  Tirrill,"  and  refused  "to  allow  the  plaintiff  to  have  any 


598     CONSTUUCTIVE  TRUSTS  AND  THE  STATUTE  OF  FRAUDS.   (Ch.  7 

interest  in  said  money,  or  the  premises  purchased  therewith,"  and  that 
it  was  agreed  that  the  premises  should  be  conveyed  in  fee  simple  to 
the  defendant,  ''and  the  plaintiff  should  not  have  any  interest  or  title 
thereto."  He  further  avers,  "that,  before  the  plaintiff  signed  and  ex- 
ecuted his  deed  to  this  defendant,  said  deed  was  read  in  the  presence 
and  hearing  of  the  plaintiff,  and  he  was  then  and  there  informed  that 
the  same  was  an  absolute  conveyance,  and  that  he  ceased  thereby  to 
have  any  interest  whatever  therein."  Taking  the  facts  to  be  literally 
as  thus  alleged,  they  significantly  suggest  the  inference  that  the  money 
was  advar.ced  by  the  defendant  for  the  accommodation  of  the  plaintiff 
in  his  purchase  of  the  land,  and  the  deed  given  to  the  defendant  for 
his  security  therefor ;  but  that  it  was  agreed  between  them  that  the 
plaintiff  should  retain  no  legal  right  of  redemption.  He  was  to  trust 
himself  wholly  to  the  good  faith  and  forbearance  of  the  defendant. 

It  is  alleged  in  the  bill,  and  not  denied  in  the  answer,  that  the  land 
has  been  all  the  time  in  the  occupation  of  the  plaintiff.  We  think  it  is 
also  to  be  inferred  that  the  land  is  of  considerably  greater  value  than 
the  sum  advanced  by  the  defendant. 

From  the  whole  case  we  are  satisfied  that  it  was  a  transaction  be- 
tween borrower  and  lender,  and  not  a  real  purchase  of  the  land  by  the 
defendant.  We  are  brought  then  to  the  question,  Can  equity  relieve 
in  such  a  case? 

The  decisions  in  the  courts  of  the  United  States,  and  the  opinions 
declared  by  its  judges,  are  uniform  in  favor  of  the  exercise  of  the  pow- 
er, and  the  propriety  of  its  exercise  by  a  court  of  chancery.  Hughes 
V.  Edwards,  9  Wheat.  489,  6  L.  Ed.  142 ;  Sprigg  v.  Bank  of  Mount 
Pleasant,  14  Pet.  201,  208,  10  L.  Ed.  419;  Morris  v.  Nixon,  1  How. 
118,  11  L.  Ed.  69;  Russell  v.  Southard,  12  How.  139,  13  L.  Ed.  927; 
Taylor  v.  Luther,  2  Sumn.  228,  Fed.  Cas.  No.  13.796;  Flagg  v.  Mann, 
2  Sumn.  486,  Fed.  Cas.  No.  4,847;  Jenkins  v.  Eldredge,  3  Story,  181, 
Fed.  Cas.  No.  7,266;  Bentley  v.  Phelps,  2  Woodb.  &  M.  426,  Fed.  Cas. 
No.  1.331 ;  Wyman  v.  Babcock,  2  Curtis.  C.  C.  386,  398,  Fed.  Cas.  No. 
18,113 ;  s.  c.  19  How.  289,  15  L.  Ed.  644.  Although  not  bound  by  the 
authority  of  the  courts  of  the  United  States,  in  a  matter  of  this  sort, 
still  we  deem  it  to  be  important  that  uniformity  of  interpretation  and 
administration  of  both  law  and  equity  should  prevail  in  the  state  and 
federal  courts.  We  are  disposed  therefore  to  yield  much  deferenqe 
to  the  decisions  above  referred  to,  and  to  follow  them,  unless  we  can 
see  that  they  are  not  supported  by  sound  principles  of  jurisprudence,  or 
that  they  conflict  with  rules  of  law  already  settled  by  the  decisions  of 
our  own  courts. 

We  cannot  concur  in  the  doctrine  advanced  in  some  of  the  cases, 
that  the  subsequent  attempt  to  retain  the  property,  and  refusal  to  per- 
mit it  to  be  redeemed,  constitute  a  fraud  and  breach  of  trust,  which 
affords  ground  of  jurisdiction  and  judicial  interference.  There  can  be 
no  fraud  or  legal  wrong  in  the  breach  of  a  trust  from  which  the  stat- 
ute withholds  the  right  of  judicial  recognition.     Such  conduct  may 


Ch.  7)       CONSTRUCTIVE   TRUSTS   AND   THE   STATUTE   OP   FRAUDS.  599 

sometimes  appear  to  relate  back,  and  give  character  to  the  orig-inal 
transaction,  by  showing,  in  that,  an  express  intent  to  deceive  and  de- 
fraud. But  ordinarily  it  will  not  be  connected  with  the  original  trans- 
action otherwise  than  constructively,  or  as  involved  in  it  as  its  legiti- 
mate consequence  and  natural  fruit.  In  this  aspect  only  can  we  re- 
gard it  in  the  present  case. 

The  decisions  in  the  federal  courts  go  to  the  full  extent  of  affording 
relief,  even  in  the  absence  of  proof  of  express  deceit  or  fraudulent 
purpose  at  the  time  of  taking  the  deed,  and  although  the  instrument 
of  defeasance  "be  omitted  by  design  upon  mutual  confidence  between 
the  parties."  In  Russell  v.  Southard,  12  How.  139,  148,  13  L.  Ed. 
927,  it  is  declared  to  be  the  doctrine  of  the  court  "that,  when  it  is  al- 
leged and  proved  that  a  loan  on  security  was  really  intended,  and  the 
defendant  sets  up  the  loan  as  payment  of  the  purchase  money,  and  the 
conveyance  as  a  sale,  both  fraud  and  a  vice  in  the  consideration  are 
sufificiently  averred  and  proved  to  require  a  court  of  equity  to  hold 
the  transaction  to  be  a  mortgage."  The  conclusion  of  the  court  was, 
"that  the  transaction  was  in  substance  a  loan  of  money  upon  security 
of  the  farm,  and,  being  so,  a  court  of  equity  is  bound  to  look  through 
the  forms  in  which  the  contrivance  of  the  lender  has  enveloped  it,  and 
declare  the  conveyance  of  the  land  to  be  a  mortgage." 

This  doctrine  is  analogous,  if  not  identical  with  that  which  has  so 
frequently  been  acted  upon  as  to  have  become  a  general  if  not  uni- 
versal rule,  in  regard  to  conveyances  of  land  where  provision  for  re- 
conveyance is  made  in  the  same  or  some  contemporaneous  instrument. 
In  such  cases,  however  carefully  and  explicitly  the  writings  are  made 
to  set  forth  a  sale  with  an  agreement  for  re-purchase,  and  to  cut  off 
and  renounce  all  right  of  redemption  or  re-conveyance  otherwise,  most 
courts  have  allowed  parol  evidence  of  the  nature  of  transaction  to  be 
given,  and  upon  proof  that  the  transaction  was  really  and  essentially 
upon  the  footing  of  a  loan  of  money,  or  an  advance  for  the  accommoda- 
tion of  the  grantor,  have  construed  the  instrument  as  constituting  a 
mortgage;  holding  that  any  clause  or  stipulation  therein,  which  pur- 
ports to  deprive  the  borrower  of  his  equitable  rights  of  redemption, 
is  oppression,  against  the  policy  of  the  law,  and  to  be  set  aside  by  the 
courts  as  void.  4  Kent,  Com.  (6th  Ed.)  159;  Cruise,  Dig.  (Greenl. 
Ed.)  tit.  XV,  c.  1,  §  21 ;'  Washb.  on  Real  Prop.  (3d  Ed.)  42;  Williams 
on  Real  Prop.  353;  Story.  Eq.  §  1019;  Adams,  Eq.  112;  3  Lead.  Cas. 
in  Eq.  (3d  Am.  Ed.) ;  White  &  Tudor's  notes  to  Thornbrough  v. 
Baker,  p.  605  [*874]  and  seq. ;  Hare  &  Wallace's  notes  to  same  case, 
p.  624  [*894]  and  seq. 

The  rule  has  been  frequently  recognized  in  Massachusetts,  where, 
until  1855,  the  courts  have  held  their  jurisdiction  of  foreclosure  and 
redemption  of  mortgages  to  be  limited  to  cases  of  a  defeasance  con- 
tained in  the  deed  or  some  other  instrument  under  seal.  Erskine  v. 
Townsend,  2  Mass.  493,  3  Am.  Dec.  71 ;   Kelleran  v.  Brown,  4  Mass. 

7  See  Wright  v.  Bates,  13  Vt.  341  (1841),  ante,  p.  11. 


(100      CONSTRUCTIVE  TRUSTS  AND  THE  STATUTE  OF  FRAUDS.   (Cll.  7 

44">;  Tavlor  v.  Weld.  5  Mass.  109;  Carey  v.  Rawson,  8  Mass.  159; 
Parks  V.  Hall,  2  Pick.  (Mass.)  206.  211  ;  Rice  v.  Rice,  4  Pick.  (Mass.) 
349;  Flajrg  v.  .Mann,  14  Pick.  (Mass.)  467,  478;  Eaton  v.  Green, 
22  Pick.  (^lass.)  526.  The  case  of  Flag-g  v.  Mann  is  explicit,  not  only 
upon  the  authority  of  the  court  thus  to  deal  with  the  written  instru- 
ments of  the  parties,  hut  also  upon  the  point  of  the  competency  of 
parol  testimony  to  establish  the  facts  by  which  to  control  their  opera- 
tion ;  although,  upon  consideration  of  the  parol  testimony  in  that  case, 
the  court  came  to  the  conclusion  that  there  was  a  sale  in  fact,  and  not 
a  mere  security  for  a  loan. 

By  the  statute  of  1855,  c.  194,  §  1,  jurisdiction  was  given  to  this 
court  in  equity  "in  all  cases  of  fraud,  and  of  conveyances  or  transfers 
of  real  estate  in  the  nature  of  mortgages."  Gen.  St.  c.  113,  §  2.  The 
authority  of  the  courts,  under  this  clause,  is  ample.  It  is  limited  only 
by  those  considerations  which  guide  courts  of  full  chancery  powers 
in  the  exercise  of  all  those  powers. 

If  then  the  advantage  taken  of  the  borrower  by  the  lender,  in  re- 
quiring of  him  an  agreement  that  he  will  forego  all  right  of  redemp- 
tion in  case  of  nonpayment  at  the  stipulated  time,  on  an  absolute  deed 
with  a  bond  or  certificate  back,  which  falsely  recites  the  character  of 
the  transaction,  representing  it  to  be  a  sale  of  the  land  with  a  privi- 
lege of  repurchase,  be  a  sufficient  ground  for  interference  in  equity  by 
restricting  the  operation  of  the  deed,  and  converting  the  writings  into 
a  mortgage,  contrary  to  the  expressed  agreement,  it  is  difficult  to  see 
why  the  court  may  not  and  ought  to  interpose  to  defeat  the  same  wrong, 
when  it  attempts  to  reach  its  object  by  the  simpler  process  of  an  ab- 
solute deed  alone.  In  each  case  the  relief  is  contrary  to  the  terms  of 
the  written  agreement.  In  one  case  it  is  against  the  express  words  of 
the  instrument  or  clause  relied  on  as  a  defeasance,  on  the  ground 
that  those  words  are  falsely  written  as  a  cover  for  the  wrong  prac- 
ticed, or  an  evasion  of  the  right  of  redemption.  In  the  other  it  is 
without  an  instrument  or  clause  of  defeasance,  on  the  ground  that  it 
was  oppressive  and  wrongful  to  withhold  or  omit  the  formal  defea- 
sance. In  strictness,  there  is  no  defeasance  in  either  case.  The  wrong 
on  the  part  of  the  lender  or  grantor,  which  gives  the  court  its  power 
over  his  deed,  is  the  same  in  both.  "For  they  who  take  a  conveyance 
as  a  mortgage  without  any  defeasance  are  guilty  of  a  fraud."  Cotterell 
V.  Purchase,  Gas.  temp.  Talbot,  61.  See,  also,  Bernhart  v.  Green- 
shields,  9  Moore,  P.  C.  18;  Baker  v.  Wind,  1  Ves.  Sen.  160;  Mellor 
V.  Lees,  2  Atk.  194 ;  Williams  v.  Owen,  5  Myl.  &  Cr.  303 ;  Lincoln 
V.  Wright,  4  De  Gex  &  Jones,  16. 

As  a  question  of  evidence,  the  principle  Is  the  same.  In  either  case 
the  parol  evidence  is  admitted,  not  to  vary,  add  to  or  contradict  the 
writing,  but  to  establish  the  fact  of  an  inherent  fault  in  the  transac- 
tion or  its  consideration,  which  afifords  ground  for  avoiding  the  effect 
of  the  writings  by  restricting  their  operation,  or  defeating  them  al- 
together.   This  is  a  general  principle  of  evidence,  well  established  and 


Ch.  7)       CONSTRUCTIVE   TRUSTS   AND   THE   STATUTE   OF   FRAUDS.  601 

recognized  both  at  law  and  in  equity.  Stackpole  v.  Arnold,  11  Mass. 
27,  6  Am.  Dec.  150;  Fletcher  v.  Willard,  14  Pick.  (Mass.)  464;  1 
Greenl.  Ev.  §  284 ;  Perry  on  Trusts,  §  226. 

The  reasons  for  extending  the  doctrine,  in  equity,  to  absolute  deeds, 
where  there  is  no  provision  for  reconveyance,  are  ably  presented  by 
Hare  &  Wallace  in  their  notes  to  Woollam  v.  Hearn,  2  Lead.  Cas. 
in  Eq.  (3d  Am.  Ed.)  676,  and  to  Thornbrough  v.  Baker,  3  lb.  694. 
See,  also,  Adams,  Eq.  Ill;  1  Sugd.  Vend.  (8th  Am.  Ed.)  Perkins' 
notes,  pp.  267,  268,  302,  303.  The  doctrine  thus  extended  is  declared, 
in  numerous  decisions,  to  prevail  in  New  York ;  also  in  Vermont  and 
several  other  states.  Mr.  Washburn,  in  his  chapter  on  Mortgages,  §  1, 
has  exhibited  the  law  as  held  in  the  different  states,  in  this  particular ; 
and  the  numerous  references  there  made,  as  well  as  by  the  annotators 
in  the  other  treatises  which  we  have  cited,  render  it  superfluous  to  re- 
peat them    here.    2  Washb.  Real  Prop.  (3d  Ed.)  35  and  seq. 

Upon  the  whole,  we  are  convinced  that  the  doctrine  may  be  adopted 
without  violation  of  the  statute  of  frauds,  or  of  any  principle  of  law 
or  evidence,  and,  if  properly  guarded  in  administration,  may  prove  a 
sound  and  salutary  principle  of  equity  jurisprudence.  It  is  a  power  to 
be  exercised  with  the  utmost  caution,  and  only  when  the  grounds  of  in- 
terference are  fully  made  out.  so  as  to  be  clear  from  doubt.     *     *     * 

In  the  present  case,  we  are  able  to  arrive  at  the  clear  and  satis- 
factory conclusion  that  there' was  no  real  purchase  of  the  land  by  the 
defendant,  either  from  Tirrill  or  from  the  plaintiff;  that  his  advance 
of  the  purchase  money  at  the  request  of  the  plaintiff  created  a  debt 
upon  an  implied  assumpsit,  if  there  was  no  express  promise ;  and  that 
it  was  the  expectation  of  both  parties  that  the  money  would  be  repaid 
soon  and  the  land  re-conveyed.  Whatever  may  have  been  the  inten- 
tion of  the  defendant,  he  must  have  known  that  this  was  the  expecta- 
tion of  the  plaintiff;  and  it  is  most  favorable  to  him  to  suppose  that 
it  was  his  own  expectation  also.  These  conclusions  are  not  in  the  least 
modified  in  his  favor  by  an  examination  of  his  answer. 

We  must  declare  therefore  that  in  equity  he  holds  the  title  subject 
to  redemption  by  the  plaintiff  in  such  manner  and  upon  such  terms 
as  shall  be  determined  upon  a  hearing  before  a  single  justice. 

Decree  accordingly. 


602  TRUSTS   AND   THE   STATUTE   OF   LIMITATIONS.  (Cll.  8 

CHAPTER  VIII. 
TRUSTS  AND  THE  STATUTE  OF  LIMITATIONS. 


O.  and  J.  KANE  v.  BLOODGOOD  and  Others. 

(In  Chancery,  before  Kent,  Chancellor,  1823.     7  Johns.  Ch.  (N.  Y.)  90,  11  Am. 

Dec.  417.) 

On  a  re-hearing-.  The  bill,  filed  July  5th,  1821,  stated,  that  an  act 
was  passed,  March  30th,  1797,  incorporating  the  Hamilton  Manufac- 
turing Society;  and  that,  by  an  act  of  the  28th  of  March,  1809,  its 
duration  was  extended  to  the  1st  of  March,  1821.  That  on  the  1st  of 
April,  1797.  the  stock  of  the  society  consisted  of  41  shares,  at  1,000 
dollars  each  ;  that  Leonard  Gansevoort  then  owned  one  share,  worth 
1,000  dollars,  and,  afterwards,  on  the  10th  of  September,  1804,  being 
entitled  to  six  other  shares,  he  assigned,  for  a  valuable  consideration, 
all  the  seven  shares  to  J.  &  A.  Kane,  with  all  the  profits  arising  there- 
from, from  the  1st  of  May,  1804.  That  the  assignment  was  under  the 
hand  and  seal  of  L.  G.,  and  endorsed  on  the  certificates  of  the  shares 
held  by  him.  under  the  seal  of  the  society.  That  the  certificates  and  as- 
signments thereof  were  delivered  by  J.  &  A.  K.  to  the  society,  who 
retained  them ;  and,  on  the  9th  of  October,  1804,  gave  new  certificates 
under  their  seal  for  the  six  shares ;  "thus  recognizing  the  right  of  J.  & 
A.  K.  to  the  shares  and  the  profits  thereon  from  the  1st  of  May,  1804." 
That  the  society,  notwithstanding  they  became  trustees  to  J.  &  A.  K., 
for  the  profits  on  the  shares  as  aforesaid,  neglected  and  refused  to  pay 
the  profits  of  the  seven  shares,  from  the  1st  of  May  to  the  9th  of 
October,  1804,  amounting  to  565  dollars  and  52  cents,  though  the  same 
were  frequently  demanded  of  the  society,  and  of  their  factor,  G.  Pear- 
son, under  the  false  and  fraudulent  pretence,  that  the  profits  had  been 
carried  to  the  account  of  L.  G.  with  the  society,  and  that  on  such  ac- 
count, he  was,  on  the  first  of  October,  1804,  indebted  to  the  society 
beyond  the  amount  of  the  profits.  That  the  account  of  L.  G.,  with  the 
factor,  (who  received  all  the  rents  and  profits,  and  kept  all  the  accounts 
with  the  stockholders,  and  paid  them  their  dividends,  under  the  author- 
ity of  the  society,)  stood  in  the  books,  on  the  9th  of  October,  1804, 
with  a  credit  of  dividends,  to  the  1st  of  May,  1804,  and  a  balance  due 
the  society,  of  867  dollars  and  79  cents,  for  glass.  That  the  credits  for 
those  dividends  were  for  dividends  or  profits  due  L.  G.,  on  the  seven 
shares.  That  the  further  dividends  on  the  seven  shares,  from  the  1st 
of  May  to  the  9th  of  October,  1804,  were  actually  credited  to  L.  G., 
in  the  books  of  the  factor,  to  the  exact  amount  of  565  dollars  and  52 
cents,  notwithstanding  the  assignment  of  the  shares,  and  the  new  cer- 
tificates as  above  stated.    That  these  dividends  were  declared,  or  sane- 


Ch.  8)  TRUSTS   AND   THE   STATUTE   OP   LIMITATIONS.  603 

tioned,  or  authorized  by  the  society,  or  the  directors.  That  there  were 
never  any  actual  payments  of  the  last  mentioned  dividends  to  L.  O., 
and  the  society,  notwithstanding  their  false  and  fraudulent  pretence 
aforesaid,  received  and  held  the  same,  in  trust  for  J.  &  A.  K.,  and  are 
now  liable  to  account  for  the  same,  with  interest.  That  they  have  not 
paid  the  same,  under  the  false  and  fraudulent  pretence  of  their  having 
accounted  for  the  same  to  L.  G. 

That  James  Kane,  the  survivor  of  J.  &  A.  Kane,  on  the  5th  of  July, 
1819,  assigned  to  the  plaintiff  Oliver  Kane,  all  the  said  claim  to  the 
said  dividends  on  the  said  seven  shares,  from  the  1st  of  May  to  the 
9th  of  October,  1804. 

As  to  so  much  of  the  bill  as  sought  a  discovery  and  satisfaction, 
for  or  on  account  of  any  dividend  or  profit  on  seven  shares  assigned, 
etc.,  and  accruing  from  the  1st  of  May  to  the  9di  of  October,  1804, 
the  defendants  pleaded  the  statute  of  limitations ;  and  that  the  cause 
of  action,  if  any,  arose  above  six  years  before  the  filing  of  the  bill,  etc. 

The  Chancellor.'  The  defendants  have  pleaded  the  statute  of 
limitations  to  so  much  of  the  bill  as  seeks  satisfaction  for  the  div- 
idends or  profits  on  seven  shares  of  the  stock  of  this  society,  assigned 
by  Leonard  Gansevoort  to  J.  &  A.  Kane,  and  which  accrued  between 
the  1st  of  May  and  9th  of  October,  1804.     *     *     * 

The  cause  was  set  down  for  hearing,  and  argued  upon  the  bill  and 
plea;  and  on  the  16th  of  October,  a  decretal  order  was  entered,  de- 
claring and  adjudging  the  plea  to  be  good  and  sufficient  to  so  much 
of  the  bill  as  it  covered.  A  re-hearing  was  applied  for,  in  respect  to 
the  claim  for  the  dividends,  and  granted.     *     *     * 

The  cause  has  been  well  and  ably  argued  upon  the  re-hearing,  and 
I  have  attentively  examined  all  the  authorities  to  which  I  have  been 
referred,  or  to  which  I  have  been  directed  by  my  own  researches.  I 
have  likewise  bestowed  the  best  consideration  in  my  power,  on  the  rea- 
soning of  the  counsel,  and  the  doctrine  of  the  cases,  with  a  view  to 
arrive  at  a  just  and  satisfactory  conclusion. 

1.  The  first  point  is  as  to  the  dividends  or  profits  on  the  seven  shares 
between  May  and  October,  1804. 

The  bill  charges  that  L.  G.,  on  the  10th  of  September,  1804,  owned 
seven  shares  of  stock  of  the  Hamilton  Manufacturing  Society,  and 
that  he  then,  for  a  valuable  consideration,  assigned  them  to  J.  &  A. 
Kane,  with  all  the  profits  arising  thereon,  from  the  first  of  May  pre- 
ceding, by  an  endorsement  on  the  certificates  for  those  shares,  and 
which  certificates  were  under  the  corporate  seal  of  the  society.  The 
certificates  were  delivered  by  J.  &  A.  Kane  to  the  society,  or  to  their 
factor  for  them,  and  by  them  retained,  and  on  the  9th  of  October,  1804, 
new  certificates  for  six  of  the  shares  were  given  in  lieu  of  the  former 
ones,  ''thus  recognizing,"  as  the  bill  charges,  "the  right_  of  J.  &  A. 
Kane  to  the  shares,  and  to  the  profits  thereon,  from  the  1st  of  May 

1  The  statement  of  facts  is  abridged  and  part  of  the  opinion  is  omitted. 


604  TRUSTS  AND   THE   STATUTE   OF  LIMITATIONS.  (Cll.  8 

preceding."  The  bill  furtlier  charges,  that  the  society,  notwith- 
standing they  became  trustees  for  J.  &  A.  Kane  for  the  profits  afore- 
said, refused  to  pay  the  profits  arising  on  the  seven  shares  between 
May  and  October,  though  they  were  frequently  demanded  of  the 
society  and  of  their  factor,  and  that  the  refusal  was  under  "the  false 
and  fraudulent  pretence"  that  the  profits  had  been  carried  to  the  account 
of  L.  G.  with  the  society  and  their  factor,  and  that  on  such  account 
he  was  indebted  to  the  society,  on  the  9th  of  October,  1804,  beyond 
these  profits. 

It  is  further  stated  in  the  bill,  that  the  account  of  L.  G.  with  the 
factor  (and  which  factor  received  the  rents  and  profits  due  to  the 
society,  and  kept  the  accounts  of  the  society,  and  with  the  stock- 
holders, and  paid  them  their  profits  under  the  direction  of  the  society) 
stood  on  his  books  of  the  date  of  the  9th  of  October,  1804,  with  a 
credit  of  dividends  to  the  first  of  May,  1804,  and  a  balance  due  to  the 
society  of  867  dollars  and  79  cents  for  glass,  and  that  the  dividends, 
so  credited,  had  arisen  on  the  seven  shares,  and  been  duly  declared  and 
authorized  to  be  paid.  The  further  credit  which  had  accrued  to  L.  G. 
for  profits  on  the  seven  shares,  from  the  1st  of  May  to  the  9th  of 
October,  1804,  amounted  to  565  dollars  and  52  cents,  and  had  been 
actually  credited  to  L.  G.  on  the  books  of  the  factor  to  that  amount, 
and  had  been  duly  declared  and  authorized  to  be  paid  on  those  shares. 
But  it  is  averred,  that  there  never  had  been  any  actual  payment  of 
these  dividends,  so  accruing  between  May  and  October,  to  L.  G.,  and 
that  the  society,  notwithstanding  "the  false  and  fraudulent  pretence 
aforesaidi,"  received  and  held  tlie  same  in  trust  for  J.  &  A.  Kane, 
and  are  now  liable  to  account  for  the  same  with  all  the  interest  which 
has  accrued  thereon.  The  payment  has  been  withheld  under  the  false 
and  fraudulent  pretence  that  these  profits  had  been  accounted  for  with 
L.  G.  The  bill  then  states,  that  the  claim  to  the  dividends  on  the  seven 
shares,  from  the  1st  of  May  to  the  9th  of  October,  1804,  was  duly  as- 
signed for  a  valuable  consideration,  on  the  5th  of  July,  1819,  by  J.  K., 
survivor  of  J.  &  A.  Kane,  to  the  plaintiff  O.  Kane,  who  now  claims 
the  same. 

These  are  all  the  material  facts  in  the  bill,  respecting  that  particular 
claim;  and  I  cannot  consider  that  claim  as  being,  on  the  9th  of  Octo- 
ber, 1804,  or  at  any  time  since,  a  mere  technical  trust,  the  creature  of 
a  court  of  equity,  and  cognizant  only  in  equity.  The  profits  on  those 
shares,  from  the  1st  of  May,  passed  with  the  assignment  of  the  shares 
on  the  10th  of  September.  They  were  growing  profits,  not  then  ascer- 
tained and  liquidated  or  appropriated,  and  they  passed  with  the  shares 
themselves  as  incident  thereto,  not  only  by  the  express  words,  but 
by  the  legal  operation  of  the  assignments ;  and  the  society,  by  issuing 
new  certificates  to  J.  &  A.  Kane,  on  the  9th  of  October  following, 
founded  up<!)n  the  assignments,  did,  in  the  language  of  the  bill,  recog- 
nize their  right  under  the  assignments,  and  which  right  w^as  just  as 
valid  to  the  intermediate  profits,  as  to  the  shares  to  which  they  were 


Ch.  8)  TRUSTS   AND   THE   STATUTE   OF  LIMITATIONS.  605 

attached.  The  society,  as  to  those  profits,  were  liable  to  account  to  J. 
&  A.  Kane,  as  being-  owners  of  the  stock  before  those  profits  had  been 
ascertained  and  declared.  An  action  of  account  wouldi  have  lain  against 
the  society,  in  the  character  of  receivers  of  so  much  money  for  the  use 
of  J.  &  A.  Kane.  I  apprehend,  also,  that  an  action  on  the  case,  for  so 
much  money  had  and  received  to  the  use  of  the  assignees,  would  have 
lain  against  the  society.  The  pretence  that  those  intermediate  profits 
had  been  accounted  for  with  L.  G.,  the  bill  avers  to  have  been  a 
false  pretence,  and  that  there  never  had  been  any  payment  of  those 
profits  to  L.  G.,  and  that  the  society  held  the  same  in  trust  for  J.  & 
A.  Kane.  The  society  had  been  put  in  default  by  a  demand  and  refusal, 
which  is  averred.  We  must  assume  these  allegations  of  fact  in  the  bill 
to  be  just  and  true;  and  a  plain  case  of  a  demand,  actionable  at  com- 
mon law,  is  stated  in  the  bill.  The  facts  charged  prove  the  validity 
and  legality  of  the  demand.  There  is  not  even  color  given  by  the  bill 
to  the  inference  of  any  real  defense  on  the  part  of  the  society,  if  an 
action  at  law  had  been  brought  by  J.  &  A.  Kane  after  the  9th  of  Octo- 
ber, 1804.  If  the  factor  had  credited  these  profits  to  L.  G.,  he  did  it 
without  authority  from  the  society,  for  none  is  pretended,  and  L.  G. 
had  no  right  to  ask,  demand  or  receive  these  profits  on  the  face  of  his 
assignment.  The  right  of  J.  &  A.  Kane  to  these  profits  was  not  con- 
tingent or  executory,  but  absolute ;  and  from  the  facts  charged  in  the 
bill,  the  conclusion  was  very  properly  drawn,  that  the  pretences  upon 
which  the  society  refused  to  accede  to  the  demand  of  payment,  were 
false  and  fraudulent. 

But  it  is  quite  unnecessary  to  examine  into  the  merits  of  the  defense 
which  the  society  might  have  set  up  in  opposition  to  the  claim  of  J.  & 
A.  Kane,  in  case  an  action  at  law  or  in  equity,  had  been  brought  in  due 
season.  It  is  sufficient,  for  the  purpose  of  the  present  inquiry,  that  the 
assignees  of  the  stock  had  a  remedy  at  law  for  the  profits  or  dividends ; 
and  we  have  no  reason  to  suppose  that  their  legal  remedy  would  not 
have  been  as  full  and  effectual,  in  reference  to  that  specific  demand,  as 
a  bill  in  equity ;  or  that  the  society  had  the  means  of  making  a  better 
defense  at  law  than  in  equity.  What,  then,  I  may  be  permitted  to  ask, 
is  to  take  this  part  of  the  demand  out  of  the  statute  of  limitations? 
The  counsel  for  the  plaintiffs  contend,  that  this  is  a  case  of  a  direct 
or  express  trust  between  trustee  and  cestui  que  trust,  and  so  not  within 
the  statute;  and  they  have  likewise  contended,  (though  I  do  not  per- 
ceive that  this  point  has  been  pressed  upon  the  re-hearing,)  that  the 
defendants,  upon  the  dissolution  of  the  corporation,  became  trustees, 
by  virtue  of  the  act  of  the  9th  of  April,  1811,  (1  N.  R.  L.  Sess.  c.  235,) 
and  were  bound,  by  the  directions  of  the  statute,  to  pay  all  the  cor- 
porate debts,  of  which  this  was  one. 

The  objection,  that  the  society  held  the  money  in  question  in  the 
character  of  trustees,  and  that  this  was  a  trust  which,  upon  equity 
principles,  was  not  within  the  statute,  has  been  the  main  object  of  dis- 
cussion in  the  cause ;    and  there  is  ground  for  a  great  deal  of  embar- 


606  TRUSTS   AND   THE   STATUTE   OF   LIMITATIONS.  (Ch.  8 

rassment  in  the  examination  of  the  question,  arising  from  the  loose 
manner  in  which  the  rule  is  often  mentioned  in  the  books,  and  the  want 
of  consistency,  as  well  as  precision,  in  the  series  of  cases  applicable  to 
the  point. 

I  cannot  assent  to  the  proposition,  that  all  cases  of  direct  and  ex- 
press trust,  and  arising  between  trustee  and  cestui  que  trust,  are  to  be 
withdrawn  from  the  operation  of  the  statute  of  limitations,  notwith- 
standing a  clear  and  certain  remedy  exists  at  law.  The  word  trust 
is  often  used  in  a  very  broad  and  comprehensive  sense.  Every  deposit 
is  a  direct  trust.  Every  person  who  receives  money  to  be  paid  to  an- 
other, or  to  be  applied  to  a  particular  purpose  to  which  he  does  not  ap- 
ply it,  is  a  trustee,  and  may  be  sued  either  at  law  for  money  had  and 
received,  or  in  equity,  as  a  trustee,  for  a  breach  of  trust.  Willes,  C. 
J.,  in  Scott  V.  Surman,  Willes's  Rep.  404,  405.  The  reciprocal  rights 
and  duties  founded  upon  the  various  species  of  bailment  and  growing 
out  of  those  relations,  as  between  "hirer  and  letter  to  hire,  borrower 
and  lender,  depositary  and  person  depositing,  a  commissioner  and  an 
employer,  a  receiver  and  a  giver  in  pledge,"  are  all  cases  of  express 
and  direct  trust ;  and  these  contracts,  as  Sir  William  Jones  observes. 
(Jones  on  Bailment,  p.  2,)  are,  "among  the  principal  springs  and  wheels 
of  civil  society."  Are  all  such  cases  to  be  taken  out  of  the  statute  of 
limitations  under  the  notion  of  a  trust,  when  one  of  the  parties  selects 
his  remedy  in  this  court?  A  review  of  the  decisions  will  enable  us,  as  I 
apprehend,  to  deduce  from  them  a  safer  and  sounder  doctrine ;  and  to 
establish,  upon  the  solid  foundations  of  authority  and  policy,  this  rule, 
that  the  trusts  intended  by  the  courts  of  equity,  not  to  be  reached  or 
affected  by  the  statute  of  limitations,  are  those  technical  and  continu- 
ing trusts  which  are  not  at  all  cognizable  at  law,  but  fall  within  the 
proper,  peculiar  and  exclusive  jurisdiction  of  this  court. 

The  earliest  case  I  have  met  with  on  the  subject,  is  that  of  Harrison 
v.  Lucas,  1  Ch.  Rep.  67,  15  Car.  I,  in  which  a  plea  of  the  statute  of 
limitations  was  overruled,  and  the  court  was  of  opinion  the  plaintiff 
had  no  remedy  at  law.  The  case  is  so  briefly  stated,  that  we  cannot 
attach  much  weight  to  it.  We  do  not  know  even  the  cause  of  action ; 
and  it  is  only  to  be  noted  for  suggesting  the  very  distinction  taken 
and  acted  upon  afterwards.  But  in  the  time  of  Charles  II  there  were 
some  decisions  which  api)lied  the  doctrine,  that  trusts  were  not  within 
the  statute,  to  cases  that  would  not  now  be  deemed  to  warrant  the 
application. 

Thus,  in  Heath  v.  Henley,  1  Ch.  Cas.  20.  2  Ch.  Rep.  5,  15  Car.  II, 
the  defendant  was  sued  for  an  account  of  moneys  received  by  him  as 
a  prothonotary  of  the  K.  B.,  for  and  on  behalf  of  the  Ch.  J.,  who  was 
the  plaintiff's  testator.  The  plea  of  the  statute  of  limitations  was  ob- 
jected to,  on  the  ground  that  this  was  a  trust  not  within  the  statute, 
and  the  defendant  was  ordered  to  answer.  According  to  this  case,  then, 
every  person  who  receives  money  to  another's  use,  is  a  trustee,  who  is 
to  be  placed  out  of  the  protection  of  the  statute,  if  the  party  elects  to 


Ch.  8)  TRUSTS   AND   THE   STATUTE   OF   LIMITATIONS.  607 

sue  him  in  chancery,  instead  of  suing  him  at  law ;  but  I  am  persuaded 
that,  upon  the  authority  of  the  mqre  modern  cases,  such  a  proposition 
cannot  be  maintained.  So,  in  Sheldon  v.  Weldman,  1  Ch.  Cas.  26,  15 
Car.  II,  the  bill  was  for  an  account  of  money  delivered  by  the  testator 
to  the  defendant  to  compound  for  his  estate  sequestered  by  govern- 
ment, and  the  statute  was  pleaded,  and  the  plea  overruled,  because 
the  money  was  delivered  on  a  trust.  The  same  observation  will  ap- 
ply to  this  case ;  an  action  at  law  would  lie  for  money  had  and  received  ; 
and  if  the  decision  was  sound  equity  doctrine,  it  would  follow,  that 
the  party  seeking  for  an  account  of  his  money  could,  at  his  pleasure, 
escape  from  the  bar  of  the  statute,  by  shifting  a  suit  from  one  forum 
to  another.  It  would  likewise  put  an  end  to  the  well  known  and  vastly 
convenient  and  remedial  action  at  law  for  money  had  and  received, 
in  every  case  where  the  demand  was  of  six  years  standing,  and  it 
would  go  very  great  lengths  towards  defeating  the  policy  and  provi- 
sions of  the  statute.  Again ;  in  Lord  HoUis's  Case,  2  Vent.  345,  26 
Car.  II,  £100.  was  lent  by  his  wife,  to  be  disposed  of  as  she  should 
direct ;  and  on  a  bill  for  the  money,  the  plea  of  the  statute  was  over- 
ruled, as  this  was  looked  upon  as  a  depositum,  and  a  trust  thereon  to 
the  wife.  This  case,  if  it  were  a  just  authority,  would,  in  a  great  de- 
gree, annihilate  the  action  at  law  for  money  lent ;  and  as  Lord  Hard- 
wicke  observed,  in  a  case  which  I  shall  presently  mention,  "every  bail- 
ment might  as  well  be  said  to  be  a  trust  as  this."  I  have,  therefore, 
no  difficulty  in  disregarding  the  authority  of  these  few  loose  and  care- 
lessly reported  cases  in  the  time  of  Charles  II,  in  which  we  have  only 
a  brief  note  of  the  decisions,  without  any  reasoning  or  illustration. 

It  is  well  settled,  that  the  statute  of  limitations  is  a  good  plea  in 
equity  as  well  as  at  law.  This  has  been  the  uniformly  acknowledged 
doctrine  ever  since  the  statute  of  Jac.  I  was  enacted.  A  demand  for 
i2,000  was  held  barred  by  the  statute,  as  early  as  9  Charles  I,  in 
Kennedy  v.  Vanlove,  1  Ch.  Rep.  38,  and  again  in  Pearson  v.  Pulley, 
1  Ch.  Cas.  102,  20  Car.  II,  the  Lord  Keeper  said,  he  considered  20 
years  to  be  a  fit  time  within  which  a  mortgage  was  to  be  redeemable, 
in  imitation  of  the  statute  of  limitations  in  real  actions.  So  early 
were  the  statutes  of  limitations  admitted  to  be  the  rule  of  decision  in 
equity,  as  well  as  at  law ;  and  though  the  courts  of  equity  were  not 
within  the  words  of  the  statutes,  the  time  adopted  by  them  was  adopted 
by  analogy,  as  a  fit  and  just  period  for  a  bar  in  equity  of  analogous 
claims.  The  great  and  marked  exception  to  this  ordinary  application 
of  the  statute  to  equity  cases,  exists  in  the  matter  of  trusts  falling  ex- 
clusively within  equity  jurisdiction. 

The  first  case  that  gave  anything  like  precision  to  the  definition  of  a 
trust,  not  affected  by  the  statutes,  was  that  of  Lockey  v.  Lockey,  de- 
cided by  Lord  Macclesfield,  in  1717.  Prec.  in  Ch.  518.  That  was  a 
bill  for  an  account  of  the  profits  of  an  estate  received  while  the  plain- 
tiff was  an  infant,  and  the  bill  was  not  filed  until  six  years  after  he 
came  of  age.     The  case  does  not  state  the  exact  character  and  rela- 


608  TRUSTS  AND  THE  STATUTE  OF  LIMITATIONS.        (Ch.  8 

tion  of  the  defendant;  though  I  should  infer,  from  one  part  of  the 
case,  that  the  defendant  had  been  in  possession,  and  received  the  profits, 
not  as  a  tort-feasor,  but  under  an  agreement,  constituting  him  a  trus- 
tee for  the  infant.  The  Lord  Chancellor  was  clearly  of  opinion,  "that 
where  one  receives  the  profits  of  an  infant's  estate,  and,  six  years  after 
his  coming  of  age,  he  brings  a  bill  for  an  account,  the  statute  of 
limitations  were  a  bar  to  such  suit,  as  it  would  be  to  an  action  of  ac- 
count at  common  law  ;  for  this  receipt  of  the  profits  of  an  infant's 
estate  was  not  such  a  trust  as,  being  a  creature  of  a  court  of  equity, 
the  statute  shall  be  no  bar  to,  for  he  might  have  had  his  action  of  ac- 
count against  him  at  law,  and,  therefore,  no  necessity  to  come  into  this 
court  for  the  account.  If  the  infant  lies  by  for  six  years  after  he  comes 
of  age,  as  he  is  barred  of  his  action  of  account  at  law,  so  shall  he  be  of 
his  remedy  in  this  court;  and  there  is  no  sort  of  difference  in  reason 
between  the  two  cases." 

The  doctrine  of  this  case  is,  that  the  trusts  which  are  not  within 
the  statutes,  are  those  which  are  the  creatures  of  the  court  of  equity, 
and  not  within  the  cognizance  of  a  court  of  law ;  and  that  as  to  those 
other  trusts  which  are  the  ground  of  an  action  at  law,  the  statute 
is,  and  in  reason  ought  to  be,  as  much  a  bar  in  one  court  as  in  the 
other.  The  statute  is  a  bar  to  a  bill  for  an  account,  wdien  it  would 
be  a  bar  to  an  action  of  account  at  common  law  for  the  same  matter, 
and  for  which  the  party  might  have  had  his  action  of  account.  The 
case  was  so  understood  by  Lord  Redesdale,  and  he  cites  it  with  ap- 
probation in  a  case  which  I  shall  hereafter  refer  to,  to  show  that  a 
court  of  equity  is  as  much  barred  as  a  court  of  law  by  the  statute  of 
limitations. 

This  single  case,  resting  upon  such  authority,  and  with  such  marked 
and  significant  discrimination  between  the  character  of  the  trusts  that 
are  within  and  without  the  operation  of  the  statute,  appears  to  me  to 
be  decisive  upon  the  point  now  under  consideration. 

The  case  of  Lawley  v.  Lawley,  9  Mod.  Rep.  32,  9  Geo.  I,  arose 
soon  after,  and  before  the  same  Lord  Chancellor;  and  it  cannot  readily 
be  supposed  that  he  intended,  by  anything  in  this  case,  to  interfere 
with  a  rule  he  had  shortly  before  so  explicitly  declared  and  illustrated. 
In  this  case,  lands  were  settled  by  will  on  trustees;  and  one  of  the 
trusts  was,  that  if  the  son's  wife  survived,  she  was  to  receive  the  rents 
and  profits  of  the  lands,  as  the  same  were  at  that  time  let.  Her 
husband  afterwards  greatly  increased  the  rents,  and  upon  his  death 
the  wife  enjoyed  the  whole  of  the  rents,  making  no  distinction  be- 
tvv-een  the  original  and  the  additional  rent.  A  number  of  years  after 
her  death,  her  executor  was  sued,  by  the  devisee  in  tail,  being  a  grand- 
son of  the  testator,  for  an  account  of  the  surplus  rents  received  by 
her  and  by  her  executor.  The  plea  of  the  statute  of  limitations  was 
over-ruled,  "because  the  estate  in  law  was  in  trustees,"  and  the  ex- 
ecutor was  decreed  to  account  for  the  improved  rents  received  by 
her,  or  by  him  since  her  death. 


Ch.  8)  TRUSTS   AND   THE   STATUTE   OF   LIMITATIONS.  609 

There  is  no  reason  given  for  this  decree,  but  what  is  to  be  inferred 
from  the  single  observation,  that  the  estate  in  law  was  in  trustees, 
and  that  must  be  understood  to  mean  that  the  plaintiff  in  the  bill  had 
not  the  legal  title,  and  could  not  have  maintained  an  action  at  law. 
The  legal  estate  was  in  trustees,  in  trust  "to  the  first  and  every  other 
son  and  sons  of  Sir  Thomas  in  tail  male,"  and  the  plaintiff  was  such 
a  son.  This  construction  of  the  case  renders  Lord  Macclesfield  per- 
fectly consistent  with  himself  in  the  preceding  case.  "It  is  clear," 
says  Sir  Wm.  Grant,  when  commenting  upon  this  case,  (2  Merivale, 
360),  "that  under  any  other  circumstances,  the  demand  for  these  rents 
would  have  been  barred ;  but  it  was  considered  that  so  long  as  the 
trust  subsisted,  so  long  it  was  impossible  that  the  cestui  que  trust  could 
be  barred.  The  cestui  que  trust  could  only  be  barred  by  barring  and 
excluding  the  estate  of  the  trustee."  I  cannot  but  think,  with  very 
great  respect,  that  the  master  of  the  rolls  is  not  very  clear  and  sat- 
isfactory in  his  commentary  vipon  the  case.  It  was  not  a  suit  between 
trustee  and  cestui  que  trust.  The  trustees  seized  of  the  legal  estate 
under  the  settlement  were  not  sued,  and  yet  he  says,  the  cestui  que 
trust  could  only  be  barred,  by  barring  the  estate  of  the  trustee.  It 
was  a  suit  by  one  cestui  que  trust  against  the  representative  of  another 
cestui  que  trust,  for  receiving  more  of  the  rents  than  belonged  to 
her;  I  see  no  good  reason  why,  as  between  them,  the  statute  should 
not  have  applied,  unless  we  adopt  the  plain  rule  upon  which  alone 
the  decision  is  intelligible  and  just,  that  the  plaintiff  was  a  cestui  que 
trust,  without  any  title  or  remedy  at  law. 

It  is  a  general  rule  in  the  books,  that  there  is  no  statute  of  limita- 
tions to  a  charge  upon  an  estate.  Thus,  in  Collins  v.  Goodall,  2  Vern. 
235,  the  statute  was  pleaded  to  a  bill  for  rent  charged  on  land  by  will. 
and  it  was  held  that  it  did  not  apply;  and  so  again,  in  the  modern 
case  of  Stackhouse  v.  Barnston,  10  Vesey,  453,  the  Master  of  the 
Rolls  said,  that  in  equity  the  statute  is  never  permitted  to  prevail 
against  a  legal  rent  charge.  And,  in  Norton  v.  Turvill,  2  P.  Wms. 
144,  a  wife,  before  marriage,  had  conveyed  her  estate  in  trust  to  her 
separate  use,  and  during  coverture  had  borrowed  money  upon  bond. 
The  bond  was  held  void,  and  after  her  death  a  bill  was  filed  against 
her  husband  and  her  executors.  The  Master  of  the  Rolls  held,  that 
her  separate  estate  was  a  trust  estate  for  the  payment  of  debts ;  and 
speaking  in  reference  to  that  trust,  he  said  the  trust  was  not  within 
the  statute  of  limitations.  These  cases  of  charges  upon  land  I  have 
alluded  to  as  going  in  support  of  the  distinction,  which  I  apprehend 
is  the  prevailing  one,  that  the  trusts  upon  which  the  statute  does  not 
operate,  are  those  trusts  of  which  equity  has  the  proper  and  the  ex- 
clusive cognizance.  I  take  it  for  granted  as  the  assumed  doctrine  in 
all  these  cases,  that  an  action  at  law  will  not  lie  in  the  case  of  a  mere 
charge  upon  land,  where  there  is  no  personal  undertaking.  And  if 
there  be  a  personal  contract,  the  statute  cannot  be  pleaded  at  law  in 
Ken.Tb.— 39 


GIO  TRUSTS    AND    THE    STATUTE    OF    LIMUFATIONS.  (Cll.  8 

the  case  of  rent,  if  it  be  reserved  by  indenture,  or  even  on  a  lease  in 
writing,  according  to  what  was  said  in  Hodsden  v.  Harris  in  2 
Saund.  66. 

We  have  a  scries  of  decisions  of  Lord  Hardvvicke  on  this  subject, 
in  which  I  think  it  will  appear,  that  the  distinction  taken  by  Lord 
Macclesfield,  in  respect  to  the  statute  of  limitations,  has  been  preserved. 

In  Prince  v.  Heylin,  1  Atk.  493,  Lord  Hardwicke  held  that  the 
statute  was  a  bar  to  any  demand  from  one  tenant  in  common  against 
another  for  an  account,  farther  back  than  six  years.  "An  action  of 
account,"  he  observes,  "lies  for  one  tenant  in  common  against  an- 
other, and  such  action  is  expressly  mentioned  in  the  statute  of  limita- 
tions ;  and  as  there  is  no  remedy  at  law,  (meaning  after  six  years,) 
there  can  be  no  reason  for  any  in  equity."  All  this  is  perfectly  intel- 
ligible, and  so  far  applicable  as  the  case  before  him  was  one  concern- 
ing tenants  in  common.  But  the  observation  respecting  the  limitation 
was  quite  unnecessary ;  for  the  chancellor  admitted  that  no  ad- 
vantage could  be  taken  of  the  statute  of  limitations,  as  it  had  neither 
been  pleaded  nor  insisted  on  in  the  answer ;  and  I  have  referred  to 
the  case,  because  it  contained  the  sanction  of  Lord  Hardwicke  to  the 
rule,  that  where  the  party  has  a  remedy  at  law,  by  an  action  of  ac- 
count, for  the  same  subject  matter  for  which  the  bill  is  filed,  "there 
can  be  no  reason"  why  the  statute  of  limitations  should  not  apply  to 
the  suit  in  equity,  as  well  as  to  the  suit  at  law.  What  shall  we  say, 
then,  to  the  other  remark  in  the  same  case,  that  "in  the  case  of  joint 
tenants  or  parceners,  there  is  a  mutual  trust  between  them,  and  they 
are  accountable  to  each  other  without  regard  to  the  length  of  time?" 
Is  it  possible,  I  would  ask,  to  make  such  a  distinction  between  tenants 
in  common  and  joint  tenants,  when,  by  the  common  law,  no  action  of 
account  lay  by  one  joint  tenant,  or  tenant  in  common,  against  another, 
unless  he  had  constituted  him  his  bailifiF;  and  when,  by  the  statute  of 
4  Anne,  c.  16,  an  action  of  account  was  given  equally  to  joint  tenants 
and  tenants  in  common  against  each  other,  for  receiving  an  undue 
proportion  of  the  profits  of  the  estate?  The  observation  of  Lord 
Hardwicke  was  entirely  extra-judicial ;  and,  probably,  it  might  safely 
be  placed  to  the  account  of  the  inaccuracy  of  the  reporter ;  as  it  is  well 
known,  that  the  reports  of  Atkyns  abotmd  in  mistakes.  Afterwards, 
in  Brereton  v.  Gamul,  2  Atk.  240,  which  was  a  case  of  a  bill  for  dis- 
covery, and  to  be  let  into  possession  of  real  estate,  and  the  statute  of 
limitations  was  pleaded  in  bar,  Lord  Hardwicke  held  that,  if  the 
plaintiff  had  lost  his  right  by  a  legal  bar,  he  could  have  no  remedy 
in  equity.  This  case  very  clearly  shows  that,  where  there  is  a  legal 
and  an  equitable  remedy,  in  respect  to  the  same  subject  matter,  the 
latter  is  under  the  control  of  the  same  statute  bar  with  the  former. 

Again,  in  Sturt  v.  Mellish,  2  Atk.  610,  Lord  Hardwicke  expressly, 
and  after  much  deliberation,  adopted  the  distinction  of  Lord  Mac- 
clesfield, as  to  the  character  of  the  trust,  which  was  to  be  exempted 
from  the  statute.    An  account  was  stated  between  the  plaintiff  and  one 


Ch.  8)  TRUSTS   AND   THE   STATUTE   OF   LIMITATIONS.  611 

Villa  Real,  and  a  considerable  debt  was  due  from  S.  to  V.  R.,  and  the 
plaintiff  constituted  V.  R.  his  attorney,  to  recover  moneys  in  Portugal, 
and  the  whole  transaction  was  with  the  government  of  Portugal.  The 
bill  Vv'as  filed  against  the  executor  of  V.  R.,  for  an  account,  and  the 
statute  of  limitations  was  held  to  be  a  bar  to  the  suit ;  and  that  it  was 
not  the  case  of  a  trust  unaffected  by  the  statute.  "A  trust,"  he  ob- 
served, "is  where  there  is  such  a  confidence  between  parties,  that  no 
action  at  law  will  lie,  but  is  merely  a  case  for  the  consideration  of  this 
court;  and  every  bailment  might  as  well  be  said  to  be  a  trust  as  this." 
In  the  next  case,  of  Pompfret  v.  Windsor,  2  Ves.  472,  the  effect  of 
the  statute  upon  a  trust  was  considerably  discussed.  It  was  a  bill 
to  have,  among  other  things,  execution  of  a  trust  for  raising  £20,- 
000.  out  of  a  real  estate,  at  a  distance  of  27  years;  and,  although 
a  fine  had  been  levied,  Lord  Hardwicke  held,  that  a  fine  by  persons  in 
possession  and  non-claim,  the  legal  estate  being  in  trustees,  was  no 
bar  to  an  equitable  charge  under  a  deed  of  trust,  and  to  a  claim  of 
the  cestui  que  trust,  calling  upon  the  administrator  for  an  execution 
of  the  trust  of  the  real  estate.  The  fine  was  levied  by  Lady  Windsor, 
as  administratrix,  and  guardian  in  possession  of  the  real  estate,  and  a 
trustee  of  the  £20,000.,  which  was  the  charge  upon  the  land.  The 
possession  was  not  an  adverse  one,  and  the  claim  was  purely  of 
equitable  cognizance  in  respect  to  the  charge.  Yet  even  here.  Lord 
Hardwicke  observed,  that  the  statute  of  limitations  did  not  stand  in  the 
plaintiff's  way,  for  "it  was  not  pleaded  or  insisted  upon  at  the  bar." 
And,  further,  the  admissions  were  so  strong,  "that,  if  this  had  been  a 
case  within  the  statute,  and  that  insisted  upon  against  the  account,  it 
had  been  sufficient  to  take  the  case  out  of  the  statute."  This  case, 
therefore,  is  in  no  respect  inconsistent  with  the  distinction  which  has 
been  deduced  from  the  preceding  cases.  And  when  we  come  down  to 
a  later  period,  we  shall  perceive  that  the  analogy  between  the  legal  and 
the  equitable  remedy,  when  both  existed  in  respect  to  the  same  subject 
matter,  has  been  strongly  and  emphatically  declared,  and  strictly  and 
uniformly  preserved. 

Thus,  in  Smith  v.  Clay,  3  Bro.  639,  note,  Lord  Camden  observed, 
that,  "as  often  as  parliament  had  limited  the  time  of  actions  and 
remedies  to  a  certain  period  in  legal  proceedings,  the  Court  of 
Chancery  adopted  that  rule,  and  applied  it  to  similar  cases  in  equity. 
For  when  the  legislature  had  fixed  the  time  at  law,  it  would  have  been 
preposterous  for  equity  to  countenance  laches  beyond  the  period  that 
law  had  been  confined  to  by  parliament.  In  all  cases,  where  the  legal 
right  has  been  barred  by  parliament,  the  equitable  right  to  the  same 
thing  has  been  concluded  by  the  same  bar."  Again,  in  Harwood  v. 
Oglander,  6  Ves.  199,  8  Ves.  106,  the  question  was  concerning  a  trust, 
in  respect  to  real  estate,  and  time  was  not  allowed  to  operate  as  a  bar, 
but  by  way  of  evidence,  as  raising  a  presumption  of  ouster.  The 
party  claiming  did  not  dispute  the  title  of  those  in  possession,  but 
alleged  a  title  in  himself,  as  tenant  in  common;    and  the  case  contains 


612  TRUSTS   AND   THE   STATUTE   OF    LIMITATIONS.  (Cll.  8 

nothing  more  on  that  point,  than  the  doctrine  at  law,  (Doe  v.  Prosser, 
Cowp.  217,)  that  the  possession  of  one  tenant  in  common,  eo  nomine, 
as  tenant  in  common,  can  never  bar  his  companion,  because  such  pos- 
session is  not  adverse,  hut  in  sup^xDrt  of  the  common  title;  and  in  that 
case,  the  Master  of  the  Rolls  observed,  that  he  "should  be  sorry  to 
have  it  understood  to  be  the  rule  of  the  court,  that  thes-e  is  no  limita- 
tion whatsoever  to  trust  estates ;  and  that,  let  the  legal  title  once  get 
into  a  trustee,  the  cestui  que  trust  may  permit  others  to  enjoy  the 
property,  and  come  to  this  court  at  any  distance  of  time  for  an  ac- 
count. It  would  be  perfectly  alarming."  He  expressed  a  strong 
opinion  against  granting  the  account  farther  back  than  six  years. 

In  Stackhouse  v.  Barnston,  10  Ves.  453,  the  Master  of  the  Rolls 
said,  that  though  the  statute  of  limitations  does  not  apply  to  any 
equitable  demand,  yet  equity  takes  the  same  limitation  in  cases  that 
are  analogous  to  those  in  which  it  applies  at  law;  and  he  said,  that 
an  account  of  rents  and  profits  was  limited  to  six  years,  by  analogy 
to  legal  limitations. 

This  application  of  the  statute  by  analogy  cannot  well  be  made  to 
cases  of  those  peculiar  trusts  which  are  the  mere  creatures  of  equity — 
for  there  is  no  ground  for  comparison;  but  when  the  same  subject 
matter  of  the  demand  in  equity  can  also  be  made  the  subject  of  an 
action  at  law,  the  rule  of  analogy  applies  in  all  its  force,  as  Lord 
Redesdale  observed,  in  Bond  v.  Hopkins,  1  Sch.  &  Lef.  413,  the  statute 
of  limitations  does  not  apply  in  terms  to  proceedings  in  courts  of 
equity,  but  equitable  titles  are  affected  by  analogy  to  it.  If  the 
equitable  title  be  not  sued  upon,  within  the  time  within  which  a  legal 
title  of  the  same  nature  ought  to  be  sued  upon,  to  prevent  the  bar  of 
the  statute,  the  court,  acting  by  analogy  to  the  statute,  will  not  relieve. 

Lord  Redesdale,  afterwards,  in  Hovenden  v.  Lord  Annesley,  2 
Sch.  &  Lef.  607,  went  much  more  at  large  into  the  doctrine  of  the 
limitation  of  actions  in  equity ;  and  the  principle  of  that  case  is,  that 
if  the  equitable  title  be  not  acted  upon  in  the  same  time  the  legal  title 
should  be,  it  is  barred.  "Courts  of  equity  are  bound  to  yield  obedi- 
ence to  the  statute  of  limitations  upon  all  legal  titles  and  legal  demands, 
and  cannot  act  contrary  to  the  spirit  of  its  provisions."  I  understand 
this  proposition  to  mean,  that  if  the  party  has  legal  title,  and  a  legal 
right  of  action,  and,  instead  of  proceeding  at  law,  resorts  to  equity; 
instead  of  bringing  his  action  of  account,  or  detinue,  or  case,  for 
money  had  and  received  at  law,  files  his  bill  for  an  account,  the  same 
period  of  time  that  would  bar  him  at  law  will  bar  him  in  equity.  This 
is  the  principle  that  pervades  the  cases.  Lord  Redesdale  proceeds  to 
observe,  that  'Courts  of  equity  have  constantly  guided  themselves  by 
the  principle,  that  wherever  the  legislature  has  limited  a  period  for 
law  proceedings,  eciuity  will,  in  analogous  cases,  consider  the  equitable 
rights  as  barred  by  the  same  limitation.  I  take  it  for  granted,"  he 
says,  "that  the  position  that  trust  and  fraud  are  not  within  the  statute 
is  qualified  just  as  Lord  Macclesfield  qualifies  it  in  the  case  of  Lockey 


Ch.  8)  TRUSTS   AND   THE   STATUTE   OF   LIMITATIONS.  G13 

V.  Lockey."  We  have  already  seen  in  what  manner  Lord  M.  qualifies 
the  position  as  to  trusts;  and  what  stronger  sanction  could  Lord 
Redesdale  have  given  than  this  to  the  principle  contained  in  that  lead- 
ing case,  and  upon  which  this  whole  argument  rests? 

He  adds,  further,  in  this  case,  that  if  the  trustee  is  in  possession, 
(speaking^  of  real  estate),  and  does  not  execute  his  trust,  the  posses- 
sion of  the  trustee  is  the  possession  of  the  cestui  que  trust;  and  if 
the  only  circumstance  be,  that  he  does  not  perform  his  trust,  his  pos- 
session operates  nothing  as  a  bar,  because  his  possession  is  according 
to  his  title.  As,  in  the  case  of  a  lessee  for  years,  though  he  does  not 
pay  his  rent  for  50  years,  his  possession  is  no  bar  to  an  ejectment  after 
the  expiration  of  his  term,  because  his  possession  is  according  to  the 
right  of  the  party  against  whom  he  seeks  to  set  it  up.  Again,  he  says, 
that  every  new  right  of  action  in  equity  that  accrues  to  the  party, 
whatever  it  may  be,  must  be  acted  upon,  at  the  utmost,  within  20 
years.  If  a  mortgagee  has  been  in  possession  for  a  great  length  of 
time,  but  has  acknowledged  that  his  possession  was  as  mortgagee, 
and  therefore  liable  to  redemption,  a  right  of  action  accrues  upon  that 
acknowledgment.  But  if  not  pursued  within  20  years,  the  statute  may 
be  pleaded ;  and  so  in  every  case  of  equitable  title,  (not  being  the  case 
of  a  trustee,  where  possession  is  consistent  with  the  title  of  the  claim- 
ant.) it  must  be  pursued  within  20  years. 

It  is  easy  to  perceive,  that  the  doctrines  here  laid  down  are  the  same 
as  govern  courts  of  law  in  analogous  cases,  and  the  statute  of  limita- 
tions receives  the  same  construction  and  application  at  law  and  in 
equity.  It  is  equally  said,  that  fraud,  as  well  as  trust,  is  not  within 
the  statute,  and  it  is  well  settled  that  the  statute  does  not  run  until  the 
discovery  of  the  fraud ;  for  the  title,  to  avoid  it,  does  not  arise  until 
then,  and  pending  the  concealment  of  it,  the  statute  ought  not  in 
conscience  to  run;  but  after  the  discovery  of  the  fact  imputed  as 
fraud,  the  statute  runs  as  in  other  cases.  This  was  the  true  ground 
of  the  case  of  Booth  v.  Lord  Warrington,  1  Bro.  P.  C.  455,  and  this 
was  the  rule  declared  in  the  case  of  the  South  Sea  Company  v.  Wy- 
mondsell,  3  P.  W.  143,  and  Lord  Redesdale,  in  the  case  on  which  I 
have  so  long  dwelt,  approves  of  the  rule. 

In  the  case  now  before  me,  if  the  directors  of  the  Hamilton  Manu- 
facturing Society  had  passed  the  dividend  to  the  credit  of  J.  &  A. 
Kane,  and  there  had  been  no  demand  and  refusal,  the  possession  of  the 
fund  would  have  been  consistent  with  the  title  of  the  cestui  que  trust, 
and  the  statute  would  not  have  been  a  bar.  But,  after  a  refusal  to 
pay,  and  a  denial  of  title,  the  possession  becomes  adverse,  and  it  is 
as  just  and  reasonable  that  the  statute  should  run  and  bar  the  party, 
who  is  apprised  that  his  right  is  denied,  and  yet  sleeps  on  that  right, 
as  that  it  should  bar  the  party  who  has  knowledge  of  the  fraud,  and 
neglects  his  remedy. 

The  case  of  Beckford  v.  Wade,  17  Vesey,  87,  arose  upon  a  construc- 
tion to  be  given  to  an  exception  in  the  statute  of  limitations  of  the 


614  TRUSTS   AND   THE   STATUTE   OF    LIMITATIONS.  (Ch.  8 

Island  of  Jamaica,  which  declared  that  the  act  should  not  be  held  to 
extend  to  a  possession  held  by  trustees  The  master  of  the  rolls  held, 
in  that  case,  that  the  exception  meant  not  constructive  trusts,  but  only 
<lirect  or  express  trusts  between  cestui  que  trusts  and  their  trustees, 
upon  which  Icntrth  of  time  doc^  not  bar,  and  ought  to  have  no  effect, 
and  that  they  did  not  extend  to  every  equitable  question  relative  to 
real  property. 

The  case  concerned  real  estate;  and  the  oljservation  of  Sir  \Vm. 
Grant,  and  which  is  so  frecjuently  met  with  in  the  books,  that  time  (Joes 
not  bar  a  direct  trust,  as  between  trustee  and  cestui  que  trust,  is  pre- 
cisely the  same  principle  that  applies  at  law  to  tenants  in  common, 
where  the  statute  does  not  run  but  from  actual  ouster,  because  the  pos- 
session of  one  is  not  adverse  to  the  right  of  the  other,  but  is  in  support 
of  the  common  title.  It  does  not  bar,  so  long-  as  the  trust  is  a  con- 
tinuing and  acknowledged  trust.  In  Harwood  v.  Oglander,  already 
cited,  it  was  considered  by  Lord  Alvanley,  and  afterwards  by  Lord 
Eldon,  that  if  a  trust  subsisted,  so  that  the  trustee  could  recover  as 
having  the  legal  estate,  it  would  follow,  that  the  right  of  the  cestui 
que  trust,  as  against  the  trustee,  could  not  be  barred.  But  supposing 
the  trustee  was  to  deny  the  right  of  the  cestui  que  trust,  and  assume 
absolute  ownership,  is  there  any  case  in  equity  that  would  allow  the 
latter  his  remedy,  beyond  the  period  limited  for  the  recovery  of  legal 
estates  at  law  ?  So  long  as  the  trust  is  a  subsisting  one,  and  admitted 
by  the  act  or  declarations  of  the  parties,  no  doubt  the  statute  does  not 
afifect  it;  but  when  such  transactions  take  place  between  trustee  and 
cestui  que  trust,  as  would,  in  the  case  of  tenants  in  common,  amount 
to  an  ouster  of  one  of  them  by  the  other,  I  can  hardly  suppose  that  a 
court  of  equity  would  consider  length  of  time  afterwards  as  of  no 
consequence.  There  is  no  good  reason  why  the  statute  of  limita- 
tions should  not  apply  to  such  a  case,  as  well  as  to  cases  of  construc- 
tive trusts,  and  to  cases  of  detected  fraud,  and  to  all  other  cases  in 
which  the  statute  is  assumed  as  a  rule  of  decision. 

"The  general  doctrine  in  this  country,"  says  the  Master  of  the  Rolls, 
in  Beck  ford  v.  Wade,  "is  against  applying  statutory  limitations  to 
cases  of  trust.  As  our  statute  bars  only  legal  remedies,  of  course  it 
has  no  direct  operation  upon  trusts,  for  wdiich  there  was  no  remedy 
but  in  courts  of  equity."  This  last  sentence  shows  what  kind  of 
trusts  Sir  W.  Grant  had  in  contemplation,  when  he  said  the  statutory 
limitations  did  not  apply  to  trusts ;  and  he  assumes  as  correct  the  dis- 
tinction between  those  trusts  which  are  the  creatures  of  equity,  and 
known  there  only,  and  the  other  cases  of  trust,  over  which  courts  of 
law  have  concurrent  jurisdiction.  It  is  as  to  those  "trusts  for  wdiich 
there  was  no  remedy  but  in  courts  of  equity"  that  the  statute  does  not 
operate;  and  Lord  Camden,  as  we  have  seen,  considered  it  as  pre- 
posterous, that  the  statute  should  not  apply  to  the  equitable,  when  it 
would  apply  to  the  legal  remedy. 


Ch.  8)  TRUSTS   AND   THE   STATUTE   OK   LIMITATIONS.  615 

The  successor  of  Lord  Redesdale  expressed  his  opinion  on  the  ap- 
pHcation  of  the  statute  to  equity  cases  in  Medlicot  v.  O'Donnell,  1 
Ball  &  B.  156,  and  declared  that  he  considered  the  statute  of  limita- 
tions as  founded  upon  the  soundest  principles,  and  the  wisest  policy; 
and  that  the  Court  of  Chancery,  for  the  peace  of  families,  and  to  quiet 
titles,  was  bound  to  adopt  it  in  cases  where  the  equitable  and  legal 
titles  so  far  corresponded,  that  the  only  difference  between  them  was, 
that  the  one  must  be  enforced  in  a  court  of  equity,  and  the  other  in 
a  court  of  law.  He  added,  further,  that  where  there  was  no  continu- 
ing or  subsisting  trust,  the  same  principle  would  apply.  In  Cholmon- 
deley  v.  Clinton,  2  Merivale.  93,  there  was  much  discussion  on  this 
subject.  The  plaintifif  claimed  to  be  entitled  to  the  equity  of  redemp- 
tion of  a  mortgaged  estate  which  was  subsisting  in  trustees,  and  he 
prayed  that  the  defendant  might  be  decreed  to  re-convey,  and  to  de- 
liver up  possession,  and  to  account  for  the  rents  and  profits.  The  de- 
fendant insisted,  that  trustees  had  been  in  quiet  possession  for  up- 
wards of  twenty  years,  and  he  claimed  the  benefit  of  the  statute.  The 
master  of  the  rolls,  in  giving  his  opinion,  stated,  that  it  was  admitted 
that  an  equity  of  redemption  subsisted  in  the  case,  and  so  long  as  it 
did  subsist,  the  question  to  whom  it  belonged  was  open,  and  some  per- 
son was  entitled  to  redeem  it.  The  trust  subsisted.  The  mortgagee 
was  trustee  of  the  legal  estate  for  the  plaintiff,  who  had  the  equity  of 
redemption.  He  held  that  the  statute  did  not  apply,  because  the  pos- 
session of  twenty  years  was  not  in  the  character  of  owner  of  the  legal 
estate,  nor  under  any  claim  of  being  so  entitled.  The  subsistence  of 
the  mortgage  had  been  all  along  recognized.  Even  at  law,  mere  pos- 
session is  not  sufficient  to  bar  the  claim  of  the  true  owner ;  there  must 
be  something  tantamount  to  a  disseisin. 

I  refer  to  this  case,  as  containing  a  clear  illustration  of  what  is 
meant  by  the  doctrine  that  no  time  bars  in  the  case  of  a  direct  or  ex- 
pressed trust,  continuing  and  subsisting,  as  between  the  parties  to  the 
trust.  In  that  case,  the  trustee  had  done  nothing  adverse  to  the  title 
of  the  plaintiff.  The  legal  estate  remained  untouched,. and  the  case 
contains,  throughout,  an  acknowledgment  of  the  principle,  that  equita- 
ble demands  will  be  barred  by  the  same  length  of  time,  by  which,  if  it 
were  a  legal  question,  in  an  action  by  which  the  party  sought  to  re- 
cover, it  would  be  barred. 

There  have  been  some  decisions  in  this  court,  wdiich  have  been 
referred  to,  as  being  unfavorable  to  the  plea. 

In  Decouche  v.  Savetier,  3  Johns.  Ch.  216,  217,  8  Am.  Dec.  478, 
I  observed,  that  no  time  bars  a  direct  trust,  as  between  trustee  and 
cestui  que  trust,  so  long  as  the  trust  subsists,  and  I  referred  to  the 
case  of  Cholmondeley  v.  Clinton.  But  these  general  expressions  must 
he  taken  under  the  same  restriction  that  is  applied  to  them  when  used 
in  the  books.  We  have  seen  the  sense  in  which  they  must  have  been 
used  by  the  master  of  the  rolls,  in  one  of  the  cases  mentioned;    and 


616  TRUSTS   AND   THE   STATUTE   OF   LIMITATIONS.  (Cll.  8 

the  same  undefined  languas:e  is  used  by  Lord  Ilardwicke,  in  Lewellin 
V.  Mackworth,  15  Vin.  125,  T,  pi.  1,  note,  and  by  Mr.  J.  Ashurst, 
as  one  of  the  commissioners  in  Townsend  v.  Townsend,  1  Cox,  28. 
The  maxim  is,  doubtless,  to  be  received  subject  to  the  distinctions 
which  the  decisions  authorize.  But  I  am  now  led  to  apprehend,  in  con- 
sequence of  a  more  thorough  examination  of  the  question,  that  I  did 
not  lay  sufficient  stress  in  that  case,  upon  the  circumstance,  that  by 
the  statute  law  of  this  state  actions  at  law,  of  debt,  detinue,  or  ac- 
count, may  be  brought  for  legacies  and  distributive  shares.  In  Eng-- 
land,  it  is  the  proper  and  exclusive  province  of  the  Courts  of  Equity 
to  enforce  the  payment  of  legacies  and  distributive  shares ;  and,  fol- 
lowing the  English  cases,  I  concluded  that  the  statute  of  limitations 
did  not  apply  to  such  demands.  The  rule,  as  to  a  legacy,  has  some- 
times been  said  to  be  upon  the  ground  of  a  trust,  and  sometimes  that 
it  is  impossible  to  say  from  what  time  the  statute  shall  run,  as  the 
legacy  is  payable  when  the  executor  shall  have  possessed  assets  suffi- 
cient for  debts  and  legacies,  which  may  be  at  an  indefinite  time.  The 
master  of  the  rolls,  in  Smallman  v.  Lord  Hamilton,  2  Atk.  71,  seemed 
rather  to  be  dissatisfied  with  the  doctrine,  that  the  statute  of  limita- 
tions was  not  applied  to  a  legacy,  as  well  as  to  other  cases ;  but  I 
assume  it  to  be  well  settled  in  England  that  the  statute  does  not  apply 
to  legacies  and  distributive  shares,  and  that  the  remedy,  to  enforce 
payment,  must  be  sought  in  chancery.  As  we,  however,  have  a  legal 
remedy  provided,  by  action  at  law,  it  becomes  a  very  serious  question, 
whether  this  Court,  possessing  now  only  a  concurrent  jurisdiction, 
is  not  bound,  upon  established  principles,  to  apply  the  same  limitation 
to  the  equitable,  which  is  given  to  the  legal  remedy?  And  if  we  as- 
sume it  to  be  the  rule  at  law,  that  the  statute  of  limitations  does  apply 
to  actions  at  law,  for  legacies  and  distributive  shares,  then  in  that 
view,  and  in  that  view  only,  I  have  doubts  as  to  the  soundness  of  the 
decision  in  Decouche  v.  Savetier. 

In  the  still  more  recent  case  of  Coster  v.  Murray,  5  Johns.  Ch.  522, 
I  referred,  generally,  to  what  was  said  by  me  in  the  preceding  case, 
that  the  statute  did  not  reach  to  matters  of  direct  trust,  as  between 
trustee  and  cestui  que  trust ;  and  I  held,  that  the  statute  did  not  apply 
to  the  case  of  a  gratuitous  bailment  or  trust.  But  though  that  decree 
was  affirmed  in  the  Court  of  Appeals,  yet,  I  understand,  it  was  upon 
other  ground  than  that  upon  which  I  had  rested  the  decree,  and  that 
the  judges  of  the  Supreme  Court  did  not  consider  it  as  the  case  of  a 
trust  not  within  the  reach  of  the  statute,  because  an  action  at  law,  of 
account,  or  for  money  had  and  received,  could  have  been  sustained 
for  the  same  matter,  and  the  equitable  remedy,  in  a  case  of  concurrent 
jurisdiction,  was  subject  to  the  same  limitation  as  the  legal.  If  I  am 
not  misinformed  as  to  the  decision,  (for  the  case  has  not,  as  yet  been 
reported,)  it  is  a  decisive  authority  in  favor  of  the  doctrine  which 
I  have  now  endeavored  to  deduce  from  the  history  of  the  cases;    and 


Ch.  8)  TRUSTS   AND   THE   STATUTE   OB"   LIMITATIONS.  617 

it  was  the  discussion  upon  the  appeal  in  that  very  case,  that  led  me  to 
suspect  that  I  had  been  misled  by  some  of  the  earlier  decisions,  in  the 
time  of  Charles  II,  on  which  I  have  now  ventured  freely  to  comment, 
and  by  the  exceedingly  loose  manner  in  which  the  rule,  as  to  trusts, 
had  been  spoken  of  in  the  books. 

My  conclusion  upon  this  branch  of  the  plea  is,  that  J.  &  A.  Kane, 
according  to  the  statement  in  the  bill,  had  a  legal  cause  of  action 
existing  in  1804,  for  the  dividends  or  profits  arising  on  the  seven 
shares,  and  that,  upon  the  demand  and  refusal  charged  in  the  bill, 
interest  commenced,  and  a  right  of  action  accrued  against  the  society. 
That  right,  not  having  been  pursued  within  six  years,  the  plaintiffs 
are  barred  at  law,  and  by  analogy  and  in  obedience  to  the  statute,  they 
are,  upon  established  principles  of  equity,  equally  barred  in  this 
Court.     *     *     * 

* 


INDEX, 

[the  figures  ekfer  to  pages] 


BARGAINS  AND   SALES, 

consideration  requisite  in,  24. 

application  of  statute  of  inrollments  to,  34. 

CESTUI  QUE  TRUST, 
wlio  may  be,  89. 
creditors  of,  and  their  rights,  309-328. 

CESTUI   QUE  TRUST'S  INTEREST, 
enforceable  in  equity  only,  110-116. 

enforceable  against  trustee  personally,  not  against  trust  res,  116-118. 
gives  him  no  remedies  against  a  stranger,  119. 
gives  him  neither  the  rights  nor  the  burdens  of  ownership  of  trust  res, 

134-140,  146-152. 
dependent  upon  trustee's  laches  and  neglect.  140-145. 
when  enforceable  against  a  transferee  of  the  trust  res,  153-184. 
assignants  of,  185-201. 
effect  of  trustee's  death  on,  201-205. 
effect  of  his  own  death  on,  205-216. 
effect  of  forfeiture  of  trust  res,  by  trustee  on,  216-219. 
effect  of  disseisin  of  trustee  on,  219-222. 
effect  of  marriage  of  trustee  on,  223,  224. 
effect  of  his  own  marriage  on,  224-235. 
effect  of  bankruptcy  of  trustee  on,  236. 
effect  of  his  own  bankruptcy,  etc.,  on,  237-260. 
rights  which  it  gives  against  creditors  of  trustee,  261-308. 

CESTUI  QUE  TRUST'S  INTEREST.  TRANSFER  OF, 

by  act  of  cestui  que  trust,  185-201. 

by  death  of  cestui  que  trust,  206-216. 

by  marriage  of  cestui  que  trust.  224-235. 

by  bankruptcy,  etc.,  of  cestui  que  trust,  237-260. 

by  act  of  creditors  of  cestui  que  trust,  309-328. 

CONSIDERATION, 

necessity  of,  to  create  a  use,  21-24. 

character  of,  in  a  bargain  and  sale.  24,  25. 

character  of,  in  a  covenant  to  stand  seised,  23-33. 

strangers  to,  in  a  covenant  to  stand  seised.  33. 

law  of.  unaffected  by  statute  of  uses.  34,  3.5. 

necessity  of,  to  a  declaration  of  trust.  .39-42. 

necessity  of.  to  an  equitable  release  of  a  chose  in  action,  43-46. 

necessity  of.  to  a  covenant  to  assign,  47. 

necessity  of,  to  an  assignment,  47-69. 

COVENANTS  TO  STAND  SEISED, 
consideration  requisite  in.  25-33. 
deed  necessary  for.  32.  33. 
effect  of  statute  of  inrollments  on.  34,  35. 

FRAUDS.  STATUTE  OF.  SECTIONS  VII-IX, 
trusts  to  which  they  apply.  99-102. 
purpose  for  which  they  require  writing,  99-102. 
prrty  enabled  to  declare  a  trust  withiu  said  sections,  102-105. 

Ken.Tb.  (619) 


620  INDEX 

[The  figures  refer  to  pages] 
GIFTS, 

imperfect  gifts  as  declarations  of  trust,  G1-G9. 
LIENS,    EQUITABLE, 

wlion  tlie  owner  of  misappropriated  property   may  enforce  an  (Hpiitable 
lien  for  the  value  of  the  property  misappropriated,  537-5:59,  557  57G. 
IXROLLMEXTS,   STATI'TE  OF,  34. 

LIMITATIONS,  STATUTE  OF, 

when  a  bar  to  the  enforcement  of  trusts,  002  617. 

TRUST, 

essentials  of  every.  1. 

TRUSTEE. 

who  may  he.  90-07. 

crtHlilors  of  and  their  rights,  200  .308. 

his  rifihts  and  burdens  of  ownership  of  trust  res,  1.34-140,  145-152. 

duty  of.  to  convey  trust  res  as  directed  l)y  cestui  que  trust,  .33.5-.3.59. 

duty  of.  to  put  cestui  que  trust  in  possession  of  trust  res.  ,359  .309. 

duty  of.  to  fiive  cestui  que  trust  information  as  to  trust  res,  369-375. 

duty  of.  to  take  steps  to  recover  trust  res,  370-3S8. 

duty  of,  to  convert  trust  res  into  money  for  the  purpose  of  investment, 

389-417. 
duty  of,  to  invest  trust  fund.s,  417^63. 
duty  of,  as  to  custody  of  trust  res.  408-^72, 

TRUSTEE'S  INTEREST,  TRANSFER  OF, 

by  act  of  tnistee,  1.5.3-184. 

by  death  of  trustee,  201-205. 

by  forfeiture  of  trustee,  216-219. 

by  disseisin  of  trustee,  219-222. 

by  marriage  of  trustee,  223.  224. 

by  bankruptcy  of  trustee.  230. 

by  act  of  creditors  of  trustee,  260-308. 

TRUSTS,  CREATION  OF, 

manner  and  purpose  of,  1-15. 

languiiw  necessary  for,  16-2L 

considei'ation  necessary  for,  21-74. 

subject-matter  necessary  for.  74-77. 

necessity  of  definite  cestui  que  trust  for,  77-89. 

necessity  of  notice  to  cestui  que  trust  for,  97-99. 

necessity  of  writing  for,  99-102. 

TRUSTS,  WHO  MAY  EXECUTE. 

when  less  tlian  all  named  may,  472.  473. 

when  all  the  trustees  qualifying  must,  473-475. 

when  a  majority  of  the  trustees  may,  475. 

when  the  surviving  trustees  or  trustee  may,  476,  477. 

when  the  testamentary  assignee  of  a  surviving  trustee  cannot,  478-480. 

when  the  testamentary  assignee  of  a  surviving  trustee  can,  481,  482. 

when  the  heir  of  a  surviving  tnistee  can,  482,  483. 

when  trustct^  may  appoint  new  trustees  to  execute,  483,  484. 

t^'heu  Jiu  assignee  of  the  trustee  cannot,  484,  485. 

when  the  trustee  must  personally  execute  it  and  not  delegate  its  execu- 
tion. 485^87. 

when  the  trustee  may    employ   agents  to  execute  the  trust   and   his  re- 
six)usil)ility  for  their  misconduct  or  neglect,  487-512. 
TR U STS,  CON STIIUCTI YE, 

when   the  owner  of  property  wrongfully  misappropriated  may  enforce  a 
constructive  trust,  51.'{-536,  5;;9  557. 

when  a  constructive  trust  may  l)e  enforced  to  prevent  unjust  enrichment 
by  means  of  the  statute  of  frauds,  577-601. 
TRUSTS,  REYOCABILITY  OF,  110. 


INDEX  621 

[The  figures  refer  to  pages] 
USES,  STATUTE  OF,  34. 

application  to  chattels,  85. 

application  to  chattels    real,  36. 

application  to  active  trust.s  of  real  property,  36. 

application  to  a  use  upon  a  use,  36,  37. 
USE  UPON  A  USE  AS  A  TRUST,  38,  39. 
WILLS,   STATUTE  OF. 

application  to  trusts,  107-110. 


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